People, Product, or Market? Why Dave Parker’s Trajectory: Startup Puts Market First
Recently inspired by the hit movie The Social Network, I sought out to create the next Facebook during my sophomore year of high school. The film makes it look easy — simply have an idea, make the app, and sit back while your app goes viral across the country. With my idea, a social network for throwing parties, and my zero experience, I commissioned a programmer from Fiverr to build the app that would eventually change the world. I eagerly waited for months, envisioning the millions of users who would love the app idea just as much as I did. Finally, the time came and my app was ready. However, even though I had spent countless hours imagining how big of a hit it would be, it turned out that no one wanted to use the app. Looking back, I had tried to force my app into a market that did not want or need it. Now, after reading Trajectory:Startup, I would not make those mistakes.
In Dave Parker’s 2021 practical guide for founders, entrepreneurs, and investors Trajectory: Startup, Parker lends advice based on his decades long career as an entrepreneur and gives insights on how to create a successful startup using a market-first approach. The book is divided into four main parts and is meant to be read during the first six months of your startup journey. However, the most substantial and distinctive information can be found in the first two parts of the book. Part One of the book is titled “Context Matters”, and provides foundational knowledge for the ideation stage, such as how to validate an idea and the pros and cons of launching a startup. In Part Two, titled “Doing The Work”, Parker includes “Deliverables” at the end of each chapter, which are assignments designed to guide readers through the startup process. During Trajectory: Startup, Parker builds an argument that the market a startup enters is the most important determinant of success.
When looking at factors that determine the future success of a startup, there are generally three factors: people, product, and market. In a panel at the University of Southern California in 2023, director of the Marshall Greif incubator and founder Paul Orlando spoke about the evolution of this discussion. Ten years ago, the majority of students, faculty, and founders believed that product and people were king. However, in the 2010s, a book called The Lean Startup started a movement that would shift this discussion (Orlando). Contrary to what was taught in business schools, The Lean Startup emphasized a quick, iterative ideation process to find the right market for your product and was one of the inspirations for Dave Parker to write Trajectory:Startup.
The importance of market in determining the success of a startup has become increasingly clear in recent years, as the oversaturation of the market has raised the bar for innovative products and highlighted the importance of deep customer development. We live in a world where the market of things is oversaturated, which means that the bar has been set higher. Obviously, there are always innovative products that haven’t been invented yet, but only the best ideas survive. People are more complex than ever living with complex, individualized problems. After the “Great App Store Boom” of 2010, there were 300,000 apps on the Apple App Store (TechCrunch). Today, there are 1.96 million App Store apps available. There is too much competition in the world to believe that your smart team and well-made product will be successful without doing deep and thorough customer development. Customer development is “scientific and systematic process of discovering if your target customer actually cares about the product you are thinking of building” (Parker, 120). Throughout the book, Parker makes it clear that the market a company enters is the most important factor for a startup’s success and his emphasis on customer development is one the ways that he does this. Instead of developing a product in isolation and hoping to find a market for it, customer development involves engaging with potential customers early on to understand their needs and preferences, and shaping the product into something it actually wants.
As someone who always wanted to start my own business, I have come up with countless million dollar ideas. My first instinct was to keep these ideas secretive and only tell people who I really trusted because I did not want my million dollar idea to be stolen by someone else. In reality, “that just doesn’t happen. Ideas die from a lack of exposure, not overexposure” (Parker, 22). The key to developing an idea is to get in front of your customers as early as possible. Your product should be malleable and iterated based on feedback you get from your potential customers. Find a market with an unmet need and let the market tell you what it wants. If you do not focus on the market first, then you could waste time and money building a team and developing a product that no one wants. It is better to put your idea out into the world and learn that no one wants your product instead of spending thousands of dollars and months of your time developing a product that no one wants.
Quibi was a startup founded in 2020 that had the team and product but failed to find the market. Run by accomplished executives, Quibi raised $1.8 billion dollars from media companies including Disney, NBA, and WarnerMedia. Nonetheless, it was dead just six months after it launched. The company failed because it never found product/market fit and burned through all of its money trying to force a product into the market. Product/market fit (PMF) “is the degree to which a product satisfies a strong market demand. When your customer sells your product for you” (Parker, 31). Throughout Trajectory: Startup, Parker argues the importance of reaching PMF, and I believe that early startups should be looked at as having two stages: pre-PMF and post-PMF. Before you reach PMF, you should not spend any money or time on anything besides reaching PMF. Every dollar spent on marketing or building a team before you reach PMF is a waste.
PMF is the most important metric for determining if people actually want your idea. Had I read Trajectory:Startup when I was a sophomore in high school, I would have created a prototype for the app and showed it to everyone who would listen to me. From there, I would have learned where I can improve on the idea. By constantly iterating and trying to find what the market wants, your idea may change or evolve. In 2009, a company called Burbn was created that allowed users to check-in to locations across the US, make plans with friends, and post pictures. The app had solid growth, but founder Kevin Systrom noticed that the picture posting was the most popular feature. Instead of continuing to force his idea to the market, he changed his idea and created a new company called Instagram (Inc).
After reading Trajectory:Startup, I thoroughly believe that entrepreneurs should let the market shape your idea into a business. Previously, I believed innovation was created by the geniuses of the business world like Steve Jobs, who famously said “people don’t know what they want until you show them” (Business Insider). Obviously, you still need a well-made product and smart team to make a successful business, but if the market is the most important factor, who is creating innovation? I decided to look back at history to find out.
Throughout the 1960s and 1970s, International Business Machines (IBM) was a global leader in the computer industry. They played a pivotal role in punch-card technology and went on to own over 60% of the mainframe computer market (Thestreet). IBM grew to one of the largest companies in the world by building innovative products that filled an unmet market need. By the 1990s, however, IBM had been dethroned by Microsoft, who led the personal computer revolution. How was it that IBM failed to innovate and continue to compete against smaller competitors? Even though IBM had a large research budget, they were unable to see what would be valuable in the future. In the late 1970s, personal computers were gaining traction for consumer use and Microsoft was one of the key players. IBM saw this innovation happening and decided to jump into the game in 1980. In an attempt to get to market as quickly as possible, IBM made a critical mistake and contracted Microsoft to build the operating system for their new pc. IBM’s pc was a huge success, but it was running on a Microsoft owned operating system. As technology became less expensive, it became clear that hardware of a personal computer was not what was most valuable, but rather the operating system. By not buying the rights to the operating system that ran on their computers or making their own operating system, IBM missed out on the next big technological innovation. Microsoft’s operating system went on to make them $27 billion.
Parker argues throughout the book that finding a market with an unmet need is the key to creating value, but I am going to take it one step further and say that innovation is not created by companies but is decided by the market. No one can see into the future and know what products or services people will want. Big companies like IBM have the largest budgets to create innovation but they continually miss the ball on the next technological innovation. Microsoft owned the personal computer market, but failed to see what Apple saw in the innovation of the smartphone. Innovation is a weird phenomenon. It is easy to witness once it has changed the world, but near impossible to predict. There are thousands of startups in the US who believe that what they are building is innovative and will change the world, but yet 90% of startups fail (Parker, 24). Like natural selection, only the strongest and most innovative startups survive and go on to become the next market leaders. While startup founders create innovation in their own eyes, the invisible hand of the market decides which companies are truly creating something innovative and valuable.
Throughout Trajectory: Startup, Parker gives pragmatic advice on how to create a startup, while providing the reader with a hand-on plan to achieve their goals. The book provides a strong, well-argued process for how potential founders should bring their ideas to life. By focusing on the market first and validating your idea, you don’t waste time and money working on something that nobody will want. The market-first approach resonates with me and allows me to better understand how the world around me works. Innovation saves lives, makes businesses more efficient, and hopefully the world a better place, yet it seems impossible to predict what will happen next.
Works Cited
Cortada, James W. “How the IBM PC Won, Then Lost, the Personal Computer Market.” IEEE Spectrum, IEEE Spectrum, 29 Mar. 2023, https://spectrum.ieee.org/how-the-ibm-pc-won-then-lost-the-personal-computer-market#toggle-gdpr.
“Henry Ford, Innovation, and That ‘Faster Horse’ Quote.” Harvard Business Review, 23 July 2014, https://hbr.org/2011/08/henry-ford-never-said-the-fast.
History of IBM: Timeline and Facts — Thestreet. https://www.thestreet.com/personal-finance/history-of-ibm.
Parker, Dave. Trajectory: Startup Ideation to Product/Market Fit: A Handbook for Founders and Anyone Supporting Them. Matt Holt Books, 2021.
Schonfeld, Erick. “Report: Analysis of the Great Mobile App Store Boom of 2010.” TechCrunch, 7 Jan. 2011, https://techcrunch.com/2011/01/07/distimo-2010-mobile-app-store-boom/#:~:text=App%20store%20analytics%20firm%20Distimo,BlackBerry%20App%20World%20reached%2018%2C000.
Orlando, Paul. “Survival Startup Series.” Lecture, University of Southern California, Los Angeles, February 2023.
