Why We Focus on Product

You may have noticed that most of what we talk about is in some way related to product, so it is easy to pick up on the fact that product is really important to us. Every venture firm and venture studio has something they really care about and focus on. For some, it is go-to-market. For others, it is engineering. And the list goes on. For us, it is product.

To put it simply, we believe that product is the foundation on which founders build their startups, and if the foundation is broken, everything that sits on top of it will be broken.

First, What Is Product?

Anyone who has spent time working with startups has, at some point, heard people use the word “product.” You may even use the word yourself. In the startup space, we often hear people say things like “she works in product,” “they need a really good product person,” or “they are having product issues,” but it can be difficult for the same people to describe exactly what “product” is. There can also be a lot of confusion about what roles and functions fit and don't fit within product. So we want to define product first.

Definition · Product

The discipline that helps a company decide what should exist, for whom, why it matters, how it should work, and whether people actually use, value, pay for, and keep using it.

Product is not just the software, the code, the design, the roadmap, the feature list, or the product manager. Product is the work of connecting a real customer problem to a usable solution and a business that can grow. It helps the company decide who it is building for, what problem is worth solving, what should be built first, how people will reach value, why buyers will pay, and what evidence tells the team to continue, change, or stop. In an early-stage startup, product does not need to be a team of people, but product responsibility must exist.

A helpful way of thinking about product is:

• +Engineering produces code.
• +Design produces screens.
• +Sales produces calls, demos, and pipeline.
• +Marketing produces messaging and campaigns.
• +Customer success produces onboarding and support.

Product produces something less visible: better decisions about what should exist and why.

A startup can have strong engineering and still build something customers do not need. It can have beautiful designs and still solve the wrong problem. It can have a clean roadmap and still be moving in the wrong direction. It can close pilots and still fail because users do not adopt the product after the sale.

Why We Focus on Product

Core aspects of product, such as identifying and validating a real venture-scale problem or need that is so significant that customers will pay over and over to address it regardless of economic conditions, form the foundation of venture building. Those are often the things founders either most commonly miss or get wrong. Those are also the elements of a startup that accelerators and investors usually do not focus on.

When CB Insights publishes the top reasons startups fail, “No Market Need” is consistently near the top of the list, if not at the top.

Whether a founder has identified and validated that they are building their company around a real, significant, venture-scale problem may seem like a simple concept and is often taken for granted. Founders, investors, advisors, everyone assumes that founders are actually validating the problem the rest of the company will sit on. However, if that were the case, you would not have so many founders raising capital and going to market only to learn that no one needs what they built.

For us, the core components of product are the foundation each startup sits on, and if those load-bearing components are flawed, everything that sits on top of them will be flawed. We have watched founders execute go-to-market perfectly and still fail because they never stopped to ask if the thing they built should have been built. We have watched founders who were sales experts fail because they were selling a product no one wanted. We have watched amazing engineers fail because they built great products for small markets.

From our perspective, many of the things that founders, investors, and advisors talk about, like GTM, sales, marketing, and engineering, sit on top of the foundation built by product. This means that even if execution in those areas is perfect, the company will still fail if core product components like ensuring there is a real venture-scale problem, clearly understanding and defining the ICP, and structuring experiments to test the riskiest assumptions are missing.

We believe that commonly cited and identified causes of startup failure, such as running out of cash and failing to achieve product-market fit, all sit downstream of product. Founders will often say they ran out of money, but that is never the root cause of failure. It is always a result of upstream issues such as weak traction and an inability to reach product-market fit. Founders will say they could not reach product-market fit, but that is driven by core product functions like assumption validation and customer discovery. We believe that far too many people focus on downstream impacts instead of upstream drivers.

We focus on product because we believe it is the core upstream driver of most non-team-related startup issues, and that effective product drives success.