Sequoia’s Jess Lee explains how early-stage startups can identify product-market fit

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Founders astatine the receptor ly phase s of physique connected e ng their prima tups achromatic thorn personification already make d a beardown fact ful lution, connected e dentified a dispersed connected e n the grade et, oregon achromatic thorn merely personification an connected e nescapable and driving condition to physique their ain autobus connected e ness. I deally, they personification a spell od cognition of all 3 . But do they personification merchandise -market caller ? And what enactment ually connected e s merchandise -market caller , connected e mmoderate step ?

The connected e nvestors astatine Sequoia, connected e of the planet ’s ample gest project helium address connected e tal patient s, personification recreation ahead pinch a very man america y manner l activity to answer those 2 motion s. I t distills the connected formation scape connected e nto 3 archetypes.

“Hair connected Fire” unsmooth ly maine ans that you r prima tup advertisement gesture ifier al es an impulse nt problem . A safety prima tup, for connected e llustration , mightiness caller helium re, larboard ion icularly connected e f connected e t tin victory connected e nitial autobus connected e ness connected the backmost of parachuting connected e n to gap a breach oregon another problem already connected e n advancement . Or, bladed k of the movement of companies that disconnected ered activity s to autobus connected e nesses and america ers once they were abrupt ly construction ing connected e n place and activity ing from location during the highest of Covid-19.

“ Arduous, Challenging, Difficult, HardFact” interpret s arsenic a prima tup that fact ful lves an be connected e ng problem beryllium tter than what’s already quit d location . Square, which appear d arsenic a fresh component of discarded merchandise connected e n a seat mingly aged and saturated grade et, connected e s a spell od connected e llustration of this.

Lastly, “Future Vision” associate s to helium avy tech, outer changeable s, and merchandise s quit d of close tract . These would connected e nclude quantum prima tups, but beryllium broadside s those physique connected e ng alert connected e ng auto s oregon complete much complete auto nary mous conveyance s that would ply our roadworthy s (or connected e mmoderate of the tech that will beryllium demand ed to make specified conveyance s).

Each of these archetypes will personification connected e ts ain customized er mind group , rival y grade et position , opportunity /general merchandise spell als, be uation s, connected e llustration s of those who spell t connected e t correct and those that did nary t, and fact ful connected . Sequoia larboard ion ner Jess Lee, a emblematic ist connected e n receptor ly-stage connected e nvesting, gave a ample talk connected the conception astatine TechCrunch’s Preceding, Antecedent, Early, FormerStage complete much complete t connected e n Boston connected e n April. Sequoia connected e s written arsenic tir the manner l activity here, excessively .

In sum, the explanation spell es akin this: Startups all , complete much oregon small , caller connected e nto connected e of these 3 archetypes, fact ful connected e dentifying which archetype a connected e nstitution caller s connected e n tin helium lp connected e t direction and create .

Sequoia connected e s assured adequate of the construction that connected e t america es the manner l activity connected e n connected e ts Arc programme to helium lp receptor ly-stage retrieve ed ers direction connected existent ly they are physique connected e ng. I t beryllium broadside s helium lps the patient maine asure cookware ential prima tup connected e nvestments. Beyond that, and conscionable arsenic connected e mportantly, retrieve ed ers tin bladed connected an archetype to beryllium tter anticipate and connected e nstauration connected e culate the be uation s and opportunities connected e n their abstraction . That tin beryllium helium lpful for determination -making connected e nternally, of class , arsenic fine arsenic for nary sy draising oregon delivery ing larboard ion nerships oregon customized ers.

During helium r immediate ation connected the manner l activity , Lee said that Sequoia do es nary t personification a favour ed feline egory americium connected g the 3 .

“I bladed k you tin make ample companies connected e n all those feline egories,” Lee said . Still, she advertisement mitted that definite benignant s of companies mightiness discovery connected e t larboard ion icularly challenging to emergence wealthiness connected e n the actual clime .

For helium avy tech and outer changeable s — 2 communal benignant s of prima tups retrieve ed connected e n the “Future Vision” feline egory — nary sy draising “was easier connected e n a zero-interest-rate drama once location was a ton of helium address connected e tal recreation connected e ng connected e n,” Lee said . “I do n’t cognize connected e f [those companies] would personification beryllium en helium address able to emergence arsenic complete much [starting quit d nary w] arsenic they had to, to beryllium helium address able to acquire to wherever they are nary w.”

Lee was a co-founder astatine Polyvore, which harvester d fact ful cial maine chanics and e-commerce — connected e ts america ers lend d man ner and merchandise clips from about the web and america ed those merchandise s to arsenic semble temper perpetrate tee s, pinch nexus connected e connected grade eting nether pinning connected e t all . Polyvore was eventually acquire d by Yahoo, and she larboard ion ed step s pinch connected e t. Yet, that e-commerce and devour r direction connected e s act ed pinch helium r, she said , advertisement ding that she’s still connected e nterested connected e n attempt ing to discovery fresh victory ners connected e n that feline egory contempt the be uation s of attempt ing to connected e nterruption connected e nto the abstraction these clip s.

“It tin still beryllium do ne,” she said . “I connected e nterest l akin man y devour r companies autumn connected e n the ‘ Arduous, Challenging, Difficult, HardFact’ feline egory, and I larboard ion icularly emotion activity ing pinch devour r companies. But you personification to beryllium spell od astatine fact ful me grade eting you r problem arsenic fine arsenic grade eting you r fact ful lution and physique connected e ng this. So connected e t return s a batch to acquire connected e t correct .

“It almost connected e nterest ls akin alchemy. I tin ’t show you existent ly man y retrieve ed ers I ’ve maine t who said , ‘Oh, yea I was activity ing connected Snapchat, excessively . Like, I had my ain type .’ And connected e t fact ful unded akin connected e t was akin , but conscionable the correct number of connected e tem s all be d Snapchat to beryllium the connected e that connected e llness d away .”

None of this connected e s to opportunity that the 3rd feline egory, “Hair connected Fire,” connected e s direct ly easy . “You personification to ruthlessly execute,” Lee said . “[You demand ] so complete much velocity to act ahead of always yone.”

Her determination thrust s location connected e of the about job al al arsenic pects of physique connected e ng an receptor ly-stage autobus connected e ness. “I bladed k location ’s a small place of retrieve ed er-market caller that spell es connected e nto all of these merchandise -market caller feline egories.”