Founder fit — Who are they and why do they care?
We believe that our process of designing for product/market fit can be most effective when beginning with what we cannot design: the founders. Our initial goal is to look for early signs of a successful leader and partnership, but we truly enjoy listening to the stories behind each founder's "why?".
The truth is that the majority of startups fail and, more often than not, it's a long and bumpy road along the way. That being said, we want to understand why the founders chose the path of entrepreneurship before we walk it alongside them. For example, there's nothing inherently wrong with a founder setting off on the entrepreneurial journey in search of monetary returns or a large exit, however, it's much harder to align this motivation with your team or users, down the line. It's by design that we disregard the market when asking these initial "founder fit" questions and when looking for specific traits to help us understand the overall fit between founders and the role itself.
The 4 qualities we seek when gauging founder fit:
If the goal is to reach PMF and ultimately scale a company, it's essential to have a leader who can effectively communicate with all stakeholders throughout the process. Whether articulating the vision, directing the team, conveying the strategy, or continuously engaging with customers, the founder will need to play head communicator on behalf of the company.
In our opinion, the secret behind excellent communication is empathy. A founder's ability to understand another person's experience and perspective can enable them to build discovery tools for new insights and better ways of executing. From hiring and retaining a loyal team to making product improvements based on user direction, being human-centric as a founder, investor, or designer has proven to be a guiding light for positive impact.
A founder that deeply believes in the ability of the team to solve a problem and create value for people is a priceless asset at the early stages of building a business. It's important that this trait remains relevant when separated from the market or solution itself, as we believe that noticeably passionate leaders can be influential when the inevitable obstacles present themselves. This form of determination can allow founders to pivot or remain flexible, while rallying the team and inspiring users or investors and, therefore, driving the company forward.
Founder or leadership experience
Although its importance varies based on the market and type of product, we love to work with founders who are not new to the role; especially those with past successes AND failures. Great responsibility and ownership come with the founder role and, if successful, they must be ready and willing to take on the tasks of leading the company at every stage. The needs of a pre-seed startup, team, and users are incredibly different than its needs as a post-PMF, growth-stage company.
Market/founder fit — Why are they the perfect candidate to address this market's needs?
After diving into founder fit, which ignores the market, we explore the reasoning for why the founder is uniquely positioned to address the market needs and, just as important, why they care about the particular problem.
"Why are you uniquely positioned to address the market's needs...and why do you even care about this problem?"
As co-designers of a startup's success, we examine ways to unearth key advantages that we can help leverage from the early and foundational pre-PMF phases. The first real "fit" that we analyze is between the founder and the market. Are the founders the perfect people to solve this market need? These qualities are far less formulaic and can take shape in many different ways.
Common market/founder fit advantages include:
Does the founder have years of deep experience or insider knowledge within the market that uniquely positions them to address gaps? If so, how deeply do they understand the existing solutions or alternatives?
Solving for a personal need
Do they have extensive experience with the market's pain points? Was the venture created to help address a personal problem? As designers at heart, we love it when founders are their own target user (however, this can form a dangerous bias later in the product's life).
Does the founder have a healthy obsession with solving these market needs? We view this as a type of determination that's aligned with the market need but detached from the solution. We seek founders who will work their tail off to provide value for their users through solving the market's problems.
Founders must be able to express their long-term goals. No founder can have a pixel-perfect description for where the company will be in 5 or 10 years (too much planning), but without a vision to guide the team and external stakeholders, you diminish the chances of realizing success by allowing your team and users to paddle in their assumed direction. As you can imagine, this comes to fruition through effective communication.
Founder feedback loops — Why is communication important for founders?
Now that we've discussed the importance of founders having effective communication as a trait for founder fit, let's look at how it can impact or increase a startup's chances of succeeding.
Founder/Team Feedback Loop — Internal Direction
In a world that's quickly shifting towards a remote-first work environment, internal communication is becoming far more personal. With meetings taking place virtually inside our homes, the threshold between work and life is diminishing. When communication's lacking the disconnect between employees and founders or even co-founders can widen faster than ever, causing confusion or dissatisfaction. Not all gaps are obvious, however.
Directly asking employees about the company can be a great indicator of how well the vision and strategy have been communicated. If the team has scattered answers for questions such as, "who is the company's target user?" or "what's the problem we're solving for?" there's surely room for improvement.
It's not a deal-breaker if there's not 100% overlap in answers to the above questions, but if communication appears to be a blocker and not a strength to be leveraged, it urgently needs to be addressed; especially while the team is small. We encourage founders to incorporate open internal communication, whether via slack, sporadic 1:1's, or regular team meet-ups to allow for teams to form not just a sense of togetherness but to allow for feedback and insights that don't fit into the regular day-to-day business.
Founder/Market Feedback Loop — External Trajectory
We often see founders who are hyper-aware of the market and needs at the startup's inception, but as the company grows they grow apart from the market (to focus on scaling the company).
At least while pre-PMF, the founder should always have a finger on the pulse of the market and their users. A founder/market feedback loop should be exactly that, a two-way street of information going from the founder to the market and vice-versa.
The founder can leverage transparency to alert the market about their mission to provide value to them and, in exchange, find valuable insights, key partners, and evangelists. People are far more likely to help a person with an idea that can benefit them rather than an impersonal company looking to expand their business. Although we said we look for founders who solve a personal need, the bias we referred to needs to be continually challenged and backed by external potential users. We'll explore our methods of communicating with the market next.
In this series, we dive deeper into our approach to achieving product/market fit, the primary "fits" that we hope to balance with our portfolio companies, and our core belief that communication is the key to long-term startup health.
Part Two — Partnering with Founder/Market Fit
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