Marc Andreessen on Product/Market Fit, in His Words

Marc Andreessen's answer to what matters most in a startup is the market, and the goal it implies is product/market fit. In his essay The only thing that matters, he puts it as a rule: "The only thing that matters is getting to product/market fit."

This post walks through that essay, archived on pmarchive.com as part 4 of his guide to startups. Each quote links to the archived essay.

Team, product or market: which matters most?

Andreessen starts from the three core elements of any startup, "team, product, and market", and notes that each varies enormously in quality. He sets out the usual answers. Entrepreneurs and VCs often say team; engineers often say product. Then he takes a different position:

"Personally, I'll take the third position—I'll assert that market is the most important factor in a startup's success or failure."

Why does the market matter so much?

Because a great market does work for you:

"In a great market—a market with lots of real potential customers—the market pulls product out of the startup."

In that situation, he writes, "The product doesn't need to be great; it just has to basically work. And, the market doesn't care how good the team is, as long as the team can produce that viable product." His examples are search keyword advertising, Internet auctions and TCP/IP routers.

A bad market is the reverse:

"Conversely, in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn't matter—you're going to fail."

His examples there are videoconferencing, workflow software and micropayments.

What is product/market fit?

Andreessen credits Andy Rachleff, formerly of Benchmark Capital, with crystallising the idea. "Rachleff's Law of Startup Success" is "The #1 company-killer is lack of market." Its corollary is "The only thing that matters is getting to product/market fit." His definition of the term is short:

"Product/market fit means being in a good market with a product that can satisfy that market."

How can you tell if you have it?

This is the most quoted part of the essay. When it isn't happening:

"The customers aren't quite getting value out of the product, word of mouth isn't spreading, usage isn't growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close."

And when it is:

"The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You're hiring sales and customer support staff as fast as you can."

He opens each description with the same claim: "You can always feel" it.

What should a startup do before it gets there?

Andreessen divides a startup's life in two: before product/market fit ("BPMF") and after ("APMF"). His advice for the first phase is blunt: "When you are BPMF, focus obsessively on getting to product/market fit."

"Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don't want to, telling customers yes when you don't want to, raising that fourth round of highly dilutive venture capital—whatever is required."

He goes as far as saying "you can ignore almost everything else", then qualifies it: "I'm not suggesting that you do ignore everything else—just that judging from what I've seen in successful startups, you can." His evidence is that every successful startup he has seen reached product/market fit while getting plenty of other things wrong along the way.

The short version

• Of team, product and market, Andreessen says market matters most.
• A great market "pulls product out of the startup"; a terrible one sinks even the best team.
• Product/market fit is "being in a good market with a product that can satisfy that market."
• You can feel when it isn't happening, and when it is.
• Before you have it, do whatever is required to get it.

This post reports what Marc Andreessen wrote in one essay. To look up what he, Paul Graham, Sam Altman, Naval or Warren Buffett wrote on your own question, you can ask Mímir. Each answer cites the original essay or letter.