The emphasis on product/market fit for a startup isn't a misdirected one. For one of the key early signs of whether a startup would be successful or not depends on their product meeting the demands of the customer.

A term coined by Marc Andreessen, product/market fit is described as 'being in a good market with a product that can satisfy that market'.

In his blog, Marc illustrates how a lot of startups fail because they never get to product/market fit.

Andrew Chen, in one of his blog post, suggests the importance of getting to Product/Market Fit quickly rather than later.

"Basically you want to get to the point where your product is working, and if you can't get there within the first 1-2 years of your company's existence, you generally run out of money or your team falls apart."

But then, there are tons of startups that have failed despite getting to product/market fit. Which means that even if you get to a point where customers can resonate with your product, there are a number of things that can go wrong. And here are a few that you should watch out for during your journey.


Product/Market Fit doesn't get you profitability in business. It only tells you that customers like what you've built.

Profitability allows startups degrees of freedom, as Mark Suster highlights. He writes, "You may have leverage when you DO need to fund raise. It allows you many more exit opportunities. And, being profitable certainly makes your company more sustainable in difficult times."

If you don't have a positive cash flow, tough times would ensure your startup tumbles down fast.


"A startup is a company designed to grow fast," writes Paul Graham. "A good growth rate during YC is 5-7% a week. If you can hit 10% a week you’re doing exceptionally well. If you can only manage 1%, it’s a sign you haven’t yet figured out what you’re doing," he adds.

You don't want to be sailing in that boat, and product/market fit is only part of this equation. Which means that just being able to build a product that customers love doesn't guarantee success. You should be able to identify your most impactful customer acquisition channel(s) early on in your journey, which tends to be a losing battle for most startups.

Oftentimes, not being able to identify the most effective growth channel results in continuing to work with expensive ones that run you out of money quickly--a recipe for failure despite product/market fit.

#3--Getting Screwed

A startup is far more vulnerable to getting screwed by people--investors, employees or even co-founders.

The investors could have screwed you with a completely lop-sided term sheet, without you having any upper hand in the discussion or pulling out of a round at the last minute, or a co-founder screwing you just when you're about to raise funding.

If it doesn't cause too much damage, it's prudent to accept the inevitable and move on to the next best course in your journey. However, for some entrepreneurs, it could kill their startup altogether depending on how deep of a trouble you're in.

Being mindful of these factors can help you hedge against a possible failure situation, and then there will be some that you cannot anticipate given your own unique market and the product. The important thing is to keep fighting and stay afloat.

As Marc Andreessen is famously quoted – The goal is not to fail fast. The goal is to succeed over the long run. They are not the same thing.

Published on: Aug 25, 2015