The typical narrative in startupland is that an early stage venture needs to achieve product-market fit (PMF) in order to be successful and that PMF can only be achieved by a founder who themselves fit the market opportunity because of their insight and domain experience. In other words, a founder who exhibits founder-market fit (FMF).
Yet, time and time again, I have seen outstanding founders who defy the theory of FMF — founders who have little domain knowledge or even little operating experience at all are somehow able to navigate the journey of building a valuable company from scratch.
One such founder that we studied this week in my Harvard Business School class is Laura Behrens Wu. Laura is the founder and CEO of Shippo, a logistics and shipping software platform for e-commerce merchants. Laura had no technical background so little intuitive understanding of her technical audience. She had never worked for an e-commerce company so did not have the domain knowledge to understand their needs which would come naturally after years of living in their shoes. In short, she was an outsider. Yet, she has navigated Shippo to becoming one of the leading online shipping platforms in the world, with 80 employees and $30 million raised from top investors such as USV and Bessemer.
Another example we studied is the founders of Plastiq, Eliot Buchanan and Daniel Choi. They were both outsiders to the payments industry. In fact, they had never worked in any industry before — having started the company right out of college when one of their Dad’s expressed frustration that he couldn’t pay for tuition on his credit card — but they have been able to build a payments powerhouse with billions of dollars processed that recently raised $30 million from Kleiner Perkins.
Laura, Eliot, Dan, and many other examples demonstrate that entrepreneurs who are outsiders can still represent FMF. In my experience, they are able to do so, despite having zero domain experience, by doing the following:
- Hit the books. Founders who are outsiders can achieve FMF by studying their chosen industry with the vigor of a student pursuing a PhD. Reading up on the field, learning the history, interviewing experts, attending conferences, and generally immersing themselves in the community are the techniques that successful founders exhibit. Domain expertise matters, so go acquire as much of it as possible as quickly as possible and don’t be too quick to dismiss those who have it, which leads to the second important behavior…
- Hire domain experts who will be cultural fits. If a founder can blend their outsider, disruptive idea with domain experts who know the inside game, they can be a powerful team. The trap is to hire a big name executive from a big company with a fancy title and realize, months later, that she is not a cultural fit (I sometimes refer to these mismatches as the startup organ rejection problem). Make sure when you’re hiring that domain expert or two into the company that they share your values and priorities and are aligned with your mission.
- Get out of the building for a fresh look. Another important behavior of successful founders, to quote Steve Blank, is to get out of the building and engage with the target customer directly. Many domain experts are out of touch with the latest shifts and changes in their industry because they learned about the customer’s pain and environment years ago and haven’t updated their world view for today’s era. Outsiders have the opportunity to take a fresh look at today’s customer pain rather than be mired in yesterday’s.
With these approaches, even the greenest of founders can find success and achieve FMF. But not every outsider founder can beat the odds. In our many years of working with founders, we at Flybridge have tended to focus on a few additional characteristics of successful founders that cut across whether they have FMF or not. Those attributes include:
- Pied Piper. Does the founder have the ability to lead and attract the interest of people to work on the projects they are working on? Successful founders need to attract top talent, partners, investors and customers, even when those decisions may be somewhat irrational and emotional.
- Authentic Passion. I like to say that when you talk to the best founders about their startups, you can’t shut them up. They are obsessed with the problem, the customer pain, and the opportunity. And their obsession is not motivated by the money or the drive to succeed for the sake of success, but rather to solve the problem because of the intrinsic value that comes with solving the problem.
- Force of Nature. In addition to being crazy passionate about their companies, successful founders have an incredible focus and determination to push through walls to achieve success. I loved that this moniker was the way Vanguard’s legendary founder, Jack Bogle, was described in this WSJ profile. Bogle was a very focused, competitive and determined entrepreneur who disrupted the financial services industry through sheer force of will.
- X-Factor. Here we are not referring to XFactor Ventures (the female-focused fund we started a few years ago), but rather the special something that is hard to put your finger on that inspires others to believe that the founder is, simply put, a winner. Shippo’s Laura was a polyglot who spoke six languages by the time she came to the US from her native Germany started Shippo. Eliot was a Canadian national junior squash champion. Both founders exhibited a high standard of excellence and achievement at a very young age in unrelated fields, giving them foundational skills like resilience and self-confidence that they have been able to draw on through the many trials and tribulations of their startups.
If you’re a founder who has zero domain experience, don’t be intimidated by your lack of obvious, surface-level FMF. Outsiders can be potent founders and disrupters if they apply themselves properly.