Market First vs. Product First and the problem with startup advice

Currently, there is a strong “Market First” trend in the “startup scene” (using this term as a generalization for the “passive-income digital nomads”, sideproject hustlers, bootstrappers, solopreneurs as well as for the good old venture backed founder). The “Product First” approach is often dismissed as “wrong”. I would like to argue against this today. Whilte it comes with some traps, it is not completely wrong.

Status Quo

But let’s start the beginning: what qualifies me to talk about it? I am currently building a new product. I made a lot of thoughts on the best way to approach it, but someone is going to get crazy when you look at all the methods out there.

We have entire frameworks with orthodox consultants priests and evangelist like:

On the other hand we have even more individual tools:

All of these are for specific parts of the product development cycle and are based on different starting points and different objectives. I myself have tried to make sense of all these methods, for example with the v01 Primer and the Prototyping Directory. I have been dealing with this jungle for quite some time, but I am not completely satisfied with my soltion. This article here is an approach to start from scratch. And there are probably two main directions to start.

Product First: building before marketing.

The classic engineers route. You are scratching your own itch and discover or develop a smart (technical) solution. Then you think about which problem / market could fit. First and foremost you have fun solving a problem, an intrinsic motivation.
And indeed, this is a lot of fun, for a long time, but has two easy to fall in traps:

  • In the short term: Too little validation Most people are satisfied with too little research and then build too much product. It’s better to build as little product as possible and do a lot of validation with this first product and talk to a lot with customers.
  • And midterm: That you don’t worry about what kind of business model you are pursuing. If you develop a product without considering whether it can sustain a certain case sustainably, you will also fail because you will have to stamp the project out again.
  • Long-term it could be hard to scale, if you cannot detach yourself from the business.

Market First: research before building.

This is more the MBA method. First you look for a market with velocity and then you try to find a problem in it, using various frameworks of the above, then solving it in a compelling manner.

Compared to the intrinsiv motivation of “Product First”, the first and foremost the goal here is to earning money.

The traps here:

  • Short term: For me the main trap was, if you proceed this way, that you fall into Analysis Paralysis during development. Every new customer interview before having an actual product made me question my entire previous thinking. In the worst case, one will change direction after each interview. Every explanation says of course that you should not do this. but it is (depending on the personality type) incredibly difficult.
  • In the medium term: If you are purely market-driven, you may be working on a topic that doesn’t completely capture you and lose interest.
  • Long-term: If one is tackling a valid market, but the customer is not aware of that he actually are having this problem, those products need a lot of explanation. Therefore, such start-ups usually require large sales and account / success teams, which often makes it a VC model. Is not a no-go now, but you have to know if you want to go in this direction.

It can very well be that you find a problem and a solution this way. And then it’s probably a very strong combination. But what I just want to say: it’s not as easy as it sounds given some advice out there and everybody has different skills and should be aware of that.

Advice is plenty. But good advice is hard.

While I do not offer a solution or some advice to you (yet!) – I give you something to think about: Most startup advice is ex post, because it comes from people who have already made it. But why did the made it? Sometimes it’s luck, but often it’s just experience that the founder has grown from (and that he is not aware of). This is resulting in either survivorship bias or simply interpreting things wrong that happend in the past.
Did airbnb become so successful because the founder got the advice from “a good friend” to start on Craigslist? And who gave those incredible advice to Mark Zuckerberg?

Jokes aside – It becomes problematic when advice is transformed into an “ultimate method” with the promise of success. One should never rely on just one tool or even a whole methodology / framework without questioning the use case very critically. The main problem lies mainly in the wrong handling. If you use a tool incorrectly, you will get consistently wrong results.

An example: customer interviews. If you do customer interviews incorrectly (and you can do a lot of things incorrectly, e.g. by putting the answer in the interviewee’s mouth) you will get permanently wrong results and make permanently wrong decisions.

This risk is reduced if you use several independent tools and ask yourself, when which one should be used in each respective situation.

Finally: My advice.

After all this introduction I finally share my own advice. But if you have read so far, you should take it with a grain of salt.

I personally read a lot and broadly and prepare it for me in a structured way using the Zettelkasten method. Through organizing all the advice out there in this manner, I was able to discover this contradiction oft approaches I am writing this article about now.

After some failures with the market first approach, I am now definitely taking the product first approach for myself. Personally, I am perhaps a little bit over-sensitive when it comes to customer interviews and I am too easily unsettled and would like to build each customer’s own product.

At the same time, however, I have established some values that a business model must fulfill, that it makes sense for me to approach it product first.

So when I have a business model that meets at the majority of the aspects, I invest my time not in customer development but in building a first version of the product – with the customer always in mind. Just building a little and then validate it, like a lot. This makes me more secure, because I don’t question all the basic things again. At the same time it gives me concrete feedback.

But this is only my list. You should make your own values. I tried to point out where I got this knowledge for myself, as a starting point for the inclined reader.

No shortcuts to creativity

The only way to find out what you really need to do is to do real work. And, you know, maybe my point of view is biased in the sense that I have already tried both ways. Most probably my market first learnings also influence how I think product first.

Success comes through creativity. And creativity can’t come from copying methods without critical thinking. Even if many advisors out there want to teach you something different. You can’t create the feeling you have after you’ve encountered a problem that can actually be monetized. It’s like acrobatics or any other skills. You have to feel it.

There are no get rich quick schemes. The only thing that helps is to fail sensibly. Grow with it. Hone your tool belt over the whole spectrum of the life cycle. Build and maintain your own models and continuously compare them with reality.

Published by Klaus Breyer

a CTO and Startup Founder/Advisor, living in Berlin and probably offering consulting regarding this topic.

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