From MVP to Product-Market Fit

You have no money. You have this great idea to deliver food from restaurants to consumers. Well what you do is you build a minimum viable product. What they did at DoorDash back in 2013, in the first six months of the company you had four founders. They did some email marketing, they made flyers, they tried to get on Google Organic search, they built a website with just menus. It wasn't interactive, you couldn't order on the menu and they just was a phone number. And consumers found DoorDash somehow through these flyers or marketing. They called the founders mobile phones or they text messages the founders and said I'd like to order this food. The founders then went to the restaurant. The restaurants were not part of the network. Founders just went to the restaurant and ordered the food takeout the way that as if they would reading it themselves but then they would drive it themselves to the customers. So that's pretty basic minimum viable product. All it is is a static website, a telephone call us up or text us, we'll order for you, we'll go to the restaurant, we'll order the food, we'll bring you the food. That was their business for six months with no money. And they then raised a pre seed round of $150,000 to hire a few people and to try to build the business out. They were already proving it was working. They already proved customers, some a handful of customers wanted to order food this way. So they hired 20 drivers as part time drivers. They hired two employees and customer support. They expanded from Palo Alto to Menlo park also and they were beginning to get a little traction. This is in the second six months of the company, months seven through 12. And the goal of this round was to make a few people happy, a few customers, a few restaurants, a few drivers and they were very successful. The restaurants who did use them loved them and recommended them. And some users were using DoorDash several times a week. So what you're trying to do at this point is get to product market fit. There's a lot of definitions of product market fit, but one way of defining it is doing a user survey which is this is on there's a website and a link here of how to do this user survey. And the question is, how would you feel if you could no longer use DoorDash? Very disappointed, somewhat disappointed, not disappointed or I no longer use DoorDash. Even with a very small sample size of 100, if 40% or more people answer very disappointed, you probably have product market fit. It's a very good way of measuring. So you now have reached product market fit. You've only raised a few hundred thousand dollars and now you want to expand. So now you raise your Series A. And what do you do with your Series A? Well, you're expanding to your second region, to San Jose. You're now up to 20 full time employees in 3, 300 drivers and continuing to expand. So if you remember that slide before, where every year you were raising more money at higher valuations, improving more, getting more traction, proving your customers love you, proving you can expand from Palo Alto to Menlo park and then from Endlo park to San Jose and then other other regions, that you can recruit more drivers at every level. You're reducing the risk and increasing your value. And that's what investors are looking for.