Alfred Lin tells seed-stage founders to start narrow: pick one customer segment and build for them obsessively before expanding. Amazon sold only books, Zappos only shoes, DoorDash one city at a time. Track what you control (throughput, processes) not just what you measure (revenue), and treat product-market fit as ongoing work, not a finish line.
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When you're at the seed level and you've decided to commit to this idea that you're on, you have a co founder, you have a set of people that you've convinced to join you. Now that you have that, you got some funding and you're off to the races, what are the things that are important? I think you just have to think about who your customer is and what your product's going to be, because you can't, inside of whatever time frame you think you are on to build a product, whether it's three months for a prototype or six months or a year to get the product to generally available for the public, that's not that long of a period of time for three to five or six people to build that product. So you need to sort of focus on what the problem is. What is the problem that you're solving for, for the customer. But before you say that, even answer that, you have to understand who your customer is going to be. And it's easy to say every single person should be a customer. Every single person eventually became a customer for Amazon, but every single customer was not an Amazon customer when they were first in the books business. We know how few people read in this country. The number of readers is quite small. But they were focused on readers and people who wanted a better way to find the books and not their local bookstore or their local Barnes and Nobles. They wanted a wider selection because these were avid, avid readers. And the number of avid, avid readers is small. And is that a good or bad thing? I think it's a funny thing because you could say the tam for that is too small. You could also say the tam for for selling shoes is too small, but it turns out to be a very interesting wedge when nobody else wants to do it. One of the things that led to the success of Zappos was that everybody thought the idea was crazy or people thought the market was too small or nobody would buy the shoes online. And I think probably people had the similar reaction to Amazon or just bookstore. Like how big is the book market and how many avid readers are there who are going to be your customers? Probably say the same thing about food delivery or Uber or Airbnb. Many of these problems seem small at the start. And the focus is to make sure you have avid fans that will allow you to broaden into the larger business. And it's nice to say today that Airbnb is in the lodging business or the experience business. But. But at the beginning, it was a much, you know, sort of much more Focused on homeshare. And the name of the company was Air Bed and breakfast. It wasn't about all accommodations, it wasn't about experiences, it wasn't about long term stays and work from anywhere. Lift from anywhere that it talked about yesterday at the earnings call. It always starts with a small, very focused idea and you got to focus on those kind of things. And so customer, we teach this at Sequoia in our company design program about customer product fit where you don't even have product market fit yet, just customer and product. Who are your customers? What's your product for those small set of customers and how do you make them added fans. Then after that you're trying to make the product into product market fit. And I would challenge people to say that product market fit is a long term journey. You're always working on product market fit and some companies never get there and they fail because of that. But even if you have product market fit, you're constantly tweaking the product for the next adjacent market or the next suburb or in Doordash's case, they had Palo Alto working. Is it that easy to get San Jose working? Turns out that you needed to change a few things for San Jose and for LA and for New York or even San Francisco even though they had Palo Alto working. And so you're constantly working on product market fit. And it's not as simple thing as oh you. When you have product market fit, you'll know it. I think that that's a true statement when something is ripping. But often things are not that simple and it always looks like it's ripping after the fact, not during. And so what do we ask people to focus on when. During the process. During the process about inputs. And Amazon has this great sort of thing about don't confuse outputs with inputs. Board members love to manage from outputs. Like what do the financials look like? But the financials are the output of all the things that you did for a while and the building that you did. And so I often talk about a company in the sense of input throughput, which is the company that you've built and how quickly you can take the inputs into outputs. Financials are the ultimate outputs. But what are your input metrics? And I don't think enough is thought about the inputs. And the hard part about the inputs, you will always have more input metrics than you have output metrics. It's easy to rally the company around one or two or three financial metrics. It's a lot harder to do that with inputs. And I think that that is the crux of the issue, because you should be constantly thinking about inputs and you should constantly be changing them over the years.
