Benchmark founder Andy Rachleff on what most founders get wrong about product/market fit

When you're starting a company, you need to first develop a value hypothesis which needs to be confirmed, and then a growth hypothesis which needs to be confirmed. The value hypothesis consists of the what, the who and the how. What are you going to build for whom is it relevant? And what's the business model? That's the how. Now, most people don't realize that you don't iterate on the what. So great technology companies are created by virtue of an entrepreneur recognizing an inflection point in technology that allows them to build a new product. For us, it was brokerage APIs and ETFs. And then you have to figure out who cares? What's the market, what's the who that matters, and maybe what's the business model that'll work. Proving the value hypothesis to me is the core of the product market fit. Finding the market that cares for your product? You don't start with a market. Look for problems to which you can find a solution because that's right in consensus and that leads to very mundane outcomes and certainly doesn't support venture capital. So the great returns in venture capital have all come from people who have tried to do something that's non consensus. And why do you describe that advertising clouds product market fit? Because the way that you really know that you found it is if you have exponential organic growth, if you have word of mouth, People only recommend things that they love and that's how you know you found it. I've seen many, many entrepreneurs fall in love with the growth that they've gotten from their advertising and not realized that they're not getting word of mouth.