This content was created by Tim Draper. This content was uploaded by Tim Draper. This is a YouTube video titled "Your Business Isn't Proven Before Product Market Fit | Favor & Sunroom CoFounder Ben Doherty" (recorded Jan 21, 2019). The excerpt is from a live talk/Q&A featuring Ben Doherty (co-founder of Favor and Sunroom/Sunrun) answering audience questions about product‑market fit for two‑sided marketplaces. Doherty advises focusing on the money side of the marketplace, subsidizing or becoming the other side early (founders doing deliveries themselves), targeting popular venues without delivery, and using retention/engagement metrics (he cites ~40% of customers feeling they can’t do without the product) to declare product‑market fit. He also notes Sunroom had recently launched and was not yet profitable. An audience member (SPEAKER B) asks follow‑up questions; Adam Draper is mentioned but not a speaker in this excerpt.
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Yeah, yeah, so he asked a question that's near and dear to my heart, which is if you have a marketplace, right, and you find product-market fit for one side and you haven't found product-market fit for the other side, the simple answer to this, and it's the exact same answer that Logan Green, the founder of Lyft, gave me about when I was sitting right here about 6 years ago, which was really key for why Favor even got going, was because— What was the question? Adam Draper recruited Logan to come speak at a time like this. But the simple answer is that you try to pay out the other side of the marketplace. Now if you don't have any money at all, you need to be that other side of the marketplace if you possibly can. So for us, for delivery, we figured out that, man, if we deliver places that don't have delivery drivers, Or let's say there's that one really hot restaurant, that was essentially product market fit for the customer side. Now, I was a pizza delivery driver already, so it was pretty easy for me to design the whole system to be catered towards drivers. But to start, before we had any money and we could actually even pay the drivers to be there, we did all the deliveries ourselves. Wherever the source of the money is, that's the side you really need to find product market fit on, and then you can try to figure out how to do the other side first, or next after that, sorry. Does that make sense? Cool, cool, go ahead.
Is Sunrun profitable yet?
So he asks, is Sunrun profitable yet? The answer to that is no, we're not. We just launched in February.
So similar to product-market fit, more earlier on, how did you prove the concept, the business concept of Sunroom and then the delivery rules?
Yeah, so he's saying prior to product-market fit, how do you prove the business concept? I would argue the business isn't proven until we find product-market fit. And so even for Sunroom, I think we're really close, we're like really close to finding product market fit, but we're not quite there yet. So until we actually find that product market fit, which again, the key definition for that is that 40% of your customers feel like they just can't do without your product. We're not like quite there yet with Sunroom. People still don't understand why we're different than Zillow, for example. Those are things we're chipping away at. For Favor, as soon as we had that big breakthrough, which was like, wow, we literally just need to deliver the most popular places that don't have delivery drivers, that was product market fit for us. And then as far as was it going to actually be a business, well, that was just trying to figure out, could we hire drivers and could we pay them enough to retain them long enough? to essentially pay back whatever the cost was that it cost to acquire them. So I think product market fit is almost, like you said, how do we prove the business concept? Product market fit is you almost have to have. I can't think of any way that you could have a business without finding product market fit. And then once you find product market fit, there's a big question of, oh, can we actually do this profitably? And that's more of like a business model question, not necessarily like the business concept.
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