I was on the Paris subway, returning from one of the first sessions of the Founder Institute there. Sitting next to me was one of the founders. Something was bothering him.
He finally asked: “why do you put so much emphasis on market size? The team, and surely other aspects must be equally important to a startup success.”
He was right: we are putting a lot of emphasis on the market size. It dawned on me that we hadn’t clearly explained why. Maybe because we took it for granted. So I said it: “VCs can fix your team by injecting more money, but they can’t fix your market”.
“Oh, of course!”. That was all the explanation he needed. When you are a bootstrapped entrepreneur, you think of money as something real hard to get, a very expensive commodity. And you lose sight of the fact that on the other side of the table, VCs see money as the cheap commodity, and good startups as the rare one.
If your technology is not quite as good as you thought, your VCs will put more money on the table and hire a bunch of Ph.Ds to make it work. But if your market turns out to be non-existent, there is nothing the VCs can do to fix it. That’s why despite all the claims about backing teams first, it’s so important to target a huge market.
Ideally, VCs want to back great teams targeting great markets. But given the choice, they’ll settle for a somewhat weaker team.
Not a smaller market.
