High-Impact Entrepreneurship

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Endeavor Investor Network Convenes Over 120 Entrepreneurs and Investors in NYC

On May 5th, the Endeavor Investor Network convened growth market leaders in New York City for a day of networking and learning. The invitation-only event gathered over 120 participants including Endeavor Entrepreneurs and leading investors […]

May 13th, 2015 — by admin

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Harvard Business Review Highlights the Power of Scale-Ups and The Global Scale Up Declaration

The Harvard Business Review recently featured an article co-authored by Endeavor President Fernando Fabre and Babson College professor Dan Isenberg that puts the spotlight on impact of scale-up organizations and the entrepreneurs behind them. The article takes […]

September 30th, 2014 — by admin

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Endeavor launches a new country affiliate in Greece focused on High-Impact Entrepreneurship

The press release below can also be found on BusinessWire.

Athens, September 12, 2012 – In the midst of continuing economic turmoil in Greece, Endeavor announced today that it launches a new affiliate office in Athens, bringing its high-impact entrepreneurship model to Europe for the first time.

“I have always believed that some of the best entrepreneurs emerge in times of chaos,” said Endeavor co-founder and CEO Linda Rottenberg. “Greece is an extremely resource- and culture-rich country. There are huge opportunities for entrepreneurs, both in traditional industries like food and agriculture and in emerging sectors like biotech. We look forward to working with Greece’s High-Impact Entrepreneurs.”

Founded in 1997, Endeavor selects and supports high-impact entrepreneurs who have the potential to scale from promising SMEs into companies that create hundreds, if not thousands, of jobs and generate significant revenues. In the past 15 years Endeavor has selected 708 high-impact entrepreneurs from 12 countries around the world in Latin America, Africa, the Middle East, Turkey, and Southeast Asia. In 2011, these entrepreneurs generated US $5.0BN in revenue and had created 200,000 jobs.

All Endeavor affiliates are spearheaded by a local Board of leading business persons, each of whom believes that high-impact entrepreneurship can transform economies. With unemployment in Greece at a staggering 23%, the new Board Members of Endeavor Greece firmly believe that despite the country’s current economic challenges, Endeavor will help create opportunities and spur entrepreneurial activity.

The Endeavor Greece Board will be chaired by Michael D. Chandris, Chairman, Chandris Group; and vice-chaired by Mareva Grabowski, Head of Emerging Markets, Dara Capital, who is also the founder of the Greek affiliate. They will be joined on the Board by Marily Frangista, Managing Director, Franco Compania Naviera; Thodoris Kyriakou, Group CEO, Antenna Group; Johanna Papadopoulou, President & Managing Director, E.J. Papadopoulos S.A.; Dimitrios Papalexopoulos, Managing Director, Titan S.A.; Yiannis Stassinopoulos, Viochalco S.A.; Spyros Theodoropoulos, Managing Director, Chipita S.A.; Takis Theoharakis, Deputy CEO & Vice President, Nissan N.I. Theoharakis S.A.; and Melina Travlou, Managing Director, Neptune Lines Shipping & Managing Enterprises S.A.

“Endeavor comes to Greece at a pivotal moment,” said Board Chair Michael Chandris. “The crisis has unleashed a new wave of entrepreneurship. Thousands of young people are no longer content with accepting a civil service job but are keen to develop their entrepreneurial ideas. Endeavor can become a catalyst to this process and thus have a substantial impact on a society in transition.”

Chandris and the board have recruited former McKinsey & Co Manager Haris Makryniotis to serve as the first Managing Director, overseeing day-to-day operations for Endeavor Greece. Makryniotis intends to introduce the first Endeavor Greece Entrepreneur candidates- the founders of digital “city insider” platform Daily Secret- to an International Selection Panel in Istanbul, Turkey, in early October.

About Endeavor

Endeavor breaks down barriers that prevent emerging-market entrepreneurs from reaching their high-impact potential. Hailed by NYT columnist Thomas Friedman as the “mentor capitalist” model and “the best anti-poverty program of all,” Endeavor identifies entrepreneurs leading high-growth innovative companies in emerging markets. These entrepreneurs are given world-class strategic advice, access to key networks and other tools that will catapult them to success. With Endeavor’s guidance they become “high-impact” – expanding employment, generating wealth and inspiring others to innovate. Often overlooked, these local entrepreneurs are now jumpstarting private sector development in their countries.

At year-end 2011, Endeavor Entrepreneurs throughout Latin America, South Africa, Turkey, Egypt and Jordan had created more than 200,000 jobs and generated over $5.0 billion in revenues. For more information, visit http://www.endeavor.org

Further Information:

For more information on Endeavor Greece, please contact Anna Zilakou, anna.zilakou@endeavor.org (tel: 0030-697-887-0661).

For further details on Endeavor Global and Endeavor’s entire portfolio of High-Impact Entrepreneurs please contact David Wachtel, david.wachtel@endeavor.org. (tel: 1-646-783-6139)

Endeavor Entrepreneur’s women-only gym rewrites Turkey’s fitness industry

Reprinted from BusinessTrade.org. Original article here

by Louis Nel

Credited for opening the first chain of women-only gyms in Turkey, Bedriye Hülya, founder of B-fit, has made exercise fun and rewarding, while empowering women at the same time.

Prior to founding the B-fit franchise in 2006, Hülya studied psychology in New York. She joined a fitness programme that prescribed a finite exercise time with a variety of exercises incorporated into the time frame, helping maintain focused attention. She realized that if she could redesign and incorporate the best qualities of the programme into a packaged fitness service, it would also serve the fitness needs of the women in her home country. After studying the dynamics of circuit training, she became convinced that her business idea had potential. She dedicated time to researching machines and equipment, talking to manufacturers and tweaking her business’ fitness and workout programmes. She spent two years going back and forth between the US and Turkey, finally hitting on a ‘formula’ she liked and opening her first gym in İzmir, Turkey.

Hülya’s gym proved very successful and within a year B-fit grew to three separate gyms. From there, the gyms grew almost exponentially, from 10 gyms in 2007 to 15 in 2008, 30 in 2009 and 52 in 2010 throughout the country. In an interview with Today’s Zaman, a Turkish print and web newspaper, she explained the franchise’s popularity.

“(…) This system works in great harmony with our traditions and ways. These B-fit sports gyms accept only women as members. From the founder to the sports instructors, everyone involved is a woman. (…) Then, in this system, women only do 30 minutes of exercise at a time. The most important element at work is that B-fit is quite cheap and therefore works for every budget,” she said.

Hülya points out that while everyone knows they need to exercise, not many people actually exercise. Her franchise fitness services taps into the needs of middle-class and lower-middle-class women, offering them a place where “where women of every age and type can come and be among only women.” This image has done a lot towards breaking down the negative perception of gym clubs in Turkey as exclusive playgrounds for the rich.

In addition, Hülya is also regarded as a social entrepreneur and advocate of positive discrimination. Franchise ownership is open exclusively for women and is seen as a great opportunity for women to start their own business. Aspiring owners are selected for qualities like ambitiousness, friendliness and the need for success, fulfilment or achievement. The costs of machines, brand rights and furniture are all included in the initial US $ 33,200 startup fee, and with clear finance plans available and payment terms spread over five years, business set-up is as transparent and easy as possible.

In addition to pure fitness, the franchise also requires franchisees to run their gym as a social club for women; offering a seminar once a month about healthy eating and nutrition, and organizing member activities, like eat-out dinners, movies and the theatre.

Chosen as one of Turkey’s best entrepreneurs by Endeavor Global in 2009, Hülya was recognised as a valuable high-impact entrepreneur with massive growth potential. Hülya has even set her eyes on increasing the brand’s presence abroad, especially in Central Asian and Middle East countries where women are sometimes less empowered. A positive agent for change, Bedriye Hülya is changing the world one kilojoule at a time.

Video interview with Endeavor Entrepreneur Sohaib Thiab of Wizards Productions [Wamda TV]

Reprinted from Wamda’s Entrepreneur of the Week feature, where this week Endeavor Entrepreneur Sohaib Thiab was spotlighted. Original article can be found here.

by Nina Curley

This week’s entrepreneur of the week, Sohaib Thiab, founded game development Wizards Productions along with Hussam Hammo and Afif Toukan in Amman, Jordan in 2009. After launching a few successful massive multiplayer online games, Wizards Productions has now pivoted into the mobile space, recently launching a new game, Aqua Jam, in partnership with publishing platform 6waves.

Here Sohaib discusses a new partnership with publishing platform Tapjoy on upcoming game Experiment Zero, what sets a Wizards game apart, and how the Jordanian company is undergoing remote training with YetiZen, a San Francisco-based accelerator that focuses exclusively on gaming.

“Make sure that you listen to your stakeholders and users,” he advises. “It’s fine to change your idea if you’re convinced that it’s the right move.”

“You’re hired”: Why we need High-Impact Entrepreneurs to fight poverty

CLICK HERE to read the full Endeavor Insight report, “Poverty Reduction Through Job Creation & GDP Growth: Understanding the Potential of High-Impact Entrepreneurship.”

Every day, more than 3.1 billion people survive on less than $2.50.  What seems impossible to imagine is in practice a numbers game: for instance, taking a gamble on whether it is more costly in the long term to continue working with a broken leg or to risk losing eight months of productivity and two-thirds of the household’s annual income when ignoring that leg causes complications and requires an operation. If there is only enough money to send one of eight children to school, parents have to guess which one is the smartest.

This is a population that needs jobs – a lot of jobs – which makes High-Impact Entrepreneurship an essential policy catalyst for emerging markets. Stable jobs remove an element of fear from the daily life of the world’s most impoverished, offering the security of a steady salary, the ability to accumulate assets over time, and a greater capacity to mitigate the impacts of unexpected life events. Numerous studies highlight the ability of high-impact entrepreneurship to create high-quality jobs compared with other policy approaches, such as microfinance or interventions at the macroeconomic level.

High-Impact Entrepreneurship is remarkably efficient way to create high-quality jobs. A five-year study by the Global Entrepreneurship Monitor showed that while high-growth entrepreneurs represented only 4% of all entrepreneurs in the dataset, they generated an astonishing 38% of all entrepreneur-created jobs. Unsurprisingly, metrics for comparative job creation suggest that, on average, supporting the expansion of a high-growth small or medium enterprise creates up to 100 times the number of new jobs as a microenterprise.

And the jobs themselves fight poverty.  Surveys also demonstrate that these jobs pay about twice as much as comparable positions, offer healthcare benefits 91% of the time, and enable over a third of employees to provide better educational opportunities for their children.

High-Impact Entrepreneurship works to close the gap between microcredit programs and macro-level government finance projects to efficiently generate high-quality employment. While it is not the only solution needed to eradicate poverty, it is an important part of the full solution. 

To learn more on this topic please read the full report linking High-Impact Entrepreneurship to poverty reduction here

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Innovation Rising: A snapshot of entrepreneurship in Latin America (with highlights about Endeavor Colombia)

Reprinted from Diplomatic Courier: A Global Affairs Magazine. Original article here.

By Oscar Montealegre

El Boom, as Latin Americans coin their sensational economic renaissance of the last decade or so, has been triggered by mainly commodities exports such as oil and copper to Europe, the U.S., and of course, commodity-hungry China. However, the region cannot wholly depend on their raw materials to sustain a vibrant economy for the long-term; Latin American leaders and politicians need to be cognizant that alternative courses of action need to be implemented to remain viable and diverse in the global economy. Enter entrepreneurship.

Entrepreneurship and the successful creation of enterprises is the catalyst of spreading wealth, upward social mobility, job creation, technological innovation, and improvement of living standards. There is one caveat that is attached with pursuing an entrepreneurial endeavor: the willingness to take risks. Therein lies one of many Latin American obstacles when implementing an entrepreneurial environment. Risk taking in Latin America is shunned; Latin Americans opt to seek safer routes in their careers, either in large corporations or government work, instead of taking calculated risks in the market.

Colombia’s former finance secretary, Rudolph Hommes, pinpointed the situation as such: “[Latin American countries] lack the entrepreneurial spirit that is the lifeblood of the American economy…citizens often value a steady job above the risks and rewards of owning a business.” The sentiment characterized by Mr. Rudolph Hommes is correct, but, albeit sluggishly, the Latin American psyche is changing for the better.

Entrepreneurship in Latin America is being embraced with an unprecedented fervor, from technological clusters in Brazil, to venture capitalists in Colombia, and top-down start-up programs in Chile.

In Recife, Brazil, Porto Digital harnesses the entrepreneurship drive through a technological and innovation cluster. The novelty behind Porto Digital is that it acts as a technological urban park, home to 200 businesses in the fields of gaming, cinema, video, multimedia, animation, music, and design. In 2010, Porto Digital businesses generated approximately $500 million in revenues, impressively bringing 70 percent from contracts outside of Recife. As businesses transcend borders in the digital age, market share in the global economic pie grows.

ICare Games, a development company based out of Porto Digital, specializes in games that promote social responsibility. One of their games revolves around safe driving and managing one’s behavior during stressful auto traffic. It is a niche-tailored business, but with social responsibility always being a headline in many sectors, ICare Games can market their services to schools, corporations, government agencies, and non-profits. Also ICare Games’ target market is threefold—Spanish, English, and Portuguese speaker countries, giving ICare a comparative advantage. ICare’s Sales Manager, Edmilson Rodrigues, said that there are many companies in Brazil that share the same drive, “The entrepreneurial environment here [Porto Digital] is boiling with new entrepreneurs and ideas.”

The same is happening in Colombia—one can sense the entrepreneurial buzz that is being enthused. Colombia is fertile ground for entrepreneurs due to a loosening of credit, rising consumer confidence, and most importantly, an instinct to survive under horrendous circumstances, i.e., the drug war, narco-guerilla insurrection, and paramilitary violence from the past decades. In Colombia, entrepreneurship is being stimulated by both top-down and bottom-up strategies. A bottom-up example is Endeavor Global, which has so far helped Colombian entrepreneurs create more than 6,000 jobs.

Endeavor Global’s raison d’être is to support high-impact entrepreneurs in emerging markets, such as Uruguay, Egypt, Indonesia, and South Africa. “High-impact entrepreneurs” see opportunities in these markets that have the potential to translate into large growth and long-term sustainability. In Colombia, Endeavor’s multi-tiered focus is to support entrepreneurs in breaking down barriers, thinking big, and demonstrating that Colombia’s high impact entrepreneurs are world class. Currently, Endeavor is in collaboration with twenty-seven entrepreneurs in further developing 18 business ventures.

Now herein lies the interesting fact about entrepreneurship about in Latin America; subtly, entrepreneurship has always been widely practiced. According to a study conducted by Cristian Larroulet and Juan Pablo Couyoumdjian, Latin America has the second-highest rates of entrepreneurship in the world. From 2000 to 2007, 18 percent of Latin Americans were involved in some type of entrepreneurial venture. A paradox indeed; but as the study further states, the difference between entrepreneurship in Latin America versus the U.S. or Europe is that a considerable size of Latin American entrepreneurship is based on necessity rather than opportunity. Entrepreneurship based on necessity tends not to go far, as it is pursued primarily because of the lack of opportunities—making the best of a bad situation.

Obviously, entrepreneurship moved by opportunity is the ideal situation. However, a multitude of challenges in Latin America exist that prevent entrepreneurship from reaching total optimization—the cost of failure (cultural), lack of role models or mentors, the lack of contracts and enforcement (rule of law), limited management experience (educational opportunities), limited access to financing (economic), and lack of trust. Fragile property rights, excessive regulation, high taxes—the list of challenges that impede entrepreneurial development goes on and on. On the bright side, Latin America is no longer dealing with entrepreneurship killers, such as monetary instability and shortages of the most basic items, an achievement that cannot be understated.

The political and regulatory climate in Latin America does not do any favors for new enterprises. No Latin American country is in the top 30 of the World Bank Group’s ranking of countries where it is easy to do business. Chile is the highest ranked Latin American nation (39), followed by Peru (41) and Colombia (42). It is no coincidence that these three countries are also aggressively pursuing open trade and growth, typified by the integration of all three respective stock markets (MILA), while Mercosur (Brazil, Uruguay, Argentina, Paraguay) are occupied in allowing Venezuela join their economic and political trade group. The logic behind Venezuela’s inclusion is uncertain, but it appears the trade bloc has become more political than economical.

According to a 2010 Gallup Poll, Latin Americans are the most likely to see government as a liability rather than as an asset when starting a business. Also, when asked if they can trust the government to allow their business to make a lot of money, 34 percent of Latin American respondents said yes, while 50 percent said no, once again the highest mark in a poll of the world’s regions. Of course we should not be too surprised about the results of this poll; the bureaucracy and red tape in Brazil is touted as a nightmarish labyrinth and Argentina’s President Fernandez de Kirchner is doing everything in her power to stifle entrepreneurship.

Entrepreneurs in Latin America, compared to their peers in the U.S., have limited access to capital. In most cases, Latin American entrepreneurs, faced with a scarcity of bank loans, lines of credit, venture capitalists, and private investors, begin to search for capital and outside investors through family and friends. According to the South American Business Forum, 80 percent of entrepreneurs surveyed use personal or family savings as a source of initial funding; less than 40 percemt had access to banks for startup loans; and less than 5 percent relied on venture capital or private investors.

The notion of good debt versus bad debt is not a fully mature idea in Latin America. Being liable for a debt obligation combined with the possibility of a failed business endeavor can be too daunting for many. However, there are some bright spots. From 2009 to 2010, funding for private equity and venture capital in Latin America more than doubled, reaching $8.1 billion. According to the Latin American Venture Capital Association, technology deals funded in the first half of 2011 increased by 133 percent compared to the previous year. Gradually, access to much needed capital is improving for Latin American entrepreneurs, reflecting a stable macro-business environment.

Compared to other regions, Latin America possesses concrete promise in achieving further economic growth. Collectively, the economies of Latin America boast a GDP of $5 trillion—impressive, but it pales beside the U.S.’ GDP of approximately $15 billion. This comparison can give Latin Americans incentive to achieve more progress, but politics and business must be in relative unison.

Luis Alberto Moreno, President of the Inter-American Development Bank, wrote in his book, The Latin American Decade, “The new generation of businessmen [in Latin America] is not only more educated and less dependent on the state, but also more connected to the world…” Latin America faces an incredible opportunity to diversify economies and avoid the web of the Dutch Disease. It can be accomplished in many ways, but one variable cannot be omitted—the spirit of the entrepreneur.

Endeavor September 2012 newsletter

To view Endeavor’s September newsletter, a recap of all the top news stories from the previous month, please CLICK HERE.

Reminder: To receive our monthly newsletters by email, please enter your email address in the sign-up box at the bottom of our homepage.

On personal networking: ask for and be specific

Reprinted from NextView Ventures. Original article here.

By David Beisel, a cofounder and Partner at NextView Ventures

Personal networking is a key business skill.  And as a VC, I get plenty of practice doing it.  As one of my former high school coaches used to put it, “Practice doesn’t make perfect.  Practice makes better.”  While I guess you could develop a “strategy” to networking successfully (… with many a book written about the subject), I think becoming especially productive at networking is largely tactical.  Along the way, I’ve stumbled across two tactics which I think are valuable.

First is leveraging the pretty obvious concept of giving-to-get, but being specific about it.  In any two-way relationship which builds based on the trust that the exchange between the parties will be equal over time, someone needs to give first.  With any potentially valuable relationship, it’s just best to do something for the other person first and not worry about reciprocity initially.

As a tactical matter, I try to end each networking conversation with “How can I specifically help you?”  Rather than just getting to know someone with the hope that you may be helpful in some way in the future, directly asking the other person how clarifies and sets expectations immediately so that a meaningful relationship can develop sooner rather than later.

The second tactic is just the reciprocal of above.  When networking to ask for help, I’ve found that after a rapport is established, it’s best to be as specific as possible about what you’re looking for.  Even though it narrows the scope of possibilities, an extra level of specificity jogs the thinking for things that are current, as well as plants the seed for recognition recall in the future.

For the job seeker, instead of saying “I’m looking for new job opportunities,” rather communicate “I am looking for a VP Product role at a consumer-mobile startup.”

In seeking new customers, instead of saying “I’m looking for people to buy my product which does XYZ,” rather communicate “My product which does XYZ most resonates most with individuals in ABC roles at companies with DEF profiles that face GHI problems.”

For VCs (including myself), instead of saying “I’m looking for innovative early-stage startup investment opportunities,” rather these days I am saying “I’m proactively seeking seed-stage investments in both ad tech and those which leverage the trend towards ubiquitous computing through device proliferation.”

Which is better: many customers at low price-point or few at high price?

I photoshopped this yayReprinted from A Smart Bear. See original article here.

By Jason Cohen, founder of WP Engine & Smart Bear Software.

The results of a serendipitous live experiment were recently published as guest posts on this blog. Sacha demonstrated the benefits of selling many copies of an eBook at a low price, while Jarrod pointed out the advantages of higher prices, bringing in more revenue with 1/6th the number of units sold.

The ensuing discussion swirled around the merits of selling more units (i.e. maximizing reach) versus selling more expensive units (i.e. maximizing per-unit profitability). This is a choice that every startup founder must make, so I’d like to dig in deeper.


How to create an enchanting business plan, by Guy Kawasaki

GuyK WordReprinted from Guy Kawasaki’s Blog, How To Change the World. Original article here.

By Guy Kawasaki

Here is the second post in my series about planning, pitching, and launching a new business venture. In partnership with Microsoft and Office Web Apps, I’ve created a Word document that outlines a good business plan. It’s saved to my SkyDrive folder here. Feel free to download it and use it as inspiration. And if you’re working with a partner, you can use the free Word Web App to stay in sync.

I provided the PowerPoint document before the Word document because a good business plan is an elaboration of a good pitch as opposed to a good pitch being a distillation of good business plan. You should give your pitch a few times to see what works. Change the pitch to make it better and then write your plan.

Think of your pitch as an outline, and a business plan as the full text. (How many people write the full text and then write the outline?) The more you pitch, the better your outline and the better your outline, the better the plan. After you perfect your pitch, then start writing the business plan. At a high level, here are some tips for writing an enchanting business plan:

1. Write for all the right reasons. Most people write business plans to attract investors, but most venture capitalists have made a “gut level” go/no go decision during the PowerPoint pitch. Receiving (and possibly reading) the business plan is mostly a mechanical step in due diligence. The more important reason to write a business plan, whether you are raising money or not, is to force the management team to solidify its objectives (what), strategies (how), and tactics (when, where, who). Even if you have all the capital in the world, you should still write a business plan. Indeed, this may be especially true because too much money usually causes sloppy and lazy thinking.

2. Make it a solo effort. While creation of the business plan should be a group effort involving all the principal players in the company, the actual writing of the business plan–literally sitting down at a computer and pounding out the document–should be a solo effort. Ideally the CEO should do it because she will be pitching, defending, and implementing it.

3. Put in the right stuff. Here’s what a business plan should address: Executive Summary (Overview), Problem/Opportunity, Unfair Advantages, Sales and Marketing, Competition, Business Model, Forecast, Team, and Status and Milestones. In other words, this is the same list of topics as a PowerPoint pitch. If you were extremely articulate, you could theoretically transcribe your pitch, and you’d have your business plan.

4. Focus on the executive summary. True or false: The most important part of a business plan is the section about the team? The answer is False. The executive summary, all one page of it, is the most important part of a business plan. If it isn’t fantastic, eyeball-sucking, and pulse-altering, people won’t read beyond it. You should spend eighty percent of your effort on writing a great executive summary and twenty percent on the rest of the plan.

5. Keep it clean. The ideal length of a business plan is twenty pages or less, and this includes the appendix. Many people believe that the purpose of a business plan, like a PowerPoint pitch, is to create such shock and awe that investors are begging for wiring instructions. They are wrong. The purpose of a business plan is continued due diligence with activities such as checking personal and customer references. The tighter the thinking, the shorter the plan; the shorter the plan, the faster it will get read.

6. Write deliberate, act emergent. I borrowed this from my buddy Clayton Christensen. When you write your plan, act as if you know exactly what you’re going to do—in other words, act deliberate. You’re probably wrong but take your best shot. However, writing deliberate doesn’t mean adhering to the plan in the face of new information and new opportunities. As you execute the plan, you act emergent—that is, you are flexible and fast moving and change things as you learn more about the market. The plan should not take on a life of its own.

Again, here is my template for an enchanting business plan. You’ll see that the template is very similar to the tips in the PowerPoint document because, again, your business plan should be a derivative of your PowerPoint pitch. I appended tips for each section in the Word document, so that you can write an enchanting one.

Founder/market fit, by Chris Dixon

Reprinted from Chris Dixon. Original post here.

An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen calls “product/market fit”, which he defines as “being in a good market with a product that can satisfy that market”. Andreessen argues persuasively that product/market fit is “the only thing that matters for a new startup” and that ”the life of any startup can be divided into two parts: before product/market fit and after product/market fit.”

But it takes time to reach product/market fit. Founders have to choose a market long before they have any idea whether they will reach product/market fit. In my opinion, the best predictor of whether a startup will achieve product/market fit is whether there is what David Lee calls “founder/market fit”. Founder/market fit means the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.”

A few points about founder/market fit:

Founder/market fit can be developed through experience: No one is born with knowledge of the education market, online advertising, or clean energy technologies. You can learn about these markets by building test projects, working at relevant companies, or simply doing extensive research. I have a friend who decided to work in the magazine industry. He discovered some massive inefficiencies and built a very successful technology company that addressed them. My Founder Collective partners Eric Paley and Micah Rosenbloom spent many months/years becoming experts in the dental industry in order to create a breakthrough dental technology company.

Founder/market fit is frequently overestimated: One way to have a deep understanding of your market is to develop product ideas that solve problems you personally have. This is why Paul Graham says that “the best way to come up with startup ideas is to ask yourself the question: what do you wish someone would make for you?”  This is generally an excellent heuristic, but can also lead you astray. It is easy to think that because you like food you can create a better restaurant. It is an entirely different matter to rent and build a space, market your restaurant, manage inventory, inspire your staff, and do all the other difficult things it takes to create a successful restaurant. Similarly, just because you can imagine a website you’d like to use, doesn’t mean you have founder/market fit with the consumer internet market.

Founders need to be brutally honest with themselves. Good entrepreneurs are willing to make long lists of things at which they are have no ability. I have never built a sales team. I don’t manage people well. I have no particular knowledge of what college students today want to do on the internet. I could go on and on about my deficiencies. But hopefully being aware of these things helps me focus on areas where I can make a real contribution and also allows me to recruit people that complement those deficiencies.

Most importantly, founders should realize that a startup is an endeavor that generally lasts many years. You should fit your market not only because you understand it, but because you love it — and will continue to love it as your product and market change over time.

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