Towards the end of last year, Stairway, the company that I'd been building for the past 3 years, was acquired. Acquisitions can go either way; either they're the exit that a founder has been working towards for years, or they're the best case for a disappointing outcome; this was the latter.
Stairway was the first company that I've founded, and the first proper job I've had. I thought it would be helpful, for future me but hopefully others as well, to summarise some of the key learnings that I take with me as I end this chapter and begin the next.
The product-market fit mirage
It is tempting as a founder to believe you've hit product-market fit, when you haven't. When you begin working on the company, it is the only thing that matters, and so it's easy to view any positive signals as indications of product-market fit.
In the first few months after launching, we saw many people signing up, all organic. We received universally positive reviews, including an average of 4.8 stars on the App Store. According to the widely accepted product-market fit survey, we'd hit it, with >40% saying they'd be very disappointed if the product no longer existed.
But we hadn't reached it. All of the above are vanity metrics which we took as signals of product-market fit.
We started to act as a post product-market fit company, when we weren't one. We raised money, we hired a team and began building out the product on new platforms, and with it increasing the complexity of product development. We started to celebrate feature releases rather than meaningful progress.
Suddenly I went from coding and building product full-time, to spending a lot of time managing the team, all while facing the fresh challenges of remote working and national lockdowns.
There's a second, less spoken about side effect of thinking you've reached product-market fit when you haven't. You start to move beyond testing your initial hypothesis, and begin building on top of it. If your initial hypothesis is actually not true, you're just compounding the problems you're seeing within the product. This makes you more prone to confirmation bias and the sunk cost fallacy in the future.
Reacting to changes in the market
When the world and your market are changing rapidly, as an early-stage startup it can be hard to tell whether positive or negative changes to your metrics are based on iteration or external factors, as you have no benchmarks. The truth is that, as CEO and founder, it doesn't matter. Your role is to grow the company.
As the spread of COVID-19 began in the UK, schools started to close and exams were universally cancelled. This was an unprecedented change to our market, and we didn't respond to this fast enough; instead hoping that the pandemic would be a short-lived interruption. One of core hypotheses was that students wanted to take charge of their own learning, and this didn't work well with the top-down teacher-driven combination of Zoom calls all day and B2B products assigned for the evening.
I've gone into hyper-learning mode since Stairway was acquired towards the end of 2021. For my next company (whenever that is), I plan to spend much more time in the building phase, working towards product-market fit before hiring or adding complexity to the core proposition. The benefit of being technical is it's possible to build product and test assumptions in real-time, and I'll stay in this phase for longer next time.
I'll write about this more in upcoming posts.