Jess Lee from Sequoia shares insights on how early-stage startups can pinpoint product-market fit

Sequoia’s Framework for Identifying Product-Market Fit

Founders at the early stages of building their startups may have already created a strong solution, identified a gap in the market, or may simply have an inescapable and driving motivation to build their own business. But do they have product-market fit? And what actually is product-market fit, anyway?

The investors at Sequoia, one of the world’s biggest venture capital firms, have come up with a very handy framework to answer those two questions. It distills the landscape into three archetypes.

The first archetype, “Hair on Fire,” roughly means that your startup addresses an urgent problem. The second archetype, “Hard Fact,” translates as a startup that solves an existing problem better than what’s already out there. Lastly, “Future Vision” relates to deep tech, moonshots, and products out of left field.

Each of these archetypes will have its own customer mindset, competitive market status, opportunity/general product goals, challenges, examples of those who got it right and those that did not. Sequoia partner Jess Lee, a specialist in early-stage investing, highlighted this concept at TechCrunch’s Early Stage event in Boston.

Sequoia is confident enough in the structure that it uses the framework in its Arc program to help early-stage founders focus on how they are building. It also helps the firm evaluate potential startup investments. Founders can lean on an archetype to better anticipate and articulate the challenges and opportunities in their space, aiding decision-making internally, fundraising, or pitching partnerships or customers.

In conclusion, founder-market fit plays a critical role in achieving product-market fit. Sequoia’s framework provides a valuable tool for startups to identify their position in the market and focus on developing their business effectively.