Fundraising is often presented as the most important step in a founder’s journey, but that is putting the cart before the horse.
Until a company builds a growing customer base that is deeply committed to its products, asking investors for money is a largely selfish exercise. However, after a startup achieves product-market fit, savvy investors can compete for a chance to participate.
Achieving product-market fit isn’t a linear process, meaning each company has to find its own way, according to Frederique Dame, an investment partner at GV who previously led product and engineering teams at companies like Uber, Smugmug and Yahoo. In her capacity as a partner, she provides portfolio company founders with a range of services, including recruitment consultancy, marketing and communications and product development.
In a fireside chat on MovieUpdates Early Stage, we discussed her experience validating product ideas, collecting actionable customer data, creating user-centric work cultures, and dealing with some of the unique challenges associated with scaling teams from a few dozen people to several thousand employees.
At Uber, Dame led strategic programs that helped the company grow from 80 employees to 7,000, including moving from spreadsheets to systems that created transparency and accountability. Early-stage employees are used to using ad hoc processes to get their work done while sprinting to grow, so I asked how she approached work from a cultural perspective.
Put your ego aside and listen carefully to customers
Trust me with what you don’t know or what doesn’t work because once we’ve invested, we’re going to have to work on this anyway. Frederique Dame
“I think the first thing you should do is hire people with low ego and low ego yourself,” she said. After the launch of Uber, early customers often experienced price increases because the platform did not hire drivers quickly enough. In response, Dame instructed members of the company’s individual driver and driver teams to focus on a single problem.
“We realized there were multiple products that conflicted… between onboarding drivers, internal systems and [including] directions for the driver in the app,” said Dame. “It’s important to have directions, but if you have high prices every time you get on an Uber or you can’t get an Uber, it’s no use to have Uber.”
After reaching out to drivers, it became clear that they hadn’t listened to customers carefully: In 2011, most drivers were using flip phones with rudimentary web browsing capabilities. To sign up, many visited Internet cafes that were not running the latest versions of Internet Explorer, Firefox, and Chrome.
“They looked at an error page and they failed. Understanding your customers’ user journey and what you’re doing with your product is very important,” said Dame. “Be obsessive and talk to customers as much as possible.”
Test as many ideas as possible (without asking engineering for help)
To achieve product-market fit, teams must iterate quickly and repeatedly to collect customer data, but there is an inexorable tension between the need to test new ideas and the desire to ensure that roadmaps shared with investors are stay in line with actual product pipelines.