What do you think about Andy Rachlef's (Wealthfront founder's) opinion on how great companies are started and product-market fit etc as mentioned in the quotes below:<p>https://www.podbean.com/media/share/dir-zamep-fe5d981
All the Hacks, 2021-09-08
Becoming a Better Investor with Andy Rachleff
10:24<p>“Contrary to what most people think, great companies are not started as a result of
an entrepreneur saying: ‘I want to start a company, so I’m going go find the best opportunity I can and then do that.’ And typically it’s described as, the process is described as someone who looks for a market that has a problem and then you develop a solution for the problem, and that’s how you get started. Those kinds of businesses lead to very mundane and small outcomes. The really great successes in venture capital are the result of an entrepreneur recognizing an inflection point in technology that allows them to build a new kind of product, and then they try to find a market for that product. So it’s an exact opposite of what you think it is.”<p>https://www.podbean.com/media/share/dir-fgpey-10e08659
Bank On It 2021-11-02, Episode 457 Andy Rachleff from Wealthfront
30:52<p>“If you set out to solve a particular problem, you seldom create a really big win. The way that I describe it in my product-market fit class is, when you read about entrepreneurship, almost every article describes the process as looking at a market, trying to find a problem and then developing a solution to the problem. That leads to very mundane outcomes, very small companies, because of the incrementalism that is required and that anybody could do that. The truly great companies are the result of someone recognizing an inflection point in technology that allows them to build a new kind of product and then they try to find a market for that product. It’s the exact opposite of what everybody thinks. Now the reason everyone thinks that’s the proper process is that consumers want to believe that whoever they buy from always intended to serve them. So every successful company revises their history to make it sound like they started with the market to come up with the solution. Nothing could be further from the truth.”
This might be true but what’s the actual <i>likelihood</i> the latter is more successful? Sure it’s nice that the majority of 10B companies are created with the latter method, but if that’s just 0.1% of all attempts, I rather seek to solve a problem if the probability is 20% but with a lower $ outcome<p>And I know the article is talking about success to a VC. Ok that’s fine I guess… but what am I gonna do with that statistic? Almost useless to me because I’m not a VC and neither are the vast majority of people!
FB and Google replaced the “inflection times products” yahoo and myspace. so idk. they just built a better product without an inflection point. they weren’t the first but the last.<p>overall, the only businesses that worked out for me out of 20 failed ones, were something that i myself wanted, had deep knowledge of and knew for sure other people wanted, was hard to get and that ppl were prepared to pay a lot for.<p>(Plastic surgery and Fame)<p>so I would say I was in the market, I knew the market, I was a customer, and then I created a product.<p>Apple with the Apple I and the iPhone on the other hand was an inflection point product.<p>OpenAI as well.<p>It’s crazy to say that all big successful companies are inflection type products. They’re the minority and it’s crazy unlikely to work out.
> you seldom create a really big win.<p>A win for who? Every person I know who built a small company to solve a small problem did quite well and were quite happy. No VCs won there, but that is fine. They didn't become famous. They did become rich and have a lot of personal freedom.<p>If that is not your definition of success, then sure, look for more. But I think most people would be fine with a small success.
My summary of what he said is: if you want a chance to make huge money quickly, make huge bets. If you want to build a solid, profitable business and minimize risk of failure, make smaller bets.<p>It's two different ways of doing business. He's describing the VC path and disparaging the non-VC path. But they're both legitimate paths. Which is best for you depends on what your goals are.
I think there’s another category of startups - whose founders are almost offended by the current way something is done. They have deep domain knowledge and an idea for how to fix the current “broken” situation. That’s much more likely a source of successful startups than having to also wait for a technology inflection point.