Ask HN: When has big $$$ before product-market-fit ever worked out?

[ungerik]

While it's always usefull to be great at fund raising, it seems not always wise to raise big $$$ before achieving product-market-fit. When such a startup fails, it always makes for great headlines and 20/20 hindsight commentary.

What are good examples of where it did work out great? And what can we learn from it?

[rwallace]

The underlying assumption behind the negative attitude here is that everything worth doing, is easy. That for every line of development which will turn out to be worthwhile, it's possible to build a minimum viable product on a shoestring. This is an understandable idea, because it would be great if it were true. It would be very handy indeed if the universe worked this way.

Unfortunately, it doesn't. Sure, it's true enough for websites because the industry spent several decades building infrastructure to the point where a couple of guys in a garage can build a website. It's not true for much anything else. If we want to make the transition to clean energy before we wreck our environment, if we want to do something about the degenerative diseases collectively referred to as old age before we all bankrupt ourselves trying to prolong dying, if we want to get off this planet before we get snake eyes on the cosmic dice, we need to get back into the habit of understanding valuable goals need big investments.

[mentos]

Pixar - https://en.wikipedia.org/wiki/Pixar

"..the Image Computer never sold well.[21] Inadequate sales threatened to put the company out of business as financial losses grew. Jobs invested more and more money in exchange for an increased stake in the company, reducing the proportion of management and employee ownership until eventually, his total investment of $50 million gave him control of the entire company."

I highly recommend reading 'Creativity, Inc. - Ed Catmull' which talks about how Pixar was formed.

[whatshisface]

Steve Jobs is probably the only person in recent human history that you would actually want to have controlling your company instead of you.

[rafiki6]

No. He was a huge jerk. I'd prefer someone who is just as brilliant and less of a jerk. They exist, I've worked with them and they have contributed far more to society than building over priced toys. Let's stop giving credit to this a-hole.

[rafiki6]

I don't know why this got down voted. It seems people don't appreciate honest opinions here. There's more evidence that he was a jerk than there isn't. He didn't need to be a jerk. His company doesn't contribute a net positive to the world. They haven't necessarily made computing more accessible especially since the primarily target a higher end market, and offer a very closed system/ecosystem. I stand by my argument. Steve Jobs was an a-hole and other equally intelligent business leaders who aren't a-holes could have done what he did.

[klohto]

> they have contributed far more to society than building over priced toys

You consider this honest opinion?

[rafiki6]

It is an opinion and it is honest. So yes. If you don't share it about Apple products great.

[sivayetski]

Palantir and Addepar both would have gone bankrupt many times over if not for Peter Thiel and Joe Lonsdale's fundraising ability, which kept the companies solvent long enough to survive and stumble onto an even footing.

[kanishkvashisht]

Segment -> Raised some 100k-ish $ after YC, didn't find PMF till their 3rd iteration on an insanely different idea.

[cm2012]

$100kish is not a lot in context though. Products like magic leap have raised hundreds of millions before PMF.

[pplante]

The YC podcast recently had one of the founders on to tell that story. It was pretty interesting to hear first hand since I had only read a little bit beforehand.

[burtonator]

The push toward PMF has been really great for the industry and really helped avoid wasting a ton of cash.

The only argument AGAINST it rally is when a team has a proven track record and already KNOWS how to find PMF and knows that it has value.

PMF is amazing when you do it right. With http://datastreamer.io we were actually a meme tracking app (similar to hacker news) but what ended up happening is that people basically said "hey, that's cool and all but we really just want to license your blog data crawling platform".

At the time I was thinking that I could just use the licensing sales to continue developing the meme tracking app.

At some point it just dawned on me that we had 10-15 customers and that it was the tail wagging the dog so I dropped the meme tracking app entirely and then focused on the crawling and data licensing component.

For Polar, https://getpolarized.io/, (which is something new I'm working on) I needed it for my own personal use as my document collection was getting out of hand and I need some way to manage annotations. I wanted something close to an IDE where I could keep all my books and web content tagged and in one place.

Initially I was worried that there might not even be a market - even as just an OSS product.

We've been soft launching for about 2 weeks now as an MVP and the results have been really fantastic.

The app is definitely not complete - not by a long shot. There are pretty clear holes in the app. For example, I shipped it without the ability to delete books - which is kind of important.

If your customers are willing to put up with a feature incomplete and a broken app and are interacting with you and requesting new features and suggesting bug fixes - well you might be on to something.

I think the trick is realizing the minimum viable product that you need to ship to measure this and then iterate from there.

If you keep iterating on an MVP that people are actually USING you will eventually hit PMF and then take off.

None of this is new though.. the whole lean startup space talks about this excessively.

[justboxing]

Checked out Polar. Looks really cool!

Serious question: Why is it free? How would you be able to support and maintain the product if you aren't charging for it?

[j45]

I have been looking for something like Polar. Heavy user of Diigo but it doesn't work offline first.

[EGreg]

Any product that took a lot of time and effort to build before it was launched.

Such as Lightbulbs, Cars, Airplanes all famously took an incredible amount of tests and funding before they achieved product market fit :)

Fundraising is more a function of having access to capital by knowing the right people or being inside the right company, than about the product. It’s rare that the product itself is such a new and revolutionary idea that has a simple implemntation — but perhaps that happens occasionally whenever a new platform comes out.

[camara]

Successful innovation by growing or established companies are examples of this — one of the superpowers of scale is being able to devote large amounts of capital to essentially new ventures without having to return to the capital markets incrementally and therefore pursue growth incrementally. Eg Apple. I would say this is the main advantage of scale.

[CM30]

Ones where the team pivoted early on? I think that's how Reddit got started; they got funded based on the team with a completely different idea, then moved over to their current one and made it a huge success. Quite a startup accelerators fund teams rather than ideas, including the one that runs Hacker News.

[codingdave]

Is Reddit profitable now?

[noodle]

Depends on your definition of "big $$$" probably.

I don't have many specific examples, but the cases where it would work tend to be focused around investing in people with track records doing capital intensive things.

[aaron_altamura]

Most successful AI ventures.

[cp9]

Slack

[rajacombinator]

Jet immediately comes to mind. Many other examples too.

[jv22222]

If Magic Leap works out it would be an example. Of course, we'll need to wait a few years to find out!

[dplgk]

Vine

[collinglass]

Paypal, Flickr, Slack