WhoBuilt

A Conversation

Oct 18, 2018· 53 min· 23K views·Watch on YouTube

Speaker

Elad Gil, startup founder and investor, discusses product-market fit, company building, fundraising, and investing with Y Combinator’s host at Startup School.

From startup operator to investor

After moving to Silicon Valley during the dot-com crash, Gil got his start by offering to work for free at a software startup. At Google, he helped start mobile efforts and build early teams; later, Mixer Labs was acquired by Twitter, where he helped scale the company from about 90 to 1,500 people. He then co-founded Color Genomics.

Finding product-market fit

Gil says the early priority is building something customers want. Signs of fit include strong retention even when a product is unreliable, major companies adopting and paying for a SaaS product, and unusually strong customer feedback. He also points to sustained organic growth, such as 20% monthly growth from a small user base.

Build quickly and make hard team decisions

Mixer Labs changed from a consumer location-content product to infrastructure for geolocation applications. Gil advises founders to build early, learn from customer reactions, and avoid staying in stealth for years. He also recommends acting promptly when a hire is a poor fit and making the development setup easy enough that new teammates can run the product quickly.

Choose markets and pivot from first principles

Gil says it can be difficult to distinguish a temporary setback from a lasting lack of traction, but founders should periodically assess whether to continue. When considering a pivot, they should ask whether the market is attractive and the product is wrong, or whether the market itself is weak. He argues that market conditions often outweigh team quality and cautions against plans that depend on several unlikely steps.

Fundraise thoughtfully and learn from customers

Gil describes Mixer Labs’ fundraising as taking two to three months and advises founders to check investor references, including from companies that struggled or shut down. For investor meetings, he recommends getting quickly to the product, market, team, and a demo. He also suggests monthly investor updates that lead with specific requests and include metrics and remaining cash.

Takeaways

  • Look for retention, organic growth, paying customers, and strong feedback as evidence of product-market fit.
  • Build early and make it easy for customers and teammates to give you useful feedback.
  • Reassess the market and product separately before deciding to pivot or continue.
  • Check investor references from companies with varied outcomes before taking capital.
  • Keep investor updates monthly, lead with requests, and include runway.

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