Dear Reader,
Welcome to the 62nd edition of the good reads newsletter by Malpani Ventures. Sharing your weekly dose of articles for this weekend’s reading!
WorkOS’ Path to Product-Market Fit — Why Your ‘Bad’ Idea Might Actually Be the Best One
https://review.firstround.com/workos-path-to-product-market-fit
Michael Grinich, founder at WorkOS shares learnings from his journey:
“The best startup ideas seem at first like bad ideas. … if a good idea were obviously good, someone else would already have done it.” - You want to be the only product in the category when you launch, and around six months ahead of the competition. So look for the solution that looks like a bad idea to enough people initially
At WorkOS, one of our operating principles is building a ‘minimum awesome product.’ That doesn't mean that you should just constantly be building forever, but you need to build something that’s beyond just okay — it needs to be excellent and impressive to people.
I consider pricing to be something you need to develop just like you develop the product itself. You iterate on the API design, and the same should be true of pricing.
Your guide to B2B referrals
Best-in-class B2B companies excel in all three: Product LTV, time to product value, and level of product engagement. But you can also be successful with just having two, anything outside these sweet spots are considered B2B referral death valley.
My Top 10 Mistakes Getting to $100m ARR: Jason Cohen, Founder WP Engine
Jason Cohen, founder of $100m+ WP Engine, shares his top 10 mistakes on getting to $100Mn in ARR
What validation can do is _disprove_ an idea, i.e. show you it’s definitely wrong. But when it seems validated, just think: It’s just _not disproved_, so a quick early product is the only way to know for sure.
The right metrics look out no more than a year, and stay scoped to specific domains, answering specific questions. So, “payback period” makes sense (ARPU/CAC, the number of months needed before a customer has “paid back” in revenue the cost of acquiring the customer), because both figures are known today, and won’t change dramatically during that time period. And cohort-retention makes sense, because that’s tracking actually behavior month-over-month, allowing you to detect and react to systematic changes. And segmenting and trending GPM is useful to know which customers are more profitable, or which operational activities would be useful to cost-optimize.
Until next time!