I wrote a thread recently on Product Market fit vs Business Market fit. Turning it into a blogpost (with some minor edits)

/threadstarts

Software is eating the world like pmarca predicted long back. What we missed is: not all businesses enabled by tech are tech businesses

Example. If you are a delivery company:

  • You can improve discovery/curation of products using tech
  • You can run A/B tests on checkout experience
  • You can redesign the homepage multiple times But those are the easiest bits

The harder part is making sure you get the cost of delivery down to a point where the business start making sense

As the joke goes: If you start selling 100 Rs notes outside Dadar station for 90 as a MVP probably it would be a smashing success

But does not mean it is a viable business

Here lies the essential the difference between P/M fit and Business Market fit. Take Dunzo for example.

Grocery delivery to your place from the nearby store in 30 mins? Fuck yeah

What if I charge 70 bucks bc that is what the delivery costs? Nope

Hence Dunzo is a good product. It serves a user’s need to get stuff delivered to them, be it groceries, food or a parcel. Is it a good business? Not so much

The real business is built by having revenue more than COSG for starters and having a gross profit

And as you scale getting the other costs: marketing, engineering etc under control so that you can turn a net profit

That is it

No matter how many rounds you raise, no matter how many devs you hire, if your business fundamentals are not strong then sooner or later you will run out of money and no amount of software/tech will help you

/endthread