This post was originally published here.
In the last couple of years, I’ve advised multiple aspiring DTC founders on priorities and pitfalls. Business is Fight Club, so let’s make it interesting:
- The first rule is to know which risk you are taking – product or brand. Product risk is creating a new category, often with innovative formulation/packaging. Brand risk is creating a new brand within an existing category. Product risk does not eliminate brand risk, it precedes it (and therefore adds to it).
- Taking on product risk is smart if you have identified a large, underserved market or use case. Unfortunately, this is a minefield. Many underserved spaces exist, but that’s often because they’re not worth going after. The existence of white space in your 2×2 doesn’t indicate depth. Competition is validation. Winning market share is easier than building a category.
- The second rule is PMF. To paraphrase Paul Graham (who said this about growth), PMF is the answer to all problems and the lack of PMF can only be solved by PMF.
- A corollary to the second rule is to not lie to yourself about PMF. When your product has PMF, it becomes easy to sell. Your problems shift away from finding new customers to scaling production, plugging leaks, hiring people who can help open new channels/geographies.
- The third rule is don’t ignore the price. PMF for India should be PPMF – Price Product-Market Fit. Discounting works. Undercutting competition works. Bata pricing works.
- The fourth rule (related to the last one) is to know your market. India is #5 on GDP but #139 on GDP per capita, sandwiched between Ghana and Bangladesh. India has a lot of poor people, a middle class, an affluent class that thinks it’s middle class, and a tiny number of rich people who consume like rich people. Make for India.
- The fifth rule is to get comfortable with not being your customer. Privilege blinds us to the market we inhabit (benignly) and sell to (critically). Starting a company to solve a problem you encountered when you returned to India? Likely a limited market. Niches are shallow in India.
- The sixth rule is obvious to understand but hard to live – solve for the business, NOT for investors (present or prospective). Building a good business is hard enough, but building a business while second-guessing VCs (who are second-guessing bigger VCs and so on) is 10x harder. Nobody knows it fully, but you likely know it a *little* better. Plus, you have the most important thing of all – skin in the game.
- The seventh rule is to manage yourself. Invest in your health, spend time with family, take holidays, compartmentalize. No one forces anyone to start a company. Part of the reason to do it is to have fun. Important to remember what a huge privilege it is to have the ability to start a company. We should all be tap dancing to work.
- The eighth and last rule is to not read so damn much. Reading the latest founder biographies, industry reports, blogs by A16Z and YC (yes, including Paul Graham), etc won’t help you. Thinking as the customer will.
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