Why Strategy Matters for Pre-Product Market Fit Startups

One of the most common pieces of advice on the internet is that pre- product market fit (pre-PMF) startups just need to ship and iterate. While it is true that shipping quickly and frequently is important, the context around this is incredibly important. What you ship is a reflection of the thought you put into it. Garbage in, garbage out. Yes, you could get lucky and one of the ideas sticks. But when you look at the failure rate of startups, you increase your odds of winning if you focus on betting your success on ideas you've thought through a bit.

As a pre-PMF startup giving yourself a strategy will help you understand why you are taking the bets you are taking. You don't need to spend a month developing it or put together a great workshop, there are key things you can think through to help you understand what you are building, who you're building it for, and why.

What is Strategy?

Strategy is about what you will and will not focus on. For an early stage startup, there might be more room to be flexible with your strategy as long as you're learning things. That being said, learning things without thinking first is learning things the hard way, and startups are hard enough as is. There are key areas of a strategy that you will want to understand that will help you think through your product.

Market Positioning: Determining what high level customer needs does your product cover that others in the industry don't do. If you look at TikTok, TikTok saw the opportunity to focus the creator aspect of social networks and video content aimed at short attention spans. While Instagram technically could also do that, it wasn't seen as primarily a video app. If anything, it has gone through a bit of an identity crisis at least once trying to be what other creator and social platforms were. Almost no one else was focused in the same part of the market as TikTok.

Segmentation: People often focus this on who customers are based on age, gender, etc instead of what customers needs and wants are. TikTok clearly went down a path that was heavily centered around creator needs that weren't being fulfilled as well by

other apps on the market.

Differentiation: Choosing what you're going to focus on being good at. You can try to be good at everything, but the reality is, even those with tons of resources are usually better when they focus those resources on a few things. Being a startup, your resources are even more limited.

Without picking a combination of these things that truly makes you different, your startup will be competing to win against a lot of other startups and big companies in the same part of the market, focusing on the same customer needs, solving for them in the same way. It can be done, but again, it's creating more ways to make things harder for yourself. Thinking through these things, even if they end up shifting, gives you a bit higher probability of winning than if you blatantly ignore the thinking at all.

Why Strategy Matters for Pre-Product Market Fit Startups

The biggest benefit of having a strategy is making sure the few resources you do have don't go to waste. Yes, you need to execute, but executing a lot and shipping don't need to be instead of strategy. These things complement each other. If you were to shop for air fryers on Amazon, you might do a little Google search to understand which ones would be the best for you. You can think about strategy as a part of the execution where you have an idea of what you're trying to do and why. Even if you spend a half day thinking about it, that will save you a lot of time building the wrong thing.

Won't the Strategy Change a Lot?

Yes, as a pre-PMF startup, your strategy will change frequently. You will learn things that will make you change your mind about where you want to be in the market, what needs you want to address, and even what you want to differentiate on. That doesn't mean having a strategy is worthless.

Think about it like science experiments. Scientists have to write out their hypothesis and why they have their hypothesis before they move forward with an experiment, which forces them to think about why this may or may not work. Think about your strategy as saying "here is my hypothesis about where we win by solving these problems being great in these ways."

Just like your plans change a lot, doesn't mean you've stopped planning, so the same should be true for your strategy. It doesn't need to be perfect. It doesn't need to take a lot of time. It won't necessarily get updated every time you tweak the strategy inherently in what you choose to say yes to and choose to say no to. But when you do a big pivot, you should revise your strategy both to make sure your new direction makes sense, and that you, your cofounder, and team are aligned around what exactly it is you're solving and why.

How Do I Create a Strategy?

There technically isn't a right or wrong amount of time, but when you need to move fast, it's understandable some startups are concerned this will slow them down. Especially as an early stage startup, you don't need to spend a whole week thinking about this, and you don't need a big fancy workshop. At this stage, it can be a conversation between co-founders that walks through answering each of the three parts of strategy I outlined above. While there is a lot more to strategy than just that, it's a good starting point, and helps you define what you and your team will say yes and no to in the meantime. When you have the time, or it becomes more critical to the success of your startup, you can learn about the other layers of strategy and competitive strategy.

The goal isn't to be perfect, but it is to de-risk your bets and use your time, resources, and money wisely, whether you need to make it to the next fundraising round or you're bootstrapping. Even in early stage, pre-PMF startups, thinking through a strategy can help you avoid unforced errors. Strategy for pre-product market fit startups is a foundation to