I’ve been thinking about early stage startup risk especially in working on the presentations about minimum viable products. In that discussion, I’ll be talking about how MVP’s are a framework for de-risking startup investments. In the early stages of a startup, the risk of getting to product market fit is the largest (but not only) reason why most startups fail.

I came across this article about startup risk authored by Kanyi Maqubela - classic risk vs. quantum risk - and it summarizes the weight of product/market fit risk really well - essentially, the risk associated with P/M fit is so much higher than all other risks associated with activities in that stage:

What does that mean for company formation? What if risk, as a function of milestones, looked less like classical mechanics, where there can be continuous, curve-like de-risking in time? What if all of the activity that comes along with building a company does not in fact de-risk it? What if product market-fit is in fact the only discrete state in the early stage that de-risks a company?

Ultimately, you can de-risk an early stage venture through in many different ways but only P/M fit matters. Simply put, if you haven’t built the right product for the right people at the right time, nothing else matters.