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Is it a good strategy for a single product to be a multi product company?

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Anonymous User at Taro Communitya year ago

After a series C funding, my org has developed a strategy to build multiple products. They are burning cash extremely fast, and the initial products have enormous losses. I'm working on a product that will never be profitable. At least the margin will be small.

I would love to know what you think about this. I've seen Alex talk about this, but I need help fetching that link.

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(2 comments)
  • 1
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    Tech Lead/Manager at Meta, Pinterest, Kosei
    a year ago

    For a startup, the core question is "Have we achieved product market fit?"

    The definition of product market fit (PMF) is frustratingly ambiguous, but fundamentally, it means that the market (customers) are demanding your product faster than you can keep up. So if your startup is losing money, that's ok, as long as there's clear demand that people want the product, and there's a path to profitability in the future.

    However, two things give me concern here:

    1. To get to series C, there should be solid evidence of PMF. There's actually an expectation of this at series B, so it's worrisome if you feel there's no PMF yet.
    2. If the company does indeed have PMF, why would they build multiple products? That doesn't make much sense unless there's a clear narrative connecting the multiple products.

    Unfortunately, in the bull market of 2020/2021, lots of companies got too much funding when they didn't actually have a good business, which means that they're desperate now. I'd try to evaluate this in your startup by asking questions to leadership and also observing the behavior of smart people in the team.

    Related:

  • 2
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    Startup Engineer
    a year ago