1/ Andy Rachleff on "product market fit" (a term Andy invented):
"Don Valentine used to say: 'I'm looking to invest in businesses that can screw everything up and still succeed because customers will pull the product out of their hands.'" https://tim.blog/2019/11/25/starting-greatness-mike-maples/ …
2/ Andy Rachleff: "One of the mistakes people make is that they iterate on the "what." They shouldn't. But they should iterate on the 'who' and the 'how' (the business model).'
"One of the best things about teaching is how much you get to learn."
3/ Andy Rachleff: "Product market fit exists when you have proven a value hypothesis. A value hypothesis is the what, the who and the how- what are you going to build, who is the relevant market and the how is the business model."
Product market fit precedes growth hypothesis.
4/ Andy Rachleff tells a story about Reid Hastings who was not a founder of Netflix but an investor and chairman. The original DVD rental by mail service was failing so Reid suggested that a subscription model he used at another business he founded (Pure) might work for Netflix.
5/ Andy Rachleff explains investing by using a 2×2 matrix which illustrates an approach advocated by Howard Marks. If you’re wrong, you don’t generate attractive returns. If you’re right and consensus returns get arbitraged away. The goal is to be in the lower right quadrant:
6/ Rachleff: “If you address a market that really wants your product, if the dogs are eating the dog food, you can screw up everything and you will succeed. Conversely, if you’re really good at execution but the dogs don’t want to eat the dog food, you have no chance of winning.”
7/ “It doesn’t matter how many losers you have, all that matters is how big your winners are.” “You can only lose one times your money. You have to be willing to be wrong a lot. It’s one of the few industries I know of where you can be wrong 70% of the time and be brilliant.”
8/ Several times in this podcast Andy Rachleff points out how much he has learned from other people (eg, Howard Marks, Reid Hastings, Scott Cook). One of the best ways to accelerate learning is to do it vicariously to supplement what you learn from first hand experience.
9/ “When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.” Andy Rachleff
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