I recently met with a friend who is building a product. He was telling me excitedly about his plans and what the product would be able to do, and he asked me how he should prepare for his first VC outreach. One of the main things VC cares about is traction, as it is a great indicator to de-risk their bets. So I recommended he start selling, even though his product isn’t ready yet.

❓ Why should you sell before you build the product?

As ventures start out, they have a lot of uncertainties. They often have a hypothesis on the problem they’re solving, the solution they’re creating, and the market they’re targeting. However, due to startups’ innovative nature, there is usually a lack of reliable, accessible data on the specific market needs. So, they would have to prove this #productmarketfit (PMF) directly on the market. VCs care about traction because it is a dollar-voted (or time and attention-voted) proof of market needs. If a problem is real and crucial, people would pay money or spend time to solve it.

There are 2 different pathways to finding out whether your idea has product market fit.

1. Build the product and then sell it.
   ✅ If you hit the jackpot, you can hit the ground running.
   ⛔ If you don’t achieve PMF, you have a lot of sunk costs and technical commitments that might make it harder for you to pivot.
2. Sell the idea and then build the product.
   ✅ It’s much easier and cheaper to iterate on an idea than a product. After you achieve some idea-market fit, you can have smoother roadmapping and future-proofed development.
   ⛔ On the flip side, if your sale is highly successful, you might be worried about not delivering a great product on time, letting your customer down, and potentially losing them.

90% of startups fail, so de-risking is important for founders because your time is expensive. This is also true for VCs, which have a business model built on making risky bets. At the earliest stage, VCs use founder track record and traction to help de-risk their decisions. The main benefit of Selling before Building is that you spend less money before you learn crucial discoveries, such as whether the idea is worth building at all. Its risk can be easily mitigated through expectations management and having clear communications on realistic deliverables.

I believe having lean expenses is crucial to startup success as the lower your cost, the more time you have to incorporate your learnings as you experiment and validate PMF. Through the use of simple methods such as pre-order, early bird, or a waiting list sign-up, this strategy enables you to learn fast before committing to any significant investment.