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Brian Armstrong shares the Y Combinator advice that helped Coinbase find product/market fit
“The first version of a product you put out doesn’t work. In fact, that’s the only thing I’ve ever seen happen in startups. I’ve never seen a startup where the first version of their product actually worked. Sometimes in hindsight people like to tell that story, but I think in reality it’s very rare.”
The first version of Coinbase was a hosted Bitcoin wallet. Brian posted it to Reddit and a few people signed up but nobody stuck around. Rather than get discouraged though, he recalled the advice he got at Y Combinator:
“Don’t spend your time going to conferences and trying to raise money. If you don’t have product/market fit yet, talk to your customers and improve the product based on their feedback… There’s really only two things you should be doing in the early stage - talking to your customers and improving the product. It sounds like simple advice, but people spend so much time doing other stuff that’s not actually real work.”
Following that advice, Brian emailed 10 of the people who had signed up for Coinbase and asked if they’d be open to a quick phone call.
One of the users liked the wallet but didn’t have any Bitcoin.
Brian asked him: “If there was an easy way to get Bitcoin into your wallet - like a buy button or something - would you have stuck around and used it?”
“Yeah, probably” replied the user.
So Brian spent the next few months securing bank partnerships and money transmission licenses so he could build a simple buy button into the app. Then he launched it.
“The minute we launched that buy button, it started to grow every day organically with no marketing or anything. And that was the minute I felt like we finally had product/market fit.”