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Segment founder Peter Reinhardt explains why the Airbnb story can be a trap for startup founders

May 08, 2024

After two failed pivots, the founders of Segment only had enough runway for one more idea. So they decided to run a cheap test to prove customer demand for their their latest idea before building it:

“The debate was whether to build out the full product and then test for product/market fit by trying to sell it to people versus this super lightweight MVP landing page that we would put on Hacker News to see if there was interest.”

When the Hacker News post took off, the founders knew they were onto something and could confidently invest their remaining resources in building out the full product.

As Peter explains, this approach of running cheap tests to validate customer demand is something most founders don’t do. Instead they build their full-blown product before testing customer demand, which Peter believes rarely works:

“I would say the Airbnb version of product/market fit is much more iterative. They struggled for years and years and made slight iterations, and finally it caught on and obviously they’re a runaway success. But my feeling is that’s extremely rare… This is a really dangerous place to be because you can stay in this iterative mode for years… I remember very clearly being really inspired by the Airbnb story and it being a logical reason why we should keep plugging away at a bad idea. And I think we abused the Airbnb story to just keep stringing ourselves along on a bad idea… I would be very, very careful of following the Airbnb example. I don’t know many other companies that hit product/market fit that way.”

Peter advises having a skeptic on your founding team:

“[You want] someone who’s skeptical and will push for the fastest reasonable test… How hurtful can it be if someone is like, ‘Well I really think you haven’t thought this through. There’s these three things that you should really test ASAP because I don’t really believe that you have product/market fit here.’ That’s what you want. You want someone who’s going to be pushing it… and who’s willing to collaborate with you on how you should reasonably test [your assumptions].”