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a16z.com

3 resources from a16z.com we point founders to, and the questions each answers.

📄 Article
Free Intermediate

12 Things About Product-Market Fit

From a16z.com by Andreessen Horowitz (a16z) ~20 min read

Why we picked it

The nuanced counterweight: PMF isn't a single binary moment, it can be lost, and 'market' is doing more work than founders think. Read after the Andreessen essay to avoid the common traps.

  • PMF is a spectrum, not an on/off switch, and it can decay.
  • Product-user fit often comes before product-market fit.
  • Beware false positives from a small, unrepresentative group.
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Answers How do I know if my idea is any good? How do I know if I've found product-market fit? When should I pivot vs. persevere? Why does 'why now?' matter so much for a startup idea? My market is small right now but growing fast. Is that a problem? How do I spot trends early enough to build a startup on them? How do I tell the difference between a real trend and a passing fad? Where do I look to find emerging opportunities before they're obvious?
📄 Article
Free Intermediate

All About Network Effects & Marketplaces

From a16z.com by Andreessen Horowitz (a16z) long-form article

Why we picked it

a16z is the definitive source on marketplace and network-effect business models, having funded and studied more of them than anyone. Their writing explains take rates, liquidity, and the cold-start problem with real rigor.

  • Marketplace revenue is GMV multiplied by take rate, both must be healthy
  • Solve the chicken-and-egg problem by going extremely narrow first
  • Liquidity, not raw scale, is what makes a marketplace valuable early on
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Answers What's the difference between SaaS, marketplace, and transactional business models? How does a marketplace actually make money and solve the chicken-and-egg problem?
📄 Article
Free Intermediate

Why Do Investors Care So Much About LTV:CAC?

From a16z.com by Andreessen Horowitz (a16z) article

Why we picked it

A focused a16z piece on the single ratio that most captures a business's efficiency and drives its valuation. Great for founders who need to understand the 3:1 benchmark and its limits.

  • 3x LTV:CAC is a common rule-of-thumb benchmark for healthy unit economics
  • Higher LTV:CAC drives higher margins and therefore higher valuation
  • The ratio can mislead, CAC payback period matters just as much for cash
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Answers How does a marketplace actually make money and solve the chicken-and-egg problem? What are unit economics and why do they matter? How do I calculate CAC (customer acquisition cost) and LTV? What is a good LTV to CAC ratio? How do I build a simple financial model or revenue projection?