Andy Rachleff (Wealthfront) on coining product market fit

• Original idea of product market fit came from Don Valentine at Sequoia. Eric Ries says first develop and confirm the value hypothesis (what are you building for whom and how, ie, the business model) and then the growth hypothesis.

• Finding product market fit with Wealthront: After testing the market, it turned out that millenials in the asset accumulation phase (vs asset preservation like a baby boomer) with typically <$1mm to invest were the core demographic they needed to be going after. Discourages people who want to invest >$1mm from using Wealthront because they won't be delighted and will probably spread a poor message.

• Product market fit is when you have exponential organic growth. Advertising can make you think you're doing well when actually you're not. So word of mouth is a true indicator. Delight is the greatest simulus for virality.

• Wealthfront went from $0- $1bn AUM in 3 years. Went from $1bn- $10bn AUM in 3 years. Expects to go from $10bn AUM to $100bn AUM also in 3 years.

• For a startup to be successful it has to be non consensus. Not unlike investing. Don't track the percentage of experiments that fail, but the magnitude of the ones that do work out. Investing idol is Howard Marks, Oaktree Capital (distressed debt). Famous for his 2x2 matrix: right or wrong on one axis, and, consensus or not consensus on the other. Only way to make money is be right and non consensus.

• Wealthfront found its 2nd product market fit for its automated planning product 5 years after launching the original investing product.

• Pivoting is iterating on the market (the who), not the what. Adding features that someone can use is not pivoting.

• Going public is great for growth, it's the best free advertising. Still run the company like it's a private company, ie, without needing to focus on quarterly earnings. The transparency is good for trust businesses like fintech.