It is dangerous to ramp up headcount and burn until you are certain that you have the right product and the right people and processes in the organization to support the product. And early revenue traction, often driven by a passionate founder, can be a nasty head fake.
(1) In Seeking Alpha, we talk about figure it out mode and scaling mode. “Figure it out” = “achieve product-market fit”.
(2) Fred’s point is that you shouldn’t add headcount (ie. move to scaling mode) until you’ve achieved product-market fit. In fact, figuring out product-market fit is easier with fewer people.
(3) The challenge of knowing when to scale is that product-market fit can be hard to spot.
(4) Re. Fred’s assertion that you also shouldn’t ramp headcount if you “don’t have the right people and processes in the organization to support the product”: Surely that’s a reason to add headcount?