Jack Altman, founder of Lattice and now an investor at Alt Capital, joins Erik Torenberg for a deep dive into the realities of company building. Altman brings his extensive experience from scaling Lattice to a multi-billion-dollar enterprise, offering a founder's perspective on crucial startup challenges.
The discussion centers on achieving product-market fit, understanding and responding to customer feedback, and making critical hiring and fundraising decisions. Altman shares invaluable lessons from Lattice's early days, including establishing a sales motion and navigating the complex tradeoffs that arise as a company grows.
Founders and aspiring entrepreneurs will find practical advice on balancing conviction with market input, when to pivot, and what it takes to build an enduring business. This conversation provides essential insights for anyone looking to understand the mechanics of startup success and long-term growth.
Key takeaways
- His motivation to become a founder was driven by a 'regret minimization' philosophy, viewing building his own company as the ultimate startup experience he would regret not pursuing.
- A significant indicator of product-market fit is rapid adoption; if a solution works, it often works quickly.
- Effective products quickly demonstrate customer demand; persistent sales struggles often indicate a lack of product-market fit rather than a need for more features.
- Founders should personally lead early sales efforts, as direct customer interaction is the most effective way to identify what resonates and achieve product-market fit.
- Maintaining a balance between a core product vision and incorporating customer feedback is crucial; neither extreme of ignoring nor scrambling to requests is effective.
- Accepting off-roadmap requests from major clients can lead to continuous diversions and may not be beneficial in the long run, though rare exceptions exist where such features later benefit a wider audience.
- Early-stage startups should prioritize hiring entrepreneurial sales reps who can innovate and build sales processes for unestablished products.
- Founders can use the tactic of “selling ahead” – discussing potential future product features with customers – to validate ideas and guide their product roadmap.
- Launching a 'just enough' product, even if it requires real-time development for initial users, can be a more effective strategy for early-stage startups to validate ideas and iterate quickly.
- Product quality expectations for software-as-a-service offerings have substantially increased over the past decade, making it harder to succeed with unrefined early versions.
- Pre-existing trust and a personal connection can significantly help co-founders get through difficult startup phases.
- Clear professional domains and mutual trust in each other's abilities minimize second-guessing and increase efficiency.
- YC's most valuable lesson for founders is achieving clarity on the few critical elements that genuinely matter for early-stage startup success.
- For nascent companies, the primary focus should be on securing product-market fit and assembling a high-performing team.
- Product-market fit is directly driven by actively engaging with users and developing product iteratively based on their needs and feedback.
- Early startups should actively seek "diamonds in the rough" – individuals with high potential whose greatness is not yet publicly apparent.
- Implement accelerator-recommended fundraising strategies: maintain a wide investor funnel, execute within a compressed timeline, and practice your pitch thoroughly.
- Do not engage in lengthy, non-committal discussions with investors who lack a firm offer, even if they express strong interest.
- As a company scales, typically around 20 employees, the CEO's primary function evolves from directly creating the product to building the organizational 'machine' designed to sustain product-market fit.
- Founders are increasingly becoming 'channelers' of external, advanced technology, focusing on integrating and applying existing innovations rather than solely developing deep proprietary tech from scratch.
Lattice's Journey from Problem Identification to Product-Market Fit
Jack Altman recounts that the initial spark for Lattice came from recognizing a pervasive problem in people management at startups. This involved difficulties with employee coordination, feedback mechanisms, and compensation structures, indicating a clear need for better solutions in HR and people operations.
While the core problem was evident, finding the right solution was not immediate. The early stages involved grappling with how to effectively address these
murky HR issues
. This iterative process of identifying a pain point and then searching for an effective product to solve it is crucial for startups.
I knew there was a problem... which was that like people management was a problem at startups... but we didn't have the right solution. So we knew the pro- we got the problem right, we had the wrong solution.
Founders Must Lead Early Sales to Achieve Product-Market Fit
Truly great products quickly generate demand and a noticeable 'pull' from customers. If a product is struggling to sell, constantly adding new features often won't solve the core problem, which is typically a lack of fundamental product-market fit. This principle suggests that successful products don't require extensive convincing; they intrinsically appeal to their target users.
Founders play a crucial role in early sales, needing to be hands-on even before a dedicated sales team is established. Direct involvement in sales conversations is considered the most effective way for founders to understand what truly resonates with customers and what doesn't. This direct feedback loop is indispensable for achieving and refining product-market fit.
Even as a company scales and revenue grows, founders should periodically engage in sales. This personal involvement helps them stay connected to customer needs, understand the challenges customers face, and identify aspects of the product that might feel difficult or less effective. This ongoing engagement ensures the product continues to evolve in alignment with market demands.
The ongoing challenge for founders is managing customer requests for features that might deviate from the current roadmap. Constantly evaluating whether to incorporate specific customer needs versus sticking to the planned development path is a daily negotiation that directly impacts product direction and market relevance.
I still think sales is the best way to find product market fit.
Hiring Creative Sales Reps and Strategically Selling Future Product Features
Early-stage companies benefit from recruiting creative and entrepreneurial sales representatives. Unlike reps from large organizations who often seek established playbooks, these individuals are adept at developing sales processes from scratch, which is crucial when both the product and its sales strategy are still evolving. This adaptability helps navigate the inherent uncertainty of early-stage sales environments.
A founder at an early-stage startup can strategically “sell ahead” by discussing product features that are up to six months away from development. This approach, while potentially causing initial friction with engineering teams, proves useful in gauging genuine customer interest and validating potential additions to the product roadmap.
While directly promising and selling non-existent features can damage a company's brand and customer trust, a more nuanced approach involves carefully pitching ideas or potential future capabilities to customers. This method helps founders understand if a new feature would significantly impact customer interest and can effectively guide product development decisions without making false commitments.
I was selling like six months ahead.
Early Product Development: The Shift to 'Just Enough' Features and Higher Quality Demands
Jack Altman contrasts two product development approaches for his company. The first, an OKR management tool, was over-engineered with too many features that customers ultimately did not deeply desire. In contrast, for their performance reviews product, they adopted a minimalist strategy, launching with only essential components.
The 'just enough' approach meant that when the first annual paying customers began using the performance review feature, the co-founder was actively programming the ability to close the review cycle and share feedback. This agile, on-the-fly development proved more effective for the startup's early stages, allowing them to iterate based on real user engagement.
However, Altman notes a significant shift in the industry since 2015. Product quality standards have risen considerably, making it far more challenging for new SaaS companies today to launch a 'piece of junk' and still succeed. Customer expectations for a polished and functional product are much higher now than they were a decade ago.
I remember the very first like annual paying customers we had for performance reviews launched performance reviews without there yet being a completed way to close the performance Review and do the follow up work.
Building a Strong Co-Founder Relationship Through Trust and Clear Domains
Jack Altman attributes much of his success with co-founder Eric Coslow to the strong relationship they built. Their foundation of trust stemmed from being friends and colleagues at Teespring, which proved crucial for navigating the inherent difficulties of a startup. This deep trust helped them persevere during challenging periods, preventing them from quitting before achieving product-market fit.
A key component of their partnership was a high degree of professional trust. Each co-founder respected the other's expertise, leading to clear domain separation. This clarity meant they rarely second-guessed each other or interfered with each other's work, fostering an efficient and focused environment without unnecessary friction.
Beyond their professional dynamic, spending significant time together outside of work also contributed to their collaborative strength. This social interaction helped develop a unique "shorthand" in their communication, further streamlining their ability to work together effectively.
there wasn't a lot of second-guessing each other, there wasn't a lot of like getting in the way of each other's stuff
YC's Most Impactful Lesson: Clarity on Essential Startup Principles
One of the most significant lessons learned from the Y Combinator program is the importance of gaining clarity on what truly matters for an early-stage startup. This involves deliberately filtering out the numerous distractions and perceived necessities to concentrate solely on a select few critical areas.
The core principles emphasized by YC are achieving strong product-market fit and building an exceptional team. While many other operational aspects might feel urgent and important to founders, they are often secondary and can divert focus from these fundamental drivers of success.
Product-market fit is primarily attained through direct engagement with users and a continuous, iterative cycle of building and refining the product based on their feedback. This direct, hands-on approach is crucial for creating something that genuinely resonates with the target market.
Internalizing these seemingly simple truths requires consistent reinforcement, as the dynamic environment of a startup journey is often filled with noise and complexities that can easily obscure these essential priorities.
the only things that matter are like getting product market fit and building a great team, and the only things that get product market fit are talking to users, users and building product.
Hiring Diamonds in the Rough for the First Ten Employees
A great company fundamentally relies on a high percentage of its first ten employees being truly exceptional. Without this strong foundation, sustained success is highly improbable for any nascent venture.
However, securing individuals who are "obviously great" presents a significant challenge for early-stage startups. Highly visible talent often has abundant opportunities at established companies, well-funded ventures like Frontier Lab or SpaceX, or may choose to become founders themselves, making them difficult to attract to a nascent company.
The pragmatic strategy for early-stage hiring is to identify "diamonds in the rough." These are individuals who possess true greatness but whose potential is not yet widely recognized or "legible" to the broader professional world. This approach is often the only viable path for startups to build a strong initial team.
what you're really looking for is diamonds in the rough of people who aren't in fact great, but aren't legibly great to the entire world. It's the only way.
Follow accelerator fundraising advice and avoid early investor processes.
Accelerator programs offer highly effective advice for seed round fundraising, which founders should follow closely. Key principles include casting a wide net with a broad funnel of potential investors, completing the process within a compressed timeline, diligently practicing the pitch, and ensuring prompt follow-ups. Adhering to this structured approach helps optimize the chances of a successful raise.
A common pitfall for founders is attempting to raise capital prematurely, especially before significant milestones like a demo day. Some investors will express enthusiasm, inviting founders to "meet us" or "get to know you," which can feel promising. However, these engagements often devolve into a drawn-out "process" without a clear commitment.
Founders should be wary of being pulled into lengthy, non-committal discussions. A genuine investor offer will specify clear terms, such as "I'll give you X at Y." If an investor isn't providing concrete terms and is instead trying to "drag you through the process," it's often a waste of valuable time that could be better spent on other parts of the fundraising effort, or on the business itself.
If some amazing investor comes to you and says, 'I'll give you X at Y,' and you like that, that's one thing. If someone's trying to drag you through the process, my process isn't, you know, in the time that the team tells me it's in.
The CEO's Evolving Focus: Sustaining Product-Market Fit at Scale
A CEO's scorecard begins with basic survival, avoiding financial ruin, before moving up to Maslow's hierarchy of needs for businesses: securing product-market fit (PMF) and then building a great team. At the seed stage, the absolute purity of product-market fit obsession is paramount, focusing on whether customers intensely desire the product, retain it, and want to buy more.
However, achieving product-market fit is just the beginning; the real challenge lies in continuously keeping and deepening it as the company grows. This demands a shift in the CEO's approach to the business.
Around 20 employees, the CEO's role typically transforms from directly building the product and serving customers to constructing the 'machine' that builds the product and serves the customers. This transition is critical because a founder's brain becomes too scrambled to do both the work and manage the people doing the work.
After this shift, it becomes crucial for founders to stay connected to the actual work, the customers, and the product, rather than just relying on team reports. This involves constantly 'sampling everything' across the company to ensure the organizational machine is effectively maintaining product-market fit.
your job goes from, you know, building the product and serving the customers to like building the machine that builds the product and serves the customers
Embrace Proactive Work and Adapt to the Shifting Founder Role in the AI Era
Prioritizing proactive work over reactive tasks is crucial for long-term impact. Many individuals spend 90% of their time responding to external demands, such as working from an inbox or attending meetings requested by others. The ideal approach is to flip this dynamic, allocating only around 9% of time to reactive work and focusing the majority on self-initiated, value-driving activities.
The role of a founder is evolving significantly, particularly in the current technological landscape driven by AI. This change is partly influenced by the nature of foundational technology itself, which increasingly originates from external sources rather than being developed internally by every startup.
In the AI age, much of the core technology that defines a company's 'why now' often resides with frontier labs or other external intelligence providers. This shifts the founder's primary focus from building deep technology themselves to effectively leveraging, integrating, and 'channeling' these advanced external capabilities to create their unique product or service.
So much of the new technology that explains the why now of the company lives somewhere else. It lives in the intelligence at, like, a frontier lab or whatever.
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