We at Balderton are excited to be backing VanMoof on their mission towards getting the next billion on bikes. Even before these challenging times, electric bikes were on a rapid growth trajectory. As people and companies around the world begin to think about safe commuting options going forward, we believe that the quality and experience of riding VanMoof's bikes, their strong community-driven brand and their innovative go to market will help VanMoof become a household name from Tokyo to Berlin.
Taco and Ties, the Founders of VanMoof, have a higher calling: to build the world’s best commuting vehicle, on two wheels or four. With their newest electric bikes the S3 and X3, they are pretty close. To get here they have reinvented an entire industry. Most bike manufacturers rely on commoditized parts, component assembly, distributors and retailers. A VanMoof rides differently because it was built as one integrated product with complete control over their supply chain. This allows them to consistently infuse their bikes with industry first technology that creates a joyful riding experience. Their control over their customer facing front end also allows them to help tackle barriers to everyday riding, with unique services like Peace of Mind that keep your VanMoof in great shape and out of the hands of bike thieves.
Our journey with VanMoof began more than a year ago when we met Taco at the company’s Amsterdam HQ. Over lunch we fell in love with the passion, focus and ambition of the team. We stayed in close contact in the intervening months and in the past few weeks, that focus and ambition crystallised into a successful launch of their newest model. When he let us know that they wanted to accelerate their growth this year, we jumped at the opportunity to work together.
The company boldly launched the S3 and X3 at a time when around the world supply chains are falling apart and people are uncertain about their futures. Despite this uncertainty, the company has seen unprecedented demand. Bicycles are dependable and are becoming an ever more important part of our commutes. Cities like New York, London, Milan and Berlin are building better bicycling infrastructure at unprecedented rates in order to become safer, greener, and cleaner.
Our conviction was deepened by tremendous market growth in electric bicycles, particularly in Europe and the United States. For example in Germany, an important market for VanMoof, the overall electric bike market grew 39% yoy in terms of units in 2019, from 1M to 1.4M, outpacing analyst estimates. While VanMoof market share in Germany is growing quickly, it still represents only low single digits. There’s no ceiling in sight.
VanMoof is much more than a company. It has created a diverse tribe around its brand filled with a world of people who ride bikes but resist the “cyclist” stereotype. There are models who name drop the brand in Vogue articles even while its subreddit boasts more than one thousand members.
Customers love VanMoof because Taco, Ties, and the entire team’s commitment to quality produces a category-leading product that is changing the world for the better. Tim Bunting, myself and the entire team at Balderton are thankful to be on the ride.
a lot of people smarter than me have written a lot of intelligent things about product market fit. i still get asked the question by entrepreneurs of how i would define it so i thought i'd lay down a summary of my thoughts here.
creative, but largely unhelpful definition:
where the rubber meets the road
or, as Andy Rachleff would say:
when the dogs start eating the dog food
this is the most simple definition. the market is ingesting what you're serving.
external (the investors) definition:
a non-trivial group of customers or users are engaging with your product and service, and have proven that they are willing to trade something valuable for it, usually time or money (or both)
internal (the founders) definition:
early observations of your original value hypothesis being proven correct. a value hypothesis articulates what exactly your product or service is, who will use it, and most importantly why they will value it.
when you have early signs that your product or service is being used by people who truly value it, you've achieved product market fit.
this framework may seem a bit at odds with lean startup methodology.
- what if the product or service that customers are valuing is not core to our business?
- what if my core product or service is being valued by customers we didn't built it for?
shouldn't these be celebrated? shouldn't that count as product market fit? yes, eventually. but in the first instance you need to rally the company around the product or service that is taking off, and potentially rethink your long-term mission, your medium term strategy and your short-term tactics. in the second instance you should run with it, but also ask yourself why your targeted audience isn't ingesting the product or service and another one is, and potentially rejig the customer facing aspects of your business accordingly.
the above definitions may seem vague and imprecise. the truth is, it's hard to find a universal definition of product market fit that applies to every company. it might mean 4 enterprise customers signing sizeable contracts, it might mean $80k MRR, it might mean participants in a network starting the share meaningful content with one another, it might mean one developer deploying your framework for the first time in production...
perhaps it's clear, but of the above, i think the internal definition is most vital. if you're confident you've achieved product market fit but an investor or external party doesn't agree, go find one that does.