Formation’s Playbook: How Building the ‘Wrong’ Version of Your Company Can Lead to Product-Market Fit

Sometimes the most valuable startup insights come from doing things completely wrong. For Formation founder Sophie Novati, spending two years running what seemed like a failing business – a one-person coding bootcamp funded by her dwindling savings – turned out to be the key to building a successful tech-enabled learning platform.

In a recent episode of Category Visionaries, Sophie revealed a counterintuitive truth about finding product-market fit: “I had no idea that when I left next door that this kind of venture capital landscape was something that existed. So I wasn’t one of the founders that decided that I was definitely going to be a Founder.”

Instead of starting with a pitch deck and venture funding, Sophie dove headfirst into the problem she wanted to solve. “I was essentially running my own coding boot camp. It was just a complete one person show. I ran all of the recruiting, all of the instruction, I did all of the grading,” she recalls. This manual approach, while seemingly inefficient, provided crucial insights that would later shape Formation’s technology platform.

The experience was financially draining. “It was almost two years of doing this and actually pouring my own savings into this company to pay the rent,” Sophie shares. Her parents thought she had lost her mind – “not only was I leaving a job to start a company, I was also spending all of my own money trying to fund it. So it was like I was paying to do a job.”

But this hands-on experience revealed a fundamental disconnect in technical education that wouldn’t have been visible from the outside. During her time at Facebook and Nextdoor, Sophie had learned “how to solve problems at scale using engineering and product.” Yet she observed that the programs trying to teach software engineering were “entirely devoid of technology.”

This insight led to Formation’s core innovation: replacing static curricula with dynamic, personalized learning powered by technology. “What we do differently is every lesson, every class, every assignment that every student does is dynamically computed by our technology based on each person’s performance in the program,” Sophie explains.

The manual experience also informed their approach to mentorship. Rather than scheduling generic check-ins, Formation built an algorithmic system that matches mentors with small groups of students who are actively struggling with specific topics. The platform “will dynamically schedule you for sessions based on your availability and your expertise.”

The results validate this approach. In 2022, Formation’s students saw an average compensation increase of $100,000. Their technology-enabled model has proven particularly valuable during the market downturn, where “people just need to be a lot more prepared for the interview process.”

The company has expanded beyond individual students to corporate partnerships, recently launching an initiative with Netflix “as part of their diversity hiring initiatives.” This evolution from direct-to-consumer to enterprise partnerships might not have been possible without the deep understanding of student needs gained through the manual bootcamp experience.

For founders, Formation’s journey offers a valuable lesson: sometimes the fastest path to product-market fit is the slowest one. By spending two years doing things manually, Sophie gained insights that helped Formation build technology that actually solves real problems rather than creating theoretical solutions to imagined ones.

The irony isn’t lost on Sophie. Her experience exemplifies how doing things in seemingly the wrong way – running an unscalable, manual business while depleting savings – can provide the insights needed to build something transformative. Sometimes you have to build the wrong version of your company to figure out the right one.