Why Your Startup Shouldn’t Chase a Specific Market
When an enterprising young entrepreneur introduces me to a new product or startup idea, one of the things that always makes me cringe a bit is when they describe their venture as: “It’s this, but for that.”
“This” is usually a loosely copycatted version of an existing successful product, reimagined to serve the distinct needs of “that,” which is usually a super-niche market segment. College students. Marketers. Athletes. Stay-at-home moms. Stay-at-home everybody.
And about a million more.
This is a mistake waiting to happen. And it’s actually not one of those train wreck mistakes that makes a lot of noise as it crashes its way toward failure. It’s more of an eerily quiet mistake that disappears quickly after failing to get traction with its intended audience.
Never choose your market first. Here’s why.
Facebook Was Built for College Students
You might be familiar with the Hollywood lore of Facebook being built as an inside joke in Mark Zuckerberg’s dorm room. What most people forget is that, for some time afterward, Facebook access was limited to college students, going so far as to only allow access for folks with email addresses that ended in “.edu.”
Some 2,000 colleges and 25,000 high schools later, it dawned on Facebook that letting every student in the world share their feelings didn’t have a dime of revenue attached anywhere to it.
The student market is where I most often hear market-limited ideas for new products, and those ideas usually come from current students or recent graduates. College students know college students, and they know that there’s a forced uniformity of behavior that looks like customer behavior, and that behavior repeats itself over an average of four years. The potential to consolidate that into a market looks really promising.
But honestly I can’t think of a harder market to a) find traction in and b) generate revenue from.
So why does this mistake happen? Entrepreneurs basically add up how much experience and comfort they have in a certain market, and put two and two together to make five. Then they get told that’s OK.
Do 1 Thing and Do It Well?
Putting the market cart in front of the product horse is a really easy trap to fall into. And it gets condoned more often than you think — student entrepreneurs are encouraged to develop products for other students, tech entrepreneurs to develop products for other coders, marketing entrepreneurs to develop products for marketers.
Even when they’re not specifically marketing to their pre-defined niche market (yet ) they’re building their product with the specific market’s behavior in mind. There’s nothing wrong with this, per se, until you inevitably start limiting your product and its positioning to the niche characteristics of that market.
Like I said, there are those who will tell you that this is how it’s done. They’re going to tell you to do one thing and do it well. Narrow your focus. Narrow your market. If your product works for college students, it can work for the entire world.
They’ve been saying this for decades — and it’s backward. Think about that statement for a moment. Doesn’t it make a lot more sense this way?
If your product works for the entire world, it will work for college students.
Solve the Problem Broadly, Then Fine-Tune It for Niche Markets
Starting broadly is a much less daunting task than it initially seems because all it requires is a simple mind shift. Instead of focusing on which customers will buy your product, focus instead on what your customers will be buying.
Solve the problem broadly. Then narrow the scope of your solution for your product-market fit, then narrow it again for your initial market.
Now, you can reverse-engineer this process, but it’s really difficult and painful to do. I learned this 10 years ago with Automated Insights, in what I call “the long, lonely walk away from sports.”
Automated Insights started life as a sports data and analytics company called StatSheet. We developed a science to turn our ridiculous amount of granular sports data into useful insights that we could then turn into written content. The sports world loved it and, with us all being huge sports fans, we loved the sports world right back.
But the sports market, as anyone who has spent more than a minute in it will tell you, is incredibly tough. It’s rich beyond imagination at the highest level and dirt poor everywhere else. It’s incredibly competitive and, as it goes in any market with money and competition, full of people spending money on the wrong things for the wrong reasons.
We kept running into brick walls in that market for so long, we finally decided to broaden our solution and go market agnostic, where we realized that the financial market and, believe it or not, the marketing market were better fits for our product. We took the long and lonely (and risky) walk away from sports and emerged on the other side far better off.
Had we first asked ourselves who needed our solution instead of tailoring our solution to fit a single market’s specific needs, we would have saved ourselves a couple of years of floundering while finding better product-market fit earlier.
Here’s Why You Don’t Limit the Market
Every startup has three stories. The A story is what you’re working on today, the B story is the bigger picture, and the C story is the billion-dollar story.
Think of this as a television series. The A story is the single episode, the B stories are plot threads that can run through a handful of episodes or an entire season. The C story is the whole series history from the first episode to the last.
A writer may write a pilot episode, and it might be really good, and they might leave all sorts of open windows for more focus on B stories and a fully developed C story to flesh out later. But if that pilot is successful and gets picked up, they can’t just start cranking out more A stories. They need to shape a C story and at least a season’s worth of B stories because it’ll be a mess otherwise.
The same is true for your startup.
If you write your central character as a college student living on campus, that’s where your B and C stories will revolve until your series is over — unless your C story is about something more universal in that college student’s life, something that more people, maybe even everyone, can identify with.
Then you don’t even have to write college-themed episodes for four years. You can just write an episode where your student drops out. (Like Mark Zuckerberg.)
Answering 2 Questions With 1 Answer
Much like what I just did with the television-to-startup analogy, you can take the broad approach too far.
The other cringeworthy moment I get with a new idea is when I ask who the product is intended for and the answer is “everyone.” That may even be the case, but it’s lousy positioning. The funny thing about “everyone” is that it describes exactly no one.
Once you’re able to describe the solution without using the label of a pre-defined market, you can then address the market, and find fit, by tying the solution back to the customer.
As an example, my new project, Teaching Startup, is a question-and-answer newsletter for entrepreneurs that provides an affordable and extremely useful alternative to traditional, usually expensive, and sometimes shady startup advice.
My initial stab at the market was “entrepreneurs,” but this existing label was far too broad. Then I went with “entrepreneurs who need advice,” but that was still way too broad and, additionally, also wrong. That’s what an advisor is for.
But when I was finally able to describe the solution and apply the solution to the customer, the market became “entrepreneurs who need answers.” This isn’t overly broad, but it’s not narrow either. It could be every entrepreneur, but it could also describe you, if you happen to be an entrepreneur who needs answers.
And that’s the market where I need to find my fit. But now I don’t have to force it or fail. I can let the product find its market with my guidance, which is what every entrepreneur should be doing.