How Startups Win Their Market With Positioning
Quick question: Can you state what your company does in a single sentence?
Most startups think about growth this way: They look at their product as point A and product-market fit as point B. But a lot of them skip the step that draws the line between those two points: positioning.
In its simplest form, positioning is an exercise to determine what, who, and where you are. It begins with that simple question: “What does your company do?” And it results in a path that gets you to product-market fit.
Here’s how to do that.
The Evolution of Product Positioning
Positioning is traditionally thought of as a marketing concept, defining the space where the company’s brand fits into the universe of its market and its competitors.
But as product development slips out of marketing and evolves into its own science, positioning has evolved with it. We’re no longer pushing our product into an existing market so much as we are forging redefined markets around a new product category.
Thus, positioning is less about market competition and more about market definition.
From a growth perspective, positioning is about knowing what you are, what your value proposition is, and what segment of the market you’re carving out to attack.
Positioning seems like a vague and daunting exercise and maybe a futile one, but it’s really about understanding and communicating what’s right in front of you. In this post, I’ll explain how my current startups have approached our positioning, how I’ve done it in the past, and also how I work with the startups I advise to help them strengthen it.
Start by Defining What You’re Not
The first step to figuring out what you are is deciding, clearly, what you’re not. Assuming you didn’t start your company to be a smaller player in a world of companies competing for the same customer, this is the time to highlight your unique differences and competitive advantages, and use them to tell a different story than your competition is telling.
One of the startups I advise is a company transitioning from a traditional recruiting service provider to a product company. The founder had discovered that the recruiting methods he had developed were producing better results than his competitors. He dug in on the unique differences of his methods, did some research, paid for some coding, and in turn productized his methods into software that any company could use without his services.
We took a look at his positioning, and decided immediately that his product was not a recruiting product, not an application tracking system, and not even HR software at all.
Thus, he should never use any of those words when talking about his product.
Much like the concepts of cost to acquire a customer (CAC) and lifetime product value (LTV) in the product world, his product brought talent into an organization for less cost, and that talent produced higher-quality results over a longer lifetime.
His product wasn’t about putting someone in a seat at a desk; it was about producing a better hire. Once we established that position, a new market began to define itself.
After the shift in position, he also realized that companies that used to be his competitors were now potential partners, which opened up a whole new market for his product.
Use the Problem/Solution Equation to Play to Your Strengths
The next step in positioning is to figure out where you dominate or intend to dominate, and this comes directly from the problem you’re trying to solve.
My previous startup, Spiffy, offers mobile auto wash and oil change on demand. While we put a lot of thought and effort into the quality of those services — EPA-approved chemicals, fully synthetic oil, wash mats and pumps to reclaim the water we used — we spent an insane amount of time building and refining software to be able to execute those quality services when and where the customer wanted them executed.
The problem we were trying to solve wasn’t the expense or the quality or the frequency of a car wash or oil change. The problem we were focused on was the time and inconvenience of trying to fit vehicle maintenance tasks into busy lives.
Our solution to that problem was our primary strength, so we positioned ourselves as mobile and on-demand above all else. We’re not selling car washes, we’re selling time. This not only helped answer the question of who would pay and why, but also allowed us to effectively expand into other maintenance areas using our proprietary tech stack.
There are a ton of mobile car washers out there, from regional chains to random folks with a truck and a bucket. Our focus on mobile and on-demand led us to develop several competitive advantages that not only helped us define our own product-market fit, but also allowed us to explore other markets in other industries.
Tie Positioning to Mission
If positioning seems like a vague concept, then mission might seem even more vague. Take the time to fix that, because when both of those things are addressed in a concrete manner and work together, they provide a lot of direction when addressing a market.
My most recent self-founded startup is Teaching Startup, and it’s on its third iteration over several years. The mission of Teaching Startup has always had the same root: Help entrepreneurs. The mission comes from lessons learned in my own winding path through entrepreneurism, my work as an advisor to startups, and, last but certainly not least, an opportunity I see in changing the way entrepreneurs get help.
Previously, I’d built a company called ExitEvent to help startups and sold it. When I looked at the success of that company, it came down to a few things, but a major component was that I stripped away a lot of what startup support organizations were doing at the time, which left the entrepreneurs a ton of room to ask questions and get answers.
For this third — and now working — iteration of Teaching Startup, I focused less on the mechanics of how I advised startups and more on the content. Turns out, despite conventional wisdom, the content is more important than all the other advisor stuff — the monthly meeting, the ability to put an experienced name on a startup’s website, or even the connections the advisor can make.
That led me to tack a few words onto the mission: Help entrepreneurs get answers. That did a few things:
- Completely changed my positioning, and now I was no longer competing with or trying to stand out from traditional advisement.
- Led me to develop a unique product, removing all the expectations of a traditional advisor engagement, which meant I no longer had to address those things.
- Narrowed my market into a much more addressable segment, because not every entrepreneur needs advice, but every entrepreneur needs answers.
The last step in positioning is to walk the fine line between where you think you are and where you want to be.
Your position should tell a story, to an extent, about how you’re going from point A, where you are, to point B, your product-market fit. Your positioning statement should clearly state your company’s intent, its focus, and its goals.
Again it helps to have a mission here, especially one that speaks to your company, your product, and your people.
At my current startup, Precision Fermentation, we offer hardware and software that monitors and provides data and insights about the brewing of beer (or wine, or anything that requires fermentation). But when we took a hard look at our positioning, we realized we are much more than that. We were selling ourselves short.
All brewers monitor their brewing process; they just do it manually. There are also sensors out there that can be used to monitor the brewing process. In fact, we use some of them. But what we’ve done is package all the hardware and knowledge together to automate the brewing process.
And since we automate fermentation, why can’t we automate everything else about making and selling anything fermented? Now our position isn’t about making better beer, it’s a long overdue technical revolution in an entire subset of industries. And in this new market, we’re not only the best, we’re the first and only.
When your positioning attacks those four angles (definition, solution, mission, and aspiration), you’ll come out of what seems like an exercise with a sharpened focus on the product you need to build, sell, and grow. This is the first stage in growth. The stage begins with knowing who you are, what you do, why you do it, and being able to communicate all of that succinctly. If you do all that right, it ends with irresistible product-market fit.