Too many startups lack market focus. They don’t really understand their target customer and what that customer wants. And that lack of focus kills startups.
It’s easy to look at and define a big market as a single entity – a giant, amoeba-like blob where everything and everyone in it is basically the same. This is an appealing tactic because it looks good in spreadsheets and presentations. Big markets mean lots of customers, lots of revenue and huge success, right? The “1% of a big market” argument becomes even more appealing when you look at a market with a 20,000 foot view. And one of the most common pieces of investor feedback to entrepreneurs (as to why they won’t invest) is that the target market isn’t big enough. So naturally, entrepreneurs want to focus on big markets.
The problem is that once you look inside a big market you find an incredible amount of diversity. You find different types of customers. Different needs. Different pain points.
One obvious way of segmenting is based on the size of the customer. Software companies often do this – focusing on SMBs (small / medium-sized businesses) or Enterprise customers. Mark Suster has a great post where he says that startups should be deer hunters. But even within each of those “target markets” there can be incredible variance.
There are lots of ways to segment a market and focus on specific verticals. What’s important to remember is this:
It’s better to do an insanely kick-ass job for a small group of people than do a so-so job for a lot of people.
- You need to truly understand the differences within your “big market” and why they exist. Rest assured there are differences, and they can be significant. Steve Blank points out that a common mistake people make when giving advice is that all startups are the same
- You’ll need less capital.
- You can launch faster.
- You’ll build a stronger brand.
- You need to succeed (or fail) in a hyper-focused market first, so that you can take those lessons into other areas. With the knowledge gained in the first vertical, you can make smarter decisions about the potential in other verticals.
Ultimately it comes down to lowering risk.
Having a strong market focus reduces risk. It doesn’t guarantee success but it should increase the speed at which you learn, and allow you to stay more agile and pivot more quickly.
Remember: You can’t please everyone all the time, so don’t even try.
photo by rawheadrex
Founding Partner at 
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