Last week, I was left with no choice – I had to issue a red notice to a startup founder.
The founder had spent almost a year breaching one of the top rules of building a startup.
RULE: You must develop your go-to-market strategy using a beachhead hypothesis.
In plain language, this means you must pick a clearly defined niche market – with a “pants-on-fire problem” – to validate your product idea with first.
But this founder wasn’t having it.
He was so besotted with the ultimate vision of how his product would operate that he wouldn’t subsegment his market.
He was trying to appeal to everyone, and thus, was appealing to no one.
As a result, he’d made next to no progress in almost a year of pursuing a startup.
❌ No clear user research results.
❌ No path forward for developing an appealing solution concept.
❌ No prospective early adopter customers.
FAILURE TO SUBSEGMENT YOUR MARKET HAS THE FOLLOWING 3 IMPACTS:
- A more diverse customer base prevents you from being specific with your targeting and value positioning
- This raises your cost of customer acquisition through needlessly low conversion rates
- It raises the complexity of achieving Product-Market Fit, costing far more time and money than is necessary
WHY IT’S IMPORTANT TO BE SPECIFIC ABOUT YOUR NICHE CUSTOMER (BEACHHEAD MARKET SEGMENT)
Trying to be all things to all people – or even all things to two or three groups of people simultaneously, instead of one clear group – is like grabbing a handful of darts and throwing them at the dart board all at once trying to hit the bullseye.
If you’ve ever played darts, you know it’s tricky enough to hit the bullseye throwing one dart at a time.
Thus, how futile it’d be to attempt to throw a handful at once.
When you’re trying to solve problems for multiple niches at the same time with your product, you get into an overwhelming situation where you feel like you need to design for all use cases – which turns into a growing black hole for your product-development budget.
Not to mention a marketing nightmare.
When you’re creating a new app, or a new piece of tech, you have a predicament.
On the one hand, you have to target large enough market opportunities to deliver the >10x returns needed to offset the innovation risk.
But part of the challenge with pursuing such large markets is that they sabotage your ability to reach Product-Market Fit by forcing you to create more inclusive – meaning more generic – experiences when building your solution.
(More generic = easier to ignore, therefore more expensive to market and sell.)
A well-thought-out and validated go-to-market strategy facilitates carving up large markets into a collection of smaller markets that allow you to build more specific and personalised solutions.
This massively improves your chances of getting to Product-Market Fit (PMF) – and radically decreases the cost of reaching PMF.
To become a billion-dollar business, you’ll need to reach PMF in multiple markets by validation of multiple Minimum Viable Products (MVPs).
Subsequent MVPs will be incremental and significantly easier than the first one, as you’ll have the muscle memory of having done it once before.
Plus, you’ll already have raving fans and advocates for your product.
Despite this, most startup founders are too afraid to focus on one key niche for their product or service in the early stages.
It feels counterintuitive because you “don’t want to leave anyone out.”
But it’s a huge contributing factor as to why most startup founders are ultimately not successful in scaling their product globally.
It’s one of the big tricks in startup building.
So often, it’s the non-intuitive that’s the key to success.
Let’s look at a well-known example of a startup that became a unicorn with a clear beachhead underpinning its go-to-market strategy.
The co-founders of Canva, Melanie Perkins and Cliff Obrecht, used a beachhead market segment in the Australian high-school space to get their graphic design offer off the ground.
While Canva is now a multi-billion-dollar must-have design program used in companies and businesses all over the world, it didn’t start that way.
In 2006, as a 19-year-old student in Perth, Melanie Perkins was tutoring students on how to use design programs like Adobe Illustrator and Microsoft Designer.
But the programs were so complicated that it took students months to even learn the basics.
That’s when Melanie started dreaming of something better – a much simpler, more intuitive graphic design experience – but she didn’t have the money or software expertise to take on the likes of Adobe or Microsoft.
She had to start small.
It happened to be that her mother was a school teacher, and Melanie had observed year after year just how much of a grind it was for teachers like her mother – alongside volunteer students with no design experience – to compile the high school yearbooks.
Melanie decided she wanted to create software for designing yearbooks that was better than anything else on the market and would operate as proof of concept for Canva.
High-school teachers and students in charge of compiling their annual yearbooks was the beachhead.
The product would be online and collaborative like Google Docs, ultra-simple to use, and have beautiful plug-and-play yearbook templates that busy teachers and students could use with no learning curve involved.
Schools would design the yearbooks for free using the software, then pay commissions for print runs from Melanie’s company Fusion Books.
The business had four key advantages:
- A big market
- A concrete problem to solve
- Recurring demand
- No quality competing products from other companies
Within 6 months, the first version of the software was ready, and schools loved it.
Fusion Books got 16 schools as customers in their first year and Melanie set up printing presses in her mother’s living room to meet demand.
Over the next few years, Fusion Books grew to become Australia’s biggest yearbook publisher, but people kept asking if they could use the software to design other things.
There was still a gap in the market that was ripe for the picking – and it paved the way for Canva.
If Perkins and Obrecht had tried to build what we now know as Canva today right from the beginning – it’s highly unlikely they would have seen the billion-dollar success story they’ve experienced.
Taking on this mission with little funds and no tech experience forced them to be strategic and innovative – tackling the task in an iterative way – market segment by market segment.
It was a textbook startup success play.
If you’re a founder with a big idea but you’re unsure what frameworks to use to identify what your optimum beachhead market segment would be, we can help.
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