Startup Founders by nature like to think big! To attract investor attention and grow a multi-million (or even multi-billion) dollar business they have no choice but to. But when it comes time to launch their product or service this same mentality may actually be to their detriment. In today’s essay we are going to look at one key concept that is integral to the successful launch of a startup. And that is to get narrow! And to get focused!
Recently, while advising startups as part of my work at Startup Engine I have listened to a number of Entrepreneurs who have great ideas, products and vision, but wanted direction on how to go to market. They have a product or service that could potentially be used by millions of people around Australia (and the world). But despite what you may think, that is actually a problem.
It’s a problem, because with a limited startup budget you can get caught in the trap of taking a spray and pray approach to marketing. There are so many potential customers that it can often be overwhelming. Naturally you don’t want to give up any sales opportunity and therefore default to the idea of contacting and engaging with anyone and everyone who may have an interest in your product or service.
“having a narrow approach makes it 10x easier to cut through.”
Unfortunately this scatter-gun approach is setting your startup up for failure. You only have to look at one of the most successful startups of our generation, Facebook, to see how getting narrow and being focused is key to a successful launch. In case you don’t know Facebook was only available to Harvard university students with a harvard.edu email address. By virtue of being narrow in their approach to user acquisition Facebook was very quickly able to reach a critical mass within the University.
This was important because the utility you gain from Facebook only comes if you log on and see other people you know. Keeping it within a narrow circle ensured that there was a significantly greater chance that when you logged into Facebook for the first time you saw someone you know and had people to engage with. That, in addition to the exclusive nature of the product made it something everyone wanted to be a part of.
We can contrast this approach to something that is more haphazard in nature. Instead of securing 5,000 users at Harvard, what would have happened if Facebook secured 5,000 users across the whole of America? Hell, you can even refine that down to 5,000 users within one particular city. The answer is the same. They would have found it infinitely harder to achieve critical mass and would potentially never have become the company they are today.
Why? Because the chance in 5,000 users within a city of millions logging on and finding friends on the platform is infinitely smaller than 5,000 out of a student body of <10,000 logging and having people to engage with. And without finding anyone you know the utility of Facebook is lost.
While the case for getting narrow is clear in the sense of a social network the same approach applies to B2B and B2C startups. Another well known example is Amazon. Today you can log on to Amazon and buy almost anything. Depending on the country and city you live in you can often have those goods shipped to you within the same day. And they even have large and growing businesses in video streaming and cloud infrastructure services. But it didn’t start that way.
Jeff Bezos had a vision to disrupt the retail world but he started with a single category…. books. He choose books after reading a report that projected annual web growth at 2,300%. He then drew up a list of 20 products he thought could be sold on the internet and then narrowed this down to his top five. This top five list included compact discs, computer hardware, computer software, videos and of course books. He eventually decided on books as they could be offered at a low price point and there was a wide variety of titles available.
Had Bezos tried to create the Amazon we know today back in 1995 do you think he would have been as successful? Even if he focused on just those 20, or narrower still the 5 shortlisted products, chances are it would have been a much harder road to success. People wouldn’t have known what Amazon stood for and getting that same level of brand recognition would have been 10x as hard. They didn’t become the go to place for books based on luck alone!
By getting narrow you improve your chances of success. If we take a look at marketing as a function that requires such focus we can reference another example, perhaps you offer an on-demand service for product X. Should you start by offering that service across the country? Or a city? The answer is neither. You want to offer that service within one particular area of a city, right down to the postcode or zip code level. There is still thousands of potential customers in that market, and you won’t have the supply capacity to services them all anyway so don’t feel like you are missing out on sales.
Once you have it narrowed geographically you may then refine further by age and gender. Using our on-demand example let’s say you now have a potential market of 10,000 people. That’s perfect! Why? Because with your marketing budget you can now hit those 10,000 people with Facebook ads, Twitter Ads, print advertising material, etc. You are reaching them over and over again and building brand recognition with them. Contrast this to 10,000 people randomly across a whole city like Sydney, San Francisco or New York. Even if you ran Facebook ads chances are you won’t hit the same 10,000 people more than one. There’s just too many people. And they will never remember who you are.
Being narrow is just the first step in your journey to connect with your customer base, prove product market fit and then scale.
The same approach applies if you are launching a new startup and think it’s a good idea to burst out of the gate with 5 products from day one. If you only have $10,000 for marketing, you are now spreading that spend across five products, so $2,000 in marketing on each. You are just spread too thin. You are going to have a much better chance if you focus all of your effort on just one product, in one geography.
And this approach doesn’t just hold true for paid marketing. If you are doing anything from content marketing (blogging), guest posting and even reaching out to reporters for press coverage having a narrow approach makes it 10x easier to cut through.
Let’s take a blog as an example that is designed to support the sales cycle of a B2B product. Say you have made a new analytics tool that can take sales results and provide instant forecasts over a daily, weekly, monthly basis using a proprietary algorithm and visualisation feature. Now there are thousands of companies across every imaginable industry that might be interested in that tool. But how are you going to blog about that? It would be a scatter-gun approach at best and a wash out at worse. But, if we take that same software tool though and launch it as solely a tool for fresh food retailers, you now have a mucher narrower market and become “the”analytics tool for fresh food retail.
This feeds into your content strategy as now every single post you write can speak to that one industry, that one business owner and that one type of product. A customer who stumbles onto your site can now clearly see that you know what you are talking about, because it is all you talk about!
The same goes for guest posting. Before you would try and reach out to all kinds of industry blogs. Now you can just target blogs about fresh food retail. You can refer to your own content and your expertise as a leader in that industry making it 10x easier to convince a blog owner or publication that you should write something for them. The same holds true for reporters looking for new startups to cover. You are not just an analytics company, you are “the” fresh food retail analytics company. A much stronger statement.
At the end of the day if you can’t make your startup grow when you launch in one market, what makes you think you can make it work if you launched in ten!
As you move on from marketing and user acquisition this narrow approach also provides a much more structured framework for future feature releases and customer support. On the feature front if you have 100 customers from 10 different industries they may all have different feature requests. How do you know what to build and when? At this early stage you can’t be everything to everyone. Having 100 customers from one industry provides a much clearer story and patterns will be easier to spot. You may now have 80 out of 100, instead of 8 out of 100, saying they need a way to forecast spoilage of fresh food as well. This narrow focus has allowed you to spot something that you would wouldn’t have seen in your multi industry approach. And your product has just become more “sticky” to your customers because of this insight.
Finally, being narrow and being focused is not saying that you don’t want to chase a big enough market, or don’t have the opportunity to become a multi-million or multi-billion dollar company. Being narrow is just the first step in your journey to connect with your customer base, prove product market fit and then scale. Just like how Facebook started at Harvard and is now universally available, or how Amazon started with books and now sells pretty much everything. Time and time again we can point to startups that understood the importance of serving one group/one market really, really well before even considering other channels. Because at the end of the day if you can’t make your startup grow when you launch in one market, what makes you think you can make it work if you launched in ten!
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Finally, I am passionate about supporting the startup ecosystem. I provide a free daily newsletter on Australian startups at www.startupsoda.com.au.
I also provide free consultations to startups at www.startupengine.com.au. Yes it’s Free and some of my clients have said:
- His thoroughness, and candour provided us with an extremely valuable review which we have taken on board to implement the findings. — John Stericker (flatmate.com)
- Paul’s deep understanding of the startup sector is extremely impressive and I would have no doubt in recommending Paul to anyone seeking advice on launching a startup — Alan Arnott (Docustream)
- With his prior experience in setting up successful digital and physical businesses he possesses the breadth and depth for advising an early-stage startup. — Harshit Sekhon (PlanMyMeal)
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