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Selecting Beachhead Market - Kjetil Holmefjord
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Before I jump into the details, note that this framework is more useful for entrepreneurs with a “solution looking for a problem” than the opposite . What I find is entrepreneurs most often are somewhere on a spectrum between these two extremes, so my thinking is this should be helpful for many early-stage founders. “You have a total addressable market, and it can be sliced and diced (aka segmented) into many pieces.” While not always intuitive, I strongly believe it’s better to pursue one segment 100% rather than multiple in parallel. This does not mean picking the first one you find, but rather to quickly review the possible segments and quickly decide on one.
Now let’s say you have different segments where your product might be useful, how can you decide on one segment more quickly? The decision should be made with incomplete data (otherwise your decision making is too slow), but I believe you could aid your decision making process by mapping out your market segments. Here’s a walkthrough of how I would do it: “Figure out which market segments you theoretically could approach first – and put them on a list.” Figure out which criteria you should use to evaluate the markets. This might vary, but if I were making the assessment I would include the following: Decision speed: How quickly are you able to go from initiating contact to a purchasing agreement. Quicker is obviously better. One of the most important things in my opinion, and the reason why I rarely recommend going after entreprise-sized clients while you’re a young company – they’ll choke you. Market size: How many customers are there? How much is each customer willing to spend on your product. Competition: How many alternatives does your customers have? Product differentiation: How significantly is your customers’ pain reduced if they switch to the current version of your product. Founder-market fit: To what degree are you able to approach this market? Do you have preexisting network, understanding, experience in approaching it. Are you motivated to approach it?
Before I jump into the details, note that this framework is more useful for entrepreneurs with a “solution looking for a problem” than the opposite . What I find is entrepreneurs most often are somewhere on a spectrum between these two extremes, so my thinking is this should be helpful for many early-stage founders. “As a founder, you have to figure out “who to approach first?”.” While not always intuitive, I strongly believe it’s better to pursue one segment 100% rather than multiple in parallel. This does not mean picking the first one you find, but rather to quickly review the possible segments and quickly decide on one.
Figure out which market segments you theoretically could approach first – and put them on a list. “Decision speed: How quickly are you able to go from initiating contact to a purchasing agreement. Quicker is obviously better.” Rate how important you believe each criteria is. Base level is 1, and if you believe one criteria is twice as important you rate it 2 etc. I don’t have a blueprint on how this should look, but I would probably weight them like this: Decision speed: 2 Market size: 1 Competition: 1 Product differentiation: 1 Founder-market fit: 2
As a founder, you have to figure out “who to approach first?”. You have a total addressable market, and it can be sliced and diced (aka segmented) into many pieces. Figuring out which piece to approach first is not always trivial. “This does not mean picking the first one you find, but rather to quickly review the possible segments and quickly decide on one.” Now let’s say you have different segments where your product might be useful, how can you decide on one segment more quickly? The decision should be made with incomplete data (otherwise your decision making is too slow), but I believe you could aid your decision making process by mapping out your market segments. Here’s a walkthrough of how I would do it:
While not always intuitive, I strongly believe it’s better to pursue one segment 100% rather than multiple in parallel. This does not mean picking the first one you find, but rather to quickly review the possible segments and quickly decide on one. “The decision should be made with incomplete data (otherwise your decision making is too slow)” Figure out which market segments you theoretically could approach first – and put them on a list.
As a founder, you have to figure out “who to approach first?”. You have a total addressable market, and it can be sliced and diced (aka segmented) into many pieces. Figuring out which piece to approach first is not always trivial. “it’s better to pursue one segment 100% rather than multiple in parallel.” Now let’s say you have different segments where your product might be useful, how can you decide on one segment more quickly? The decision should be made with incomplete data (otherwise your decision making is too slow), but I believe you could aid your decision making process by mapping out your market segments. Here’s a walkthrough of how I would do it:
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