As a small and scrappy startup with limited resources, you must identify where your solution fits in the market and how it works with your prospects’s technology platforms. The best beachheads come from capturing emerging processes and opportunities.
Are businesses quickly changing the way they do marketing? Are there ways to capture those new processes?
It’s good to have a vision for the end product, but early on, you won’t be able to go for the big win. Unless you’re bringing some kind of disruption to the market, you can’t position your solution as an all-in-all platform. You need to find the gap you’re going to fill.
Maybe it’s a manual process, an Excel spreadsheet, or a legacy solution that never quite solved the problem completely. To find your gap, you have to understand the substitute products (your competition), and what you’re enabling (your solution’s value).
In other words, you must figure out how your solution is differentiated and whether that differentiation is valued by prospects. This, in a lot of ways, is a perception game. Often times, perceived comparables and perceived value matter more than real competitors and real value.
How to Compete Against Substitute Products
You can have the greatest product in the world, but if your prospects think your solution is just like Dropbox, you’ll have a hard time charging more than Dropbox. Your perceived comparables matter more than how different you think your product really is.
In the same way, if prospects don’t perceive your solution as valuable, it won’t matter what benefits it provides. The only value that matters is the value that prospects perceive from your product. What impact do they feel it has?
Think less about the direct competitors and more about how your solution can fit in their technology mix. For startups, substitute products and the status quo are typically more dangerous competitors than large incumbents.
Understand the technology mix, play nice with the existing solutions, find your fit and beachhead, and then expand to take over the world.
Now that the costs of building new products have decreased, generations (and mentalities) have changed, and business gatekeepers have lost some of their leverage, new and more diverse paths have become real options for entrepreneurs. Enter solopreneurs:
What Are Solopreneurs?
Solopreneurs are business owners running their businesses alone. They can work in either B2B or B2C, in tech or in other domains, and have modest or grand ambitions.
The core difference between entrepreneurs and solopreneurs is that solopreneurs choose to build their businesses alone.
Although this post focuses on solopreneurs in technology, what’s particularly interesting with solopreneurs is that they embrace the constraint of being solo.
As Lean and B2B entrepreneurs, there’s a lot we can learn from their approach and mindset, specifically:
1. Solopreneurs Use Constraints to Define Their Businesses
We’ve already talked about the importance of the entrepreneur fit in building and growing a startup.
With solopreneurs, the entrepreneur fit is at the heart of their decision to start up. By limiting the scope of the business ideas they evaluate, and being keenly aware of the lifestyle they’re trying to have, they’re able to make better decisions as to what the right business is for them.
B2B entrepreneurs need to learn to keep the entrepreneur fit front and center. Building a business you’re not uniquely qualified to build can lead to de-motivation and the feeling of being estranged in your own business.
To achieve speed and success, it’s usually best to build for your unique competitive advantage(s).
2. Solopreneurs (Often) Use Quick MVPs to Validate Their Businesses
A rising trend among tech solopreneurs is the idea of building really quick MVPs and throwing them out into the world for validation.
Although this requires distribution channels to get visibility and it won’t work for enterprise or mid-sized businesses, I’m not convinced that it’s a bad way to get a quick feel for a business idea.
With the rise of Application Programming Interfaces (APIs) and Web Services, people of all backgrounds are now able to build tech products. This means that teams can now create (and iterate on) basic versions of their products without or before hiring (or partnering with) development talent.
For B2B entrepreneurs, it can help transform your early mindset from “Can we build this?” to “What external services can allow us to create and validate this quickly?”
4. Solopreneurs Can Only Focus on the Essential
There’s only so much you can do as a solo founder. Put too much on your plate and your run the risk of burning out. Put too little (or too much of the wrong things) and your run the risk of stagnating.
When you have a team, it’s easier to stretch and assign unessential tasks to co-founders or employees. You may not bear the brunt of it, but these tasks can destroy productivity, team morale, and slow down your growth.
Solopreneurs are constantly forced to re-evaluate and re-prioritize tasks. This helps keep their focus on the truly essential tasks, and forces them to embrace the lean methodology.
5. Solopreneurs Start with Lower Expectations for Their Businesses
For some reason – be it media or culture – we don’t hear the same kinds of stories about solo founders that we hear about startups.
Because they don’t have a team and generally haven’t raised large sums of capital, solopreneurs experience less pressure for their business to sell, grow big, or morph into something else. This helps keep their expectations in check.
Considering the time it takes to get a B2B business off the ground (18 to 24 months), and the Long, Slow, SaaS Ramp of Death, it helps to have the right expectations at start up.
MailChimp was a side-project for 6 years.
Todoist was a side-project for 4 years.
Basecamp took 2 years before it was paying their salaries.
Maybe the rest of us shouldn't be in such a hurry.
If you have a team and/or co-founders, compromises might lead to the creation of a business everyone is ok with, but no one loves. Worse, you may create useless work just to keep the team engaged, which is absolutely not lean.
Overall, there are a lot of things we can learn from solopreneurs. The more models we know, the better equipped we’ll be to handle what’s up ahead.
Entrepreneur and investor Jason Lemkin says that if you have 1 customer in a segment, you can get 10.
With user segmentation and a bit of data, you can find your business’s best customers to double down and find more. In this post, we look at how entrepreneurs can use data to find their product’s best customers.
How I Found Lean B2B’s Best Customers with User Segmentation
We don’t need to look very far for another example…
I wrote Lean B2B to help B2B entrepreneurs; the book and its marketing made that fact pretty obvious. Yet, evaluating buyers a few years after publication, I realized that innovation consultants loved the book, found value, and were extremely willing to refer it to their peers.
For an author with limited time and resources, it made sense to use this insight to prioritize promotion efforts.
How to Use Data to Find Your Product’s Best Customers
You probably already have a sense of whether you’re targeting the right customers or not, and you know what great customers look like. It’s the perfect time to dive into user segmentation.
To find the best customers from your customer base, we’ll look for signals within your data or analytics.
The next 10% gives you a good comparison point. It can also reveal some of the lowest hanging fruits to help you create an exceptional product experience.
The last 10 – and this one is optional – helps you define who you shouldn’t be targeting. There’s a lot to learn there as well.
With these less-than-ideal customers, you’re looking for the characteristics and habits of the people that were never really a proper fit for your company. You can use those to create a negative persona – an archetype or profile.
Going Beyond User Segmentation to Home in on Your Best Customer Segment
To dive deep and understand the breakdown of each of those segments, you can do a market segmentation analysis, doing interviews to refine your segmentation.
Since you’re targeting people you’ve already sold to – or have already convinced to try your product – it should be easier to get them to engage with you.
Depending on your customer base and how deep you want to go, evaluating your customer segments can take anywhere between 2 weeks to 2 months.
This may seem like a lot of time, but it’s definitely worth it if you are to make an important focus decision.