David Cummings on Startups

Focus on One Solution for One Market

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David Cummings

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Recently, an entrepreneur reached out to get some thoughts on going after two very different segments of the same market. As an example, think about a product that’s sold to one group for hundreds of dollars per year and another group for hundreds of thousands of dollars per year. My recommendation was to focus on one solution for one market.

The old adage still rings true: most startups die of indigestion, not starvation. Meaning, entrepreneurs are optimistic and eager to chase a number of opportunities, yet by going after multiple markets with multiple solutions, the chance of success goes down dramatically. Building a product that 10 customers love is incredibly difficult, so why make it twice as hard going after two markets or having two products?

Over time, most products and markets do run out of steam and it does make sense to expand. Too often, entrepreneurs give up early on a market and don’t go as deep as possible. If the market is growing double digits for the foreseeable future, it likely makes sense to stay the course. If the market changes, or there’s a new opportunity that’s at least 10x better, changing directions is an option.

Entrepreneurs should focus on one solution for one market and delight the customer.

Comments

2 responses to “Focus on One Solution for One Market”

  1. Alex Kistenev (@alexkistenev) Avatar
    Alex Kistenev (@alexkistenev)

    That is so true. Let me add my personal experience outside of tech world.

    I used to rent a two-story building where on a 2nd floor we had a school of robotics for children (7-14 y.o.). It was doing well, but the 1st floor wasn’t at use.

    So I thought, why don’t we open a kinder garden on the 1st floor hoping to have a match from the customers of the school. Some of them had younger kids, or friends with kids.

    It ended up with two _separate_ businesses with very different customers segments in the same building. We couldn’t dedicate enough time to both the school and kinder garden, and thus the service and marketing lacked execution.

    So, after some time we closed the kinder garden, leased the 1st floor and focused 100% of our efforts on the school.

    Reply
  2. Klaus Hofeditz Avatar
    Klaus Hofeditz

    Imagine a software company serving multiple segments in the same market by leveraging Open Source. The company gives it’s basic product away for free, offers SaaS/Hosting solutions and serves SMB’s as well as Enterprise class customers by offering “tailored” solutions made possible by pre-configuration of one and the same product and using a hybrid license model. One can argue that expectations and requirements towards the product vary between customers and that therefore different skill sets are needed to serve such a wide range of clients. However the model is more stable and allows for organic growth, given a skilled and flexible workforce.

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