Learn to love your niche
"Start with a niche" is one of the most common pieces of startup advice, and yet I think it’s still vastly underestimated. It’s not just a strategy; it acts as a forcing mechanism, making you talk to a restrained set of users and build something they really want. And I really believe that go-to-market focus on a niche is highly beneficial to your company, and most founders should stick to their niche much longer, even once they’ve figured out their product-market fit.
Reducing the scope is a hard decision to make
Over the years I’ve spent countless hours arguing with founders over the need to drop B2B or B2C, to drop the large enterprise segment over SMBs, which verticals to drop, etc. As I try to convince them, examples from large companies being stuck in their B2C or B2B segments don't cut it, nor do articles like this one. Founders learn the hard way, until they come back saying, "We should have done it sooo long ago."
The arguments I hear are always the same:
it is exactly the same product for the two types of clients
the clients have very similar use cases
it doesn't take more to support
it is money being (stupidly) left on the table
But even if the product is similar today, the requirements of different segments will force you to perform the most epic of splits. Catering to large enterprises will force you to invest heavily in security, SLAs, on-premise... while catering to SMBs or B2C will push you towards slick design and easy on-boarding. As a startup, you have limited resources: don't try to master two products at the same time! It's the story of Slack versus Discord, or Box versus Dropbox. And know what? All of those are great companies.
Go-to-market will define your company
Most importantly, the go-to-market is different for those segments. Go-to-market will shape your organization, your culture, and your roadmap. How do you set up your targets? What type of people do you hire? What do you celebrate quarterly?
A typical B2B organization:
forecasts revenue based on the number of salespeople they can hire and their efficiency
has a culture that thrives on lavish dinners, golf courses and influence
rewards extremely high paid salespeople wearing suits
celebrates 7-figure contracts
A typical B2C organization:
forecasts revenue based on marketing spent and product metrics
thrives on product, design and its users
rewards extremely high paid engineers wearing slippers and robes
celebrates 0.5% increases in retention rates
Startups are building cults. You can't build two cults in the same space.
Catering to one segment doesn't mean you can't sell to other segments. It means you should treat them as regular clients and have the exact same go-to-market. Selling $5k ACV contracts and $100k ACV contracts is as different as B2C and B2B.
That's why as a Fortune 500 manager you could pay for Slack for your whole team with your corporate credit card. Only much later did Slack introduce inside salespeople to cater to large enterprises; and to really succeed, they partnered with Salesforce, a company that thrives on sales!
Stay focused!
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