From Market Zero To Market Hero; Did You Do Your Homework?

“Beware the man of a single book.” ― Thomas Aquinas

What’s wrong with them………

How many times you’ve been in a conversation with other “like-minded” people and in the end of the chat you had a feeling; do they kidding me?

4 days ago I had such kind of conversation; it was kind awkward, you want to be polite and not offend anybody but you can’t stop thinking and wonder, do something goes wrong with them?

But In the end of the day how am I to judge them?

Nevertheless, I was so curious to understand their perspective that I couldn’t resist and ask them, why your product is better or unique with what is currently available in the market?

Ok let’s give you the context to understand what I am speaking about.

It’s not an app is a killer app, really?

Due to the nature of my profession I am constantly surrounded by startups, I love it. Every day I learn something new, something that will potentially be helpful for my own startup.

Nonetheless sometimes I hear some stupid things… one of them was as I said 4 days ago. While chatting with somebody (I didn’t know him before) I asked him in what kind of startup he is in, he replied to me “my startup develops an app, but is not just an app is a killer app….

I replied to him good for you and we both laughed! He then started explaining to me what kind of app will be (something like his elevator pitch) but to be frank nothing made sense to me.

However given that I am not so knowledgeable about that industry, I said to myself; it might be that the reason why I can’t get his points.

Long story short, after discussing with him for some minutes I was sure why his words didn’t make any sense to me.

Why? I will leave someone else to answer on my behalf

“Beware the man of a single book.” ― Thomas Aquinas

What do I mean?

That guy was completely ignorant of his market; he came up with one idea, he superficially read some “stuff” related to his market, then he dived in and started converting that idea into a product.

What is missing?

He forgot to do his homework. What kind of homework?  The homework that is needed before everything else, the market homework….

Any kind of startup need to connect those dots

Roughly speaking any kind of startup business before doing anything else have to get 2 answers to 2  very clear questions, or if you wish to be able to connect the dots and fill 2 gaps.

1^st: Identify the pain points of the market (needs, wishes, preferences, wants, problems of your target group)

2^nd: How you intend to solve it (your solution)

Even if you follow the advice that was given in one of my previous posts; “Be one of your target group”, this will allow you probably to have a good grasp about the 1^st gap (Identify the pain points)

You might think, provided that I have the 1^st question answered, with the 2^nd I will simply close myself in a dark room and try to figure out what is missing, or in other words a solution that address that pain points. No, something is still missing. What?

Real Market knowledge

Yes the answer is real market knowledge; but the question is what real market knowledge is really mean?

Knowing your market has 2 core components:

a)     To know your target group like the back of your hand

b)     Knowing the existing solutions (what is currently available in the market)

In the 95% of the times the pain points that you recognize is already addressed somehow by other market players.

Thereby, what is missing is to be aware about the existing solutions and how you can create a product or service that can either be better of the current solutions or unique. Otherwise you will probably lose the game before even begin.

This is what I mean when I am saying knowing your market. If we ignore any of the 2 components will be in the same position like our friend in the beginning of the post; be fueled by confidence due of ignorance.

Because we don’t want that……we’ll use some of our startup experts (again) to guide us avoiding this death trap.

In our today post I will stick purely how you can address the 2^nd  core element that constitute knowing the market and I will leave for a future post how to structure a compelling Value Proposition (your solution to that very specific problem that you’ve identified)

From market zero to market hero; how to do your homework

If we assume that you already applied some of the suggestion that were given in previous posts and you are in the point of finding out what are the current available solutions that you will eventually compete with, the process is composed by 5 steps. I will immediately start enumerating and explaining them.

1^st step: Research the current players (Your goal is not to spend a bunch of time learning everything, due first you can’t and second is not needed. Learn as much as you have to be able to move one).

Thus, create a list with at least 10 companies that currently accommodate your market either directly or indirectly. It doesn’t mean that these companies  have to offer exactly the same “product”, it could be different products that serve the same purpose/problem.

2^nd step: Deconstruct their offering; Namely what elements/benefits are included in their offer, be as specific as possible.

3^rd step: Assess the product/market fit. In other words after you carry out your initial research (it shouldn’t take you more than a week), you have to understand if your (future) rivals managed to have product-market fit (a solution to the market problem). If yes define how exactly they did that, if no recognize what is missing, where is the gap between customer expectations and what is been delivered to them

4^th step:  Decide which market type match with your case

As Steve Blank explains through his Customer Development Model, there are 4 market types that you can opt to compete with your rivals:

a) New Market: After you conduct your research you realized that potentially what you have to offer doesn’t have direct competition. This will be either mean that you are the 1^st in an undefined market, or something goes wrong with your market (market that doesn’t exist might mean that there are no potentials there)

b) Existing Market: This mean that there is a concrete market with several competitors operate in, is quite straightforward.

c) Re-Segmenting an existing Market:  “You try to segment the existing market to create a submarket where your product can be unique or substantially different. Or you can create a new market, you can define a space the market leader doesn’t address at all”. –Steve Blank

This is the model that I suggest to follow and all my recommendation in my previous posts have as a core principle that market type. Of course each one of you has to take into account its own personal case but after a thorough analysis and experimentation I adopted this type in conjunction with Tim Ferriss advice.

Due to the fact that initially we seek and will be smaller players and given our limited resources is by far the best option, I don’t recommend anything other than that market type.

Following this market type you have 3 strategies for competing:

1. Niche Strategy (just narrow down your market)
2. Cost leadership (I don’t recommend it, due to our startup size is impossible (you can’t use and exploit the economies of scale dimension due to size) and is fool game to select that path
3. “Secret” Strategy (this is the path to follow, allow me to not reveal it today, in my next post I will elaborate how through that Strategy in combination with some other tactics how you can diversify and stand out from the crowd).

d) Clone an existing market. Namely, take one business model from one country and bring it on your country because it doesn’t exist yet.

5^th step Create a differentiated and compelling Value Proposition

In my next post I will address solely this step in combination with the step #4.

*********

That’s it “guys” this is the simple process that will make you from market zero to market hero.

And never forget…

“The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.”
― Stephen Hawking

[Contributed by Andreas Aravis, founder of No More Startup Myths. He is a 25-year old junior startup development specialist, blogger and aspiring entrepreneur.]

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.