STEP 0

Ways of starting a new venture

● Have an idea
● Have a technology
● Have a passion
“What can I do well that I would love to do for an extended period of time”

What can I do well that I would love to do for an extended period of time
Know your strengths
● Knowledge
● Capability
● Connections
● Financial assets
● Name recognition - what are you know for
● Past work experiences
● Passion for a market
● commitment

Entrepreneurship is not a solo sport

STEP 1
Funneling - brainstorm

“Is this something the world could benefit from, and is it something I do well and would love to
do for an extended period?”
The single necessary and sufficient condition for a business is a paying customer.
Now, just because you have a paying customer does not mean you have a good business

Creating an innovative product where no market currently exists is essential to the success of a
startup

pitfalls:
You have limited resources, that's why you should focus on your main product do not try “selling
to everyone”
“China syndrome” or “fun with spreadsheets” basically creating somewhat realistic situations
that work on paper but wont work in real life

Types of business models:

Within the broad definition of a customer, there is the end user, who ultimately uses your
product, and the economic buyer, who makes the final decision about whether to acquire the
product.

For instance, Google’s search engine is free to use, but Google sells advertisements on search
results pages to make money. (differentiation between primary vs secondary customer)

Matchmaking models, where you need both seller and buyer

Market segmentation:
Brainstorm crazy ideas
Talk to customers even at the early stages
Be open minded and creative
Start with a wider ideas
Find possible end users
Identify tasks your en user needs to perform
Group you subcategories if they happen to be similar

Narrow
● Is the target customer well-funded? No money - no business
● Is the target customer readily accessible to your sales force? - per to per no third parties
to market
● Does the target customer have a compelling reason to buy? Is it gonna choose your
product over something else
● Can you today, with the help of partners, deliver a whole product?
● Is there entrenched competition that could block you?
 ● If you win this segment, can you leverage it to enter additional segments?

STEP 2
Start small and work your way up
Select one market opportunity

HOW TO CHOOSE YOUR BEACHHEAD MARKET

Once you are dominant beachhead market share you can move to the next ones
It's easier to gain market share when you focus on one beachhead
The narrowing strategy are useful
Try avoiding big markets
Smaller markets are easier to learn from

YOUR BEACHHEAD MARKET STILL NEEDS TO BE SEGMENTED FURTHER

How do you tell if your market is targeted enough?
● Customers within the market buy similar products
● Salesman can be very effective even when switching similar markets
● Worth of mouth - customers have references between each other

STEP 3
Decision-Making Unit: The individual(s) who decide whether the customer will buy your product,
consisting of:
Champion: google user, baby
Primary Economic Buyer: ad payer for google, father
Influencers, Veto Power, Purchasing Department, and so on: People who have sway or direct
control over the decisions of the Primary Economic Buyer

WHY TARGET A SPECIFIC DEMOGRAPHIC?

Even tho beachhead markets are narrow, often you find a lot of variety inside of them, you need
to point your product into the customers inside the market that are actually interested in
acquiring your product
Look into characteristics of your customers to funnel them into your specific customer

Having someone in your founding team that is actually a end user is really useful, this way you
wont make assumptions
STEP 4
BOTTOM-UP ANALYSIS AND TOP-DOWN ANALYSIS

Bottom-up: get the number of end users that fit your profile (counting noses)
Top-down: secondary market research using comprehensive factors as a basis for decision-
making funneling

They are complementary to each other

When you get the amount of customers you can calculate an expected revenue
The TAM is how much annual revenue you would accumulate if you achieved 100 percent
market share

If your TAM is below 5 million in revenue then your beachhead is too small
TAM between 20-100 mill is a good target, everything adobe 1 billion is a red flag

STEP 5

the Persona is a person who best represents the primary customer for the beachhead market.
HOW TO CHOOSE AND PROFILE YOUR PERSONA

If you have sales analyze the most successful customers

If you havent you can use information from the primary market research
Make sure they'll pay for it, not just interested
You're looking for a representation of the end user

Get into his life, job, income , hobbies, etc

The top priority is the concern that keeps the Persona awake at night.
You have or don't have to interview the actual persona
Look into the details

This is more than an exercise

The persona is the focus when taking decisions in the future
It is crucial to update your persona if you made errors
Businesses such as ebay or google where they have a customer but also a end user need 2
personas, one for each role
This personas help you focus on what to and what not to do
Once the persona is developed you're not selling to and end user you are selling to an specific
individual
An important detail to understand about the Persona is his or her Purchasing Criteria in
Prioritized Order