The single most important factor to a startup getting off the ground and succeeding is problem market fit. You must solve a core problem for a specific market. Yet, sometimes that market can have submarkets or niches that you can target and succeed in. So a market giant doesn't necessarily kill your chances of success.
I’ve spoken to quite a few first-time founders over the years working on launching a startup. Many of them obsess about either being first in the market or only entering a market without an elephant in the space. Both can be quite helpful to allow you to quickly gain market traction. Yet, most of the founders see their target market as a one-size-fits-all. Meaning my addressable market is both Enterprise and SMB if a B2B app, or every person trying to book travel (B2C or B2B). So they look to address and conquer all markets or buyer personas in order to succeed.
In reality, this doesn’t need to be the case. A startup looking to build an app to book travel simply has the potential to succeed as a B2C play. Allowing Scott to easily find & book the cheapest flights from Tel Aviv to Madrid and hotel/car/etc. This example too is a macro view. Instead of building that business, I could instead build a product to allow people to book purchase cultural travel packages. Yes flights & hotels, but more about the experiences. The home-cooked meals at someone’s home. Learning how to handcraft some local garments. Perhaps, taking a music lesson from a local musician playing a local instrument and type of music.
In the past year, I saw a great example of this. When CoVid hit, I couldn’t go to the gym anymore. I was going 5x a week and the thought of not exercising anymore was a bit scary. I didn’t have any equipment at home, and I’ve tried tons of gym apps over the years. Never wanting anything more than a simple way to log my reps 💪. Then I found the Peloton app, and have been a fan ever since. I love a few of the trainers they have. Their style, their engagement, and the production all around. I even pay for the app ( I’ve honestly always tried avoiding many paid tools though have come around the past year). I was sure I’d continue using Peloton until CoVid ended and I’d return to the gym.
Then in the fall of 2020, Apple released my ultimate teaser. I’ve used the Apple Watch for years, and always knew it was undervalued as a product and category. Finally, Apple was getting into the fitness space. YES!! 🙌. When Apple wants to go all-in on a category, they do it. And normally do it very well. Plus they have endless bags of money 💰💰💰 to spend. Making the best possible product, experience, and most importantly content. This was going to be game-changing, and I was already convinced to swipe my card 💳.
A few months later after a long wait, Apple fitness launched. I immediately signed up and took my first ‘core’ class. It felt…………..like a ‘B’ movie. For those that don’t understand the phrase ‘B movie’ it refers to a low-budget movie where the actors are either not great or try way too hard. Read more. I must have had a bad day, and it was me. I took 4 or 5 more classes over the next 2 weeks. I felt the same way after each class. How the heck could this be? How could Apple have spent a boatload 🛥️ of money to produce something so poor? How could Peloton be doing this so much better?
It then dawned on me. Apple didn’t produce an inferior product for me. They produced (probably) a superior product for someone else. What the heck does that mean? I’ve been going to the gym for more than half of my life. That said, many of the Peloton core exercises can still kick my ass. I took a step and realized there was a very clear difference between Peloton and Apple Fitness. Peloton built an app with trainers teaching courses for intermediate and higher-level exercisers. People who’ve been working out for years and were already at least partly fit. People who need to work hard to get a good workout. So the trainers engage their watchers more as peers. Perhaps not at the same level, but not rookies doing their first workouts. So more explaining of how the exercise works the body and less focus on motivating.
On the other hand, Apple Fitness was built for beginners. Whether only recently starting to workout or looking for that ‘couch to fit’ idea. Starting at step one. Meaning the trainer focuses more on motivating you. Making you feel good vs pumped. The 2 assistants in the videos add their motivation. Including “oohs and ahhs” and “that was exhausting” remarks. As a beginner, this would resonate much more. Hearing the assistant trainers huffing and puffing with you, tells your brain ‘this workout is really tough’ and ‘I can keep up with the trainers.’ A masterful psychological and customer experience (CX) stroke at motivating beginners to keep going.
Peloton is worth billions (from the hardware that goes along with the SaaS model). Apple is worth a ton more. Each is conquering and dominating a specific niche, a specific sub-market, or stall within the bigger ‘workout from home’ market. Just like the picture above, one stall may sell vegetables 🥬, while the stall next door sells root vegetables 🥕🥔 , and the next one selling fruit. 🍉 🍌 🍍 . It’s all ‘one’ workout from home market, but there’s plenty of room for multiple successful products and companies targeting specific use cases or personas.
So if you’re a founder don’t be put off by trying to conquer the entire market. If you want to build a project management tool, you don’t necessarily have to build one that every single team would use. You could build a design project management tool. From gathering business & user requirements to the mockups, hi-fidelity screens, and collaboration/communication to tie things together. There are plenty of design teams in the world, and a tool designed for their use case could be as valuable as a generic tool. Just be sure that the smaller market is still big enough.
Now, if you’re worried you’ll get swallowed by a giant in the space. Yes, it’s true they may pivot or extend their platform into your space. Though in many cases it takes them years and years to do so. Lots of companies can launch and exit in that time. I believe the best example for this (besides Amazon) is Airbnb. For years, I’ve stated Airbnb will want to be the single destination for travel. Not just where you stay, but how you get there. Not just how you get there and where you stay, but what you do when you’re there. And what you eat, what you buy, etc. If you look at their website and business they are still quite a ways away from being that one-stop-shop.
Let me know what you think. I appreciate honest and transparent feedback. Even if you don't agree with my opinions.
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