Go To Market

Network effects generate positive feedback loops that result in superlinear growth

Johny Fiala

Summary

You can't start small and grow slowly, it needs to be widely adopted by the market or else it offers little value to potential users (get to the "tipping point").

If you can't change the economics of the product, change the perception of adoption for new users (what users expect the adoption to be in the future).

Redesign the product to give value to the individual user regardless of that user's network (LinkedIn profiles serve as professional identity for user even if that user's colleagues haven't joined LinkedIn).

Go To Market Strategy

"What Do We Sell?

⁠

This is a crucial phase: The objective is to identify what the minimum specifications of a product are. What is the problem we are addressing? How does our product solve this problem? Is this a new solution? If yes, why has no one done this before? Do we have a new technology? Otherwise, why is our solution superior to that of our competitors? What value does our customer receive from our product? What is our product roadmap?

Entrepreneurs should have answers to all these questions before embarking on the rest of their journey."

"Where Do We Sell It?

This may seem trivial, but it is extremely important—what if you have created something amazing that only a few people are interested in? Who wants to buy what we are making? How large is this market now? Will it grow? Can I prove this? An example that comes to mind are companies that target venture capital funds in Europe with due diligence products and services: This may seem like an interesting market at first glance, but it actually is not. There are not very many venture funds, and they tend to be smaller and have smaller budgets than private equity funds, for instance, so they offer limited income opportunities. Another important consideration to be made is on how the market will change and evolve. A handy visualization of this question is the Ansoff Matrix, pictured below."

"Who Do We Sell It To?

Once we have determined which market we will target and have validated our assumptions about size and needs, we need to go one level further in our analysis and segment our customers. This analysis is based on two main variables: needs and behavior. Obviously, the techniques and layers of data taken into account will change depending on whether we are looking at individuals or businesses, but the principles don’t change.

A few example techniques to segment customers are: Based on geography, Based on size, Based on where they would go buy your product, Based on spending and purchasing habits, demographics, etc."

⁠

"How Do We Reach Our Customers?

At this point, we have a product that answers a specific need, we have decided which market to target, and we have segmented our customer base and created personas. It is now time to select our channel and decide how to reach our target customers.

The first question is whether you need a high or low touch sales approach: This will depend on the LTV of the customer. Then we will have to decide whether to sell directly or indirectly. Will we have a physical store? Will we sell through our website? Through channel partners? Through affiliates? This is why it is so important to understand our customers’ buying behavior: A successful company, especially at first, will need to go to the customers and not try to change their behavior, which would be too complex and costly to do and you would most likely go out of business before effecting any change.

100 Million Dollar Question:

Will it be?

1 customer paying you $100 million dollars a year

10 customers paying you $10 million a year

100 customers paying you $1 million a year

1,000 customers paying you $100,000 a year

10,000 customers paying you $10,000 a year

100,000 customers paying you $1000 a year

1,000,000 customers paying you $100 a year

10,000,000 customers paying you $10 a year

100,000,000 customers paying you $1 a year"

Summary

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