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Disciplined Entrepreneurship: 24 Steps to a Successful Startup (Disciplined Entrepreneurship Series)
by
Bill Aulet
Three Conditions That Define a Market
customers within the market all buy similar products.
customers within the market have a similar sales cycle and expect products to provide value in similar ways.
“word of mouth” between customers in the market,
It is critically important that you recognize that to be successful, you must build your business based on the customer you are serving,
Each customer actually consists of an end user and a decision-making unit.
The individual (a real person!) who will use your product.
individual(s) who decide whether the customer will buy your product,
stay focused on a key group of relatively homogenous end users, who will provide the much-needed initial cash flow.
you must continually talk, observe, and interact with your target customer to obtain this information and reconfirm it.
Your goal is to create a description of a narrowly defined subset of end users with similar characteristics and with similar needs.
POTENTIAL CHARACTERISTICS TO INCLUDE IN YOUR END USER PROFILE
gender?
age r...
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income ...
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geographic lo...
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moti...
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fear
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h...
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go for vacation? For dinner? ...
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read? Web...
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w...
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What is the general reason they ar...
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special and ident...
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their ...
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It is a huge advantage if someone who fits the End User Profile is on your team from the beginning,
If you don’t have someone from the demographic already on your founding team, you should hire a target end user for your executive team.
For the end user’s gender and age, they specified both male and female, with an age range of 17–40 years old. This demographic is far too general.
It is also a critical part of the process to help ingrain the mentality that you should build the company around the customer’s needs,
TAM for your beachhead market is the amount of annual revenue, expressed in dollars per year, your business would earn if you achieved 100 percent market share in that market.
first determine how many end users exist that fit your End User Profile using a bottom-up analysis based on primary market research. Then, complement this with a top-down analysis to confirm your findings. Then determine how much revenue each end user is worth per year.
Multiplying the two numbers results in the TAM. You are looking for a market that is big enough for you to get to critical mass, develop key capabilities, and get to cash-flow positive in the market.
You will have to make some assumptions about how much a customer is willing to pay per end user.
base the number on the budgets of the potential customers you have identified.
How much are they spending today to accomplish what your product does? How much have they paid in the...
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How much value does your product cre...
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If, at this point, the estimated value of your TAM is less than $5 million per year, it is possible that your new venture has not identified a big enough beachhead market,
TAM that is between $20 million per year to $100 million per year is a good target.
over $1 billion certainly raises flags.
Compound Annual Growth Rate (CAGR).
We had not adequately segmented the market, and would need to choose one of these geographic
We started by looking at how much customers were spending today for a similar but inferior digital product, or what they were spending to simply get the job done without a digital product.
we focused on how much the customer spends per designer;
TAM is how much annual revenue you would accumulate if you achieved 100 percent market share.
You are looking to answer the question, “If I had only one end user to represent our End User Profile,
who would it be?”
The Persona should conform very well with this profile while also providing...
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Most importantly, you want to list the Persona’s Purchasing Criteria in Prioritized Order, as these priorities will dictate what purchasing decisions the Persona makes.
It is crucial to understand how your customer prioritizes their needs and wants.
The Persona should become a touch point as you think about decisions going forward.
