Disciplined Entrepreneurship: 24 Steps to a Successful Startup

by Bill Aulet

the sunscreen market proved to be too large and too diverse for the team, which continued to subsegment the market through primary customer research. Eventually, they settled on one of the subsegments, extreme athletes in their thirties who do triathlons.

When the team approached a number of these athletes with their idea, they were extremely positive toward the concept (or potential product).

SUMMARY Choose a single market to pursue; then, keep segmenting until you have a well-defined and homogenous market opportunity that meets the three conditions of a market. Focus is your ally.

Step 3 Build an End User Profile

Use primary market research to flesh out a detailed description of the typical end user within your market segment.

you must build your business based on the customer you are serving, rather than pushing onto the market the product or service you want to sell.

Each customer actually consists of an end user and a decision-making unit.

End User: The individual (a real person!) who will use your product. The end user is usually a member of the household or organization that purchases your product.

Decision-Making Unit: The individual(s) who decide whether the customer will buy your product, consisting of: Champion: The person who wants the customer to purchase the product; often the end user. Primary Economic Buyer: The person with the authority to spend money to purchase the product. Sometimes this is the end user. Influencers, Veto Power, Purchasing Department, and so on: People who have sway or direct control over the decisions of the Primary Economic Buyer.

you will build a profile of the end user that is specific enough for calculating the Total Addressable Market size of your beachhead market.

Later, you will add much more specificity by identifying one end user who fits the End User Profile to serve as your Persona. Your focus will be on the end user, because if the end user does not want your product, you will be unable to reach your customer.

You may think that after choosing a beachhead market, the End User Profile will be easy. However, it typically requires a lot of time, thought, and further research.

You will find that even in your narrow beachhead, the end users are not all alike. You will first need to further focus by choosing a specific demographic of end users.

As a startup, you will have to exclude many potential customers in order to stay focused on a key group of relatively homogenous end users, who will provide the much-needed initial cash flow.

As I will note throughout this book, you must continually talk, observe, and interact with your target customer to obtain this information and reconfirm it.

Once you have done this primary market research, it may well be the most valuable information you will have.

Your goal is to create a description of a narrowly defined subset of end users with similar characteristics and with similar needs. Look for a subset the same way you looked for a beachhead market.

Trying to sell a product to a wide variety of end users is as unfocused as trying to sell to multiple markets. Your sales strategy may not be equally effective for both 25-year-olds and 50-year-olds;

You do not want to spend your time and resources trying to be everything to everybody.

POTENTIAL CHARACTERISTICS TO INCLUDE IN YOUR END USER PROFILE

DOES YOUR FOUNDING TEAM INCLUDE SOMEONE IN THE END USER PROFILE?

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.

they are frustrated with products that don’t properly convey their very specific design intent.

Hence they have not given up using clay studios, which convey design intent much better than the new digital tools that are being forced on them. The new tools are engineering tools that have been modified for designers but make it very difficult to convey design intent.

Ride-Sharing Company, Russia

They focused on younger tech-savvy drivers who they thought would be more likely to use the service,

When they presented their End User Profile, they were not nearly specific enough in their demographics. The company was trying to be inclusive with its profile, but the result was lost focus.

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. Do all males and females ages 17–40 have the same goals, aspirations, and fears?

the beachhead market was not segmented enough. They should have tried using the question, “Why would the end user want to use my product?” to further segment their beachhead.

There were some specific factors, such as the end users had smartphones, though they did not specify the type of smartphone,

They also said their users are technologically advanced, early adopters of new tech products, and active users of social networks. All of these can be further specified (which social networks?) as well.

Narrowing categories like gender, age, and occupation will give them clarity regarding the specific priorities of that demographic, how they position the product, what features to develop, what their messaging should look like, and how to accelerate word of mouth.

SUMMARY Your analysis of your target customer is nowhere near complete, but the End User Profile points you in the right direction for future steps. The journey is only beginning, but you are starting off with the right focus—a well-defined target customer. This is a critical step in your search for specificity and starting to make your customer concrete and very real. 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, not based on your interests and capabilities. The latter does matter, but it is secondary to how you should think about your business.

IN THIS STEP, YOU WILL:

Use the demographics from the End User Profile to determine quantitatively how large your beachhead market is. Use this market size number to determine whether you need to further segment the market to have a more appropriately sized beachhead market.

Entrepreneurs often tend to inflate the TAM with excessive optimism, but a big number is not necessarily better. The goal of this exercise is not to impress others, but to develop a conservative, defensible TAM number that you have faith in.

IN THIS STEP, YOU WILL:

Choose one end user from one potential customer to be your Persona. Build a detailed description of that real person. Make the Persona visible to all in the new venture so that it gets referenced on an ongoing basis.

The Persona should be a real person, not a composite.

No one end user represents 100 percent of the characteristics of every end user in your End User Profile. But as you work toward defining the Persona, you will be able to find someone who matches the profile quite well. You will then focus your product development around this individual, rather than on the more-general End User Profile.

Your whole team should be involved in this process to ensure everyone is on the same page

so they can maintain a customer-based focus.

Rather than simply describing how your Persona will use your product, you should also detail how the end user determines they have a need for your product.

Then determine how they acquire your product and ultimately how you will get paid for your product.

It is imperative in this process that you see your product through the eyes of the customer and not through your eyes.

Also, they are often overconfident regarding what the customer will gain from using their product and how easy it will be to use.

SUMMARY

Creating a visual representation of the full life cycle of your product enables you to see how the product will fit into the customer’s value chain and what barriers to adoption might arise.