Skate to where the puck will be…

2010 April 26
by david

Recently I was having lunch with two tech entrepreneurs and we ended up in a debate about the right target market for startup web sites. I said I was aiming for affluent, well-educated users, not early adopters. I’ve watched plenty of “cool,” “hip” sites go out of business because they couldn’t attract a big enough audience to achieve profitability. (Some lucky ones get acquired before that happens and then fade from view.) I think of the web as a media business and have the bias of an ex-AOLer. Our target market was “anybody with a computer.” My fellow entrepreneurs said that most successful sites start out by being popular with early adopters and grow from there.

Defining the target audience is a challenge for any web site. If you build a site that works for your mom, how do you create a compelling experience for the recent college grad who grew up using a computer? Do you build a product that works for the sophisticated user then, once you gain some traction, “dumb” it down to appeal to more mainstream users? How many of us have launched an “improved,” “redesigned” site only to incite a mass revolt from our customers? Even when we’re adding great new features. Trying to offer a good experience to two vastly different customer segments isn’t easy. Apple does it better than anyone. Google does it by marketing a utility with one input field and free email. Most people have never heard of Google Labs or Google Analytics.

It’s well known that sophisticated users consistently overestimate the capabilities of the rest of the world and that’s a danger for web startups. Take RSS feeds. People who know how to use them find them very useful—although social networks are rapidly becoming the preferred way to get information. But most people don’t know what RSS means or how to use it. A fairly recent (2005) study showed that only 12% of Internet users were aware of RSS and only 4% said they used it. At the time of the study, 27% of Internet users used an RSS-based service like MyYahoo without being aware that it was based on RSS. The numbers are likely higher today but the point is that the majority of Internet users are not tech savvy.

There are almost 50M college grads in the US. What percentage is tech-savvy and what percentage has never heard of TechCrunch? On the other hand, there are roughly 16M college students, clearly a segment that’s comfortable with technology and open to new brands.

What’s the right target market? It depends on the problem you’re trying to solve and what stage you’re at. If you’re solving a technology problem, your customers will be developers or technology companies. If you’re solving a fairly universal problem then your target will be the online consumer audience. But it’s a huge uphill battle to create a brand and convert customers. So it’s a process. You have to start small. Despite our ambitions to achieve mainstream status, our marketing strategy is to use guerrilla marketing to target college students (and early adopters) and keep our acquisition costs low. (Not very unique but it can be effective if it works. Both Twitter and Foursquare gained huge mindshare at South by Southwest.) If we can create some “buzz,” ie press coverage, word of mouth, etc., then we have a better chance of going mainstream. And raising more money so we can spend more on marketing. If you want to build a big brand you’ve got to have a plan that takes you there one step at a time. Because it’s a crowded field out there and for every overnight success there are a thousand small businesses struggling to make payroll.

As for your product strategy, I’m a believer in launching the minimal viable product first. See the recent NYT article on the lean startup. For both your target audience and your product strategy, the best approach is to, as Gretzy famously said, “skate toward where the puck will be.” I heard another good analogy from an executive who had ridden a motorcycle across the US with a group of successful middle-aged guys looking for adventure. When you’re doing 90 down some highway in Montana, you can’t stare at the road right in front of you because you’ll miss the long view of what’s ahead. But if you’re looking too far away you won’t see that patch of gravel until it’s too late.

Comments are closed.