New entrepreneurs stumble upon great ideas in tough markets. Eager to set the world on fire, they dive straight in.
I love it.
The problem? Next day, they just go off and build their thing. Big mistake.
You should never start with your idea.
You start with the people you want to serve. Period.
Jeff Hyman knows this. As a 5x entrepreneur who raised $55M in venture capital, and served as Vice President of Marketing at Dyson, he nailed his process. His previous company Retrofit now boasts 50 employees, $18M in investment, and signs up new customers by the thousands.
I jumped on a Skype call with him to share his wisdom with you.
Yes -- you could just go ahead and build your first idea. Hire people, build a fancy site, buy stock...but guess what? Best case, a mountain of your cash and time goes up in smoke before you discover your niche. Worst case, you waste all that and discover nothing.
You need a better strategy. First off: go with a winner.
Pick a megatrend
Ask yourself: do you want to work crazy hours, take huge emotional risks, face constant uncertainty every day, for months or years -- just so you can dominate a shrinking market? I doubt it.
Far better to align yourself with an exploding market. Hyman chose a massive, overwhelming, growing problem: obesity.
"There's a huge obesity problem in the US: 68% of Americans are now overweight. And it's heading in the wrong direction, soon to be 75%. A massive need."
But look -- a trend consists of more than numbers. You must look for behaviors too. Yes, the soft stuff. Qualitative data.
"The overweight issue has two angles to it. From a personal perspective it's a vanity issue: overweight people feel down on themselves, they feel depressed, they feel self-conscious."
"Most people don't like being overweight. The other completely different issue is the health risk that being overweight introduces: depression, diabetes and so on."
Hyman and his cofounder interviewed dozens of overweight people. Visited their homes, looked in their pantry, immersed themselves in their world.
Result? A clear picture of who they were: how obesity affected them, how they tried to lose weight, the language they used...you name it.
A strong trend can serve you well. So should you just chase the biggest possible market? No way.
Quite the opposite.
Start with the smallest viable slice of the market
How many people did Hyman target in the beginning? A few thousand people. But the megatrend rings true for two-thirds of Americans.
Can you do the math? Hyman had his sights on 0.001% of the market, or less.
"I wasn't trying to boil the ocean and capture every single overweight American. It's not gonna happen, 68% of Americans. So we said: 'Look, if we can get a few thousand people we'll have a nice business.'"
Listen -- even a single customer can turn your entire business around.
Why? They might know other potential customers, yes. But no less important, customers often know big players in the market. A single customer can act as your gateway to them -- if you care enough to earn their trust.
Want to know Hyman's clever plan? He and his team nailed it for a small slice of the market -- so now, they can go for a bigger slice, with thousands of delighted customers to point to. Smart move.
"We told the VCs: let us get a few thousand customers. Then we can evolve to B2B, which is what we're now focused on. We get employers to sign up thousands of people at a time, versus one at a time. But again, that didn't all happen the first day."
Get clear on this: huge trend, but tiny slice. Because once you pick a huge trend, anything more than a tiny slice equals madness. Guess what happens when you set your sights on too big an audience?
You drown in noise.
Your real challenge? Noise reduction
I see it all the time. Entrepreneurs do what the experts say: go out and talk to prospective customers. Ask clear, open-ended questions. All good stuff.
Then they come back, piles of feedback in hand...and no clue what to make of it. One hundred percent noise.
With Retrofit, Hyman handled this better.
"You see 30 people and you start to see the same movie over and over. You don't need to go interview 1,000 people."
How could he see strong patterns with just 30 people?
One word: discernment. He made extensive notes, talked to his cofounder and top obesity experts, and went straight back to customers to learn more. Repeat and improve.
Try this in your own business. Next time you end a conversation with a customer, don't get straight to work on the next thing. Instead, make notes. Talk to peers and mentors. Reduce your noise level so you can see what everyone else can't see.
Otherwise, you will waste your time on junk. Guaranteed.
"In a startup, you can spend 24/7 on junk. And you can't expect a first-timer to understand that. My first time, I was the same way."
What next for Hyman? He went right back at it: founded Startup Therapist to serve entrepreneurs. Took a big trend (startups), focused on a niche (founders with some capital), separated out the noise, and quickly saw a key problem for his customers: how to hire the best people.
So he interviewed experts and wrote a short eBook to deliver value on this. All part of his process.
See the pattern?
Align with a strong trend, aim for a tiny slice, then see through the noise. Instead of flying blind, you systematically raise the odds in your favor.
Fierce industry or not -- start the right way and its force becomes your advantage. Not so tough after all.
Hi, I'm Harry -- a fellow entrepreneur. Keen to help you discover your ideal customers. Let's connect.