Step-by-Step Instructions

Problems You’ll Solve

• Find your customers faster by focusing on one small segment at a time.

Why?  If you focus on multiple segments, or try to solve multiple problems at once, you will end up solving a big group of people’s problems poorly, instead of a small group of people’s problems extremely well.  No one will buy your product.

Instead, you want to focus on one segment, solve their problem really well, and then go on to the next segment.  Your first segment will be telling your Early Majority how great your product or service is – because you solved their problem so well.

Flying Cars: Fun Fantasy, Useless in Reality

Flying cars are simultaneously bad planes, and bad cars. Neat!

Flying cars have existed for decades.

So why are we still sitting in traffic? Why have you never seen one either on the road or at an airport?

Because instead of solving one problem well, flying cars provide mediocre solutions to two problems.

Customer’s don’t want crappy solutions to multiple problems; they want a great solution to one problem – the problem they’re most concerned with at the moment.

In trying to provide a solution for flying and driving, flying cars attempt to provide the best of both worlds, but they never do. Instead, they combine a horrible flying experience with an awful driving experience to create the worst of both worlds.

The same goes for startup founders. In trying to build a company that solves problems for both “flyers” and “drivers” they end up creating “flying cars” – mediocre solutions that solve problems for neither.

Your first customers, your Early Adopters, don’t want a product that solves a problem for them while also solving a problem for another segment – they want a product that solves just one problem, theirs, extremely well.

Big Things Start Small

Facebook didn’t start globally. Facebook didn’t start on college campuses. Facebook didn’t even start on Ivy League campuses. Facebook started on one campus – serving one university’s students, Harvard’s.

Airbnb didn’t start globally. Airbnb didn’t start in one country. Airbnb didn’t even start in one state. Airbnb started in one city: San Francisco.

Google didn’t start globally. Google didn’t even start indexing a single language. Google started indexing a single topic: Linux.

Amazon, Uber, the list goes on an on.

“Big things start small. Global things start locally. Automated things start manually.” – Laura Klein

If you want your big thing to get big, the only way for it to get big, is for you to start small.

Niche to Win

Warning: The following exercise is going to force you to niche to an uncomfortably small customer segment.

You’re going to be concerned that by focusing your attention so narrowly, that you’ll never be able to achieve your victory.

The truth is, the only way to achieve your victory, the only way to reach the size you want, is to start something small, and build up to it. The way to do that is to start with a small, focused, niche and solve a problem for them extremely well. Once you have, you’ll do the same for a second small niche, then a third, and a fourth until you achieve you victory.

Niche to win.

If you try to achieve your victory by solving problems for multiple niches at once (e.g. Facebook starting at multiple college campuses, Airbnb starting in multiple cities, Google starting by indexing multiple topics) you’ll end up building a mediocre solution for all of your niches.

If you go that route, your company’s trajectory will be as promising as the flying car’s.

In the previous exercise you identified a few groups of Early Adopters.  Now we’re going to figure out which to target first.

Let’s Review

You should have 3-5 Early Adopter definitions from the Who are your Early Adopters? exercise. You’re now going to prioritize those Early Adopter segments to figure out which one to start with.

Step 1

Open the SCALE Spreadsheet and write in the specific “early adopters” customer segments you’ve identified.

Next, you will start filling in columns.

Each letter of the word SCALE stands for a different factor that will help you determine where to niche.

Step 2

S stands for Size – edit the column heading to say “Size.”

This is a “gut check” (i.e. these are guesses…don’t worry if they’re not correct, you’ll fix that later) of how large you think this segment is, using t-shirt sizes:

• 3 = Large
• 2 = Medium
• 1 = Small

In my case, it feels like there are a “large” number of startup founders, but fewer who are going to Lean Startup-oriented events. I’ll count them as “medium” and give them a score of 2.

Note: when you’re making these estimates do them based on the geographic market you’ll start in, and keep it consistent for each segment. For example, if your first market will be the US, base your estimate on the relative size of the segment in the US. If your first market will be Croatia, make your estimates based on the relative size of the Croatian segments.

On the other hand, I think there are a small number of all the other types of segments – all of whom represent more B2B segments. If you’re B2B, it’s entirely normal that all of your segments would be considered small – there typically aren’t that many customers in B2B niches, and that’s just fine.

Step 3

C stands for Currency – edit the column heading to say “Currency.”

The currency column represents how much of the thing that you need to be successful does this customer have?

Now, if you are going to charge your customers directly, the currency might be actual currency – it might be actual cash money they have available to spend on a solution.

If you are running an ad-supported service then your “currency” would be the customer’s time, attention and willingness to use your product.

If you are selling some form of data about your users, you might be measuring how willing your customers are to sharing the information you’re going to sell about them.

No matter what type of currency you are seeking, you’ll rate each group based on how much of it they have:

• 3 = They have a lot of it
• 2 = They have some of it
• 1 = They have a little of it

Based on my Victory Declaration ($1 million in the bank), my currency is actual money: do these people have money to spend on a solution the problem?

Founders have very little disposable income, so they’re easily a 1. Entrepreneurship professors I hypothesize have a little money to spend on curriculum, so I’ll give them a 2, and innovation consultants and directors who are attending the Lean Startup conference, have quite a bit of money to solve their problems.

Give each of your segments a currency score.

Step 4

A stands for Access - edit the column heading to say “Access.”

Access is how quickly you could get “currency” for your product from this segment.  How easily can you access them?

This column represents any unfair advantage you might have for this customer segment.  If you’ve worked with this segment for years, we want that represented here.  If you’ve never worked with this segment before, and have no idea how they operate or how to reach them, we also want to represent that here.

For this column, if your product was available today, give the segment a…

• 3 = if you could get their currency in days
• 2 = if you could get their currency in weeks
• 1 = it would take months

In my case, I work closely with organizations that run Lean Startup events, so if I had a product that could solve a problem for people attending those events, I could get their currency in a number of days. They get a 3 for me.

All of the other segments would take some additional time, but since I’ve been playing in this space for a while, they’d each take weeks, not months, to generate currency from. I’ll give the rest 2’s.

If you’re new to an industry, don’t be surprised if it would take months to get access to your segment’s currency – it’s entirely normal to have a column full of 1’s here.

Step 5

L stands for Love – edit the column heading to say “Love.”

This is really simple: how much do you want to serve this group of people for the next 5-10 years?

If you’re just really passionate about a group, we want to represent that here.  If you don’t care about a particular group, we also want to represent that here.

For this column:

• 3 = A lot of love
• 2 = Some love
• 1 = A little love

In my case, I really enjoy working with early stage founders. Entrepreneurship professors would also be fun to work with, but probably not quite as much. Consultants and innovation directors (I thought when I first filled out this worksheet) wouldn’t be as fun (I’ve since learned that isn’t the case, but let’s leave the sheet as I filled it out originally for authenticity’s sake ;).

If you don’t have any 3’s in this column, you should really reconsider which segments you’re targeting.

You don’t want to spend 10 years serving people you don’t love.

Step 6

E stands for Early Adopters - edit the column heading to say “Early Adopters.”

Here we are looking for real data that these people are “paying” to solve this problem.

In this case you are not making a guess – you are not going by our gut – but looking at real data you have collected to show this group is actively trying to solve the problem your product or service addresses.

For this column:

• 3 = you’ve collected a lot of data
• 2 = you’ve collected some data
• 1 = you’ve collected no data

In my case, again since I’ve been working with them for a while, I have either some or a lot of data.

If you haven’t been running experiments with your customers, it would be completely normally to have 1’s for this column.

Step 7

Crunch the numbers

In this step you’re going to multiply the numbers in each row.

We multiply so we can maximize 3's and 2's and minimize the influence of 1's.  Write your total in the final column.

With my results, the “Founders who go to Lean Startup Events” come out on top. While this group doesn’t have much currency, it’s fairly large, I can access them, I am interested in helping them, and I have data that they are early adopters for a problem I want to solve.  This is my best place to start!

If it turns out these are not the people that I’m best off serving (i.e. my assumptions/scores are wrong), I know exactly where to turn to next: Innovation Consultants and Entrepreneurship Professors are great alternatives for me to turn to next!

Did you get a tie?

You may find you have two segments that have “tied” for first or second place.  In this case, you can fiddle with the numbers by adding “.5” if you are slightly more interested in one than the other, or one group is slightly bigger than another, and so forth.

What’s Next?

Congratulations!  You have just SCALE’d your customer segments.  You now know exactly who you are going to target as you begin developing your solution.

By developing a killer solution for the segment of Early Adopters you just chose, you will have a high level of success with this group – that, in turn, will lead to getting your Early Majority, which will lead to your Victory!