Geoffrey Moore: evaluation

Transcript context

…So if a startup founder is listening and trying to decide is their initial target audience, their ICP too wide, do you have any advice for how to know if this is still too wide, and you should try to get more and more narrow? I know you talk about a single use case. What else should people be thinking about there? Well, so first of all, before you try to cross the chasm, do you have a marquee? Have you won a marquee customer that puts you on the map? Because if you're not... You need to make yourself visible before you can make the Crossing the Chasm play. Let's assume you've done that. So then when we first saw, "Well, why don't I just use that industry?" Turns out that the visionary person you work with... First of all, they did some very weird things because they're visionaries and second of all, they don't want to help their industry. The whole point of this was they wanted to get ahead of their competitors. They didn't want to help. So normally you can't use the visionary project as your beachhead. You'd love to from a point of view of reusing the work. You just can't. So then the question becomes, "Okay, where am I going to go?" So the key formula, and this is the formula... If there's one sort of takeaway from founders listening at this point, you want to have a target segment that is big enough to matter, small enough to lead and a good fit with your crown jewels. That's the formula. So big enough to matter means do I have enough room to double or... Often venture capitalists talk about a triple double followed by a double triple. So if you said, "Okay, let's just, I'm going to make you a million dollars." Put that visionary, but just to give you a number. Okay, so a double triple would be I went from one to four and from four to 12, and then I did a triple double. So that would be 12 to 24, 24 to 48, 48 to 90. Okay, so how would you get from one to a hundred million dollars? So you want to have a segment that says that I could get to a hundred million dollars in a five year... That was a five-year window. So you say, "Okay, but what it can't be is a billion dollar segment." Because if it's a billion dollar segment, you might be able to get there, but you would not be a big fish. So that's a fish to pond ratio thing. So you want to think about, particularly as you're starting out... This is a B2B model predominantly. If I could take the top 20 customers in this segment, meaning... What do I mean by a segment? It's in the same geography. People in Japan don't talk to people in America. People in America don't talk to people in Germany, they even speak different languages. I don't know why everybody doesn't speak English, but apparently they don't. So they have to be same geography, same industry, because dentists do not talk to software designers, who don't talk to advertising people and in the same profession. So salespeople don't talk to finance people and finance people don't talk to the guys in the warehouse. So same industry, same geography, same profession. And then the compelling use case, which is the thing... That's the thing that starts the fire. There's segments everywhere and by the way, they all have that... They all do... Every segment works the same way. the compelling use case, which is the thing... That's the thing that starts the fire. There's segments everywhere and by the way, they all have that... They all do... Every segment works the same way. If I have to make a high risk buying decision, I'm going to talk to my peers about it. And I don't want to be first. I want to be able to do whatever the herd's doing. But what a compelling reason to buy does is it goes well, but I have to act faster than I want to. And that's what you need as an entrepreneur. You need the customer to be coming toward you even though you're new and you're unproven, and frankly you scare the crap out of them, but they're even more afraid of the problem that they're saddled with. So that's why you can build a relationship with them.…

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