A common issue I see with early-stage companies is over their selection of entry market sector. Obviously, all investors love their portfolio companies to have a huge vision to change large markets in a big way, and on occasion the best way to plan to reach that is to go straight to the big opportunity head-on. However, often that's going to be slow and hard, perhaps credibility is crucial, in which case it's really helpful to find a launch "beach-head" in the lines advocated by "Crossing The Chasm".
So where companies have chosen to use a beach-head, the next question is which one? If you just pick the "largest sector", or the one you're "most familiar with, you face a danger- the best entry sector is not always the obvious one. I think there's a different set of thinking about launch markets, where you highlight a slightly different set of factors as important.
| Criterion | Ultimate market | Launch market |
| Scale | Ideally as large as possible | Manageable, but low priority in selection process |
| Differentiation of offering against competition | Important | Critical |
| Focus on customer problems | Can be more general- boxed product is easier to scale | May be helpful to have solution type sales initially |
| Unit sale | Very large or small is good- scalability is crucial | Ideally ~1 months burn- large enough to be useful, but small enough to avoid lengthy approvals |
| Mission criticality | Mission critical to the customer provides extra value | Ideally not too critical- hard to buy from a startup |
| Length of buy cycle | May be long | Short is incredibly helpful |
| Easy customer identification | Useful | Vital |
I bet there are some great suggestions for improvements to this table- please let me know!
