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!