The one ideal characteristic of your startup’s first customers


This post is by Tomasz Tunguz from Tomasz Tunguz


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Over lunch last week, a good friend who is an entrepreneur and I were brainstorming about the features of his optimal initial target market. His product hasn’t yet launched so he still had some decisions to make about which users and use cases to target. We wondered if there were a rule of thumb about initial target customer segments. We took out a blank sheet of paper and came up with this:

The one ideal characteristic of your startup’s first customers


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Over lunch last week, a good friend who is an entrepreneur and I were brainstorming about the features of his optimal initial target market. His product hasn’t yet launched so he still had some decisions to make about which users and use cases to target. We wondered if there were a rule of thumb about initial target customer segments. We took out a blank sheet of paper and came up with this: Ideal Customer = max (DAU / MAU)

Rapid iteration from informed feedback

The best first customers are the most active customers - the ones who will use your product on a daily basis - or as close to a daily basis as possible. Active customers provide three key pieces of feedback: First, their activity rate proves the product solves their need. In other words, these users validate product/market fit. Second, these power users can readily articulate the product’s Continue reading "The one ideal characteristic of your startup’s first customers"

Willing to be misunderstood


This post is by Tomasz Tunguz from Tomasz Tunguz


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Jeff Bezos appeared on Charlie rose two weeks ago and spoke about Amazon’s history, future and best of all, its culture. In the interview, Bezos discussed Amazon’s core values: We are willing to be misunderstood We are obsessed with customers, not competitors. We are long term thinkers While all of them are critical to Amazon’s success, my favorite is the first because it combines three critical concepts for startups.

Willing to be misunderstood


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Jeff Bezos appeared on Charlie rose two weeks ago and spoke about Amazon’s history, future and best of all, its culture. In the interview, Bezos discussed Amazon’s core values:
  1. We are willing to be misunderstood
  2. We are obsessed with customers, not competitors.
  3. We are long term thinkers
While all of them are critical to Amazon’s success, my favorite is the first because it combines three critical concepts for startups. First, it requires knowing a secret, in the Peter Thiel sense of the word, seeing something in the market that very few others understand. Second, it requires systems thinking, understanding where a new product fits into the market place and how to leverage a company’s assets to best deliver the product to customers. Third, it requires conviction, belief in the product and market even when others are deriding the notion and investors are pushing the company to achieve quarterly targets. Continue reading "Willing to be misunderstood"

The dumbest guy in the room


This post is by Tomasz Tunguz from Tomasz Tunguz


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I rowed crew in college. I walked on to the team and fell in love with the sport the very first time we pushed the boat from the dock and took a stroke. Looking back on those four years, I often draw parallels between rowing and entrepreneurship. My freshman year, Joe Holland, who had raced for the national team in the eighties had taken a sabbatical to coach the freshmen team.

The dumbest guy in the room


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




I rowed crew in college. I walked on to the team and fell in love with the sport the very first time we pushed the boat from the dock and took a stroke. Looking back on those four years, I often draw parallels between rowing and entrepreneurship. My freshman year, Joe Holland, who had raced for the national team in the eighties had taken a sabbatical to coach the freshmen team. He was a master and he loved the philosophy of rowing as much as the sport. crew (1).jpg When I asked him how he became such a great athlete, he said, “I made sure I was always the slowest guy in the boat. I knew I could push myself much harder if I needed to keep up with the fastest guys.” Eight years later, I started at Redpoint. One afternoon, Tim Haley, one of our partners, told me the founding Continue reading "The dumbest guy in the room"

Education sales vs execution sales


This post is by Tomasz Tunguz from Tomasz Tunguz


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When going to market, startups tend to pursue one of two sales strategies, either education sales or execution sales.These sales strategies are substantially different. They demand different sales cycles, pricing and market positioning - potentially even different team members. The Education Sale If your customers don’t know they need your product yet, then the sales process is an education sale. Education sales are common when creating a new market (TiVo inventing the DVR) or when bringing existing technologies to new market segments (CRM for restaurants).

Education sales vs execution sales


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




When going to market, startups tend to pursue one of two sales strategies, either education sales or execution sales.These sales strategies are substantially different. They demand different sales cycles, pricing and market positioning - potentially even different team members.

The Education Sale

If your customers don’t know they need your product yet, then the sales process is an education sale. Education sales are common when creating a new market (TiVo inventing the DVR) or when bringing existing technologies to new market segments (CRM for restaurants). Education sales demand great product marketing. The product’s value proposition must be encapsulated in one concrete, succinct idea. How do you explain the value of a DVR to someone who has never used one? “Watch your favorite shows whenever you want” or “Skip all the ads.” Testing the effectiveness of marketing messages is essential. Education sales require longer sales cycles. It takes time Continue reading "Education sales vs execution sales"

Startup playbook: reverse-engineering Clay Christens’s market disruptions


This post is by Tomasz Tunguz from Tomasz Tunguz


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In this month’s HBR, Clay Christensen and Maxwell Wessell published an article targeted to the CEOs of large companies on how to prevent disruption to their businesses. They point to five major barriers to competition in a market listed in increasing order of difficulty to assail. Instead of reviewing the incumbent’s strategy, I’m going to flip these around to reverse engineer these defenses and build a startup’s playbook for disruption with examples from our portfolio.

Startup playbook: reverse-engineering Clay Christens’s market disruptions


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




In this month’s HBR, Clay Christensen and Maxwell Wessell published an article targeted to the CEOs of large companies on how to prevent disruption to their businesses. They point to five major barriers to competition in a market listed in increasing order of difficulty to assail. Instead of reviewing the incumbent’s strategy, I’m going to flip these around to reverse engineer these defenses and build a startup’s playbook for disruption with examples from our portfolio. football_play.jpeg
  1. The inertia barrier: When entering a market, a startup has to convince a customer the value of switching is greater than the switching costs including building a new relationship, implementing a new provider and training.
  2. The tech-implementation barrier: Startups should leverage their nimbleness and focus to bring a better product to market faster. Ex. Expensify is building a mobile-first expense reporting solution with great OCR and a better customer experience. By iterating quickly and responding Continue reading "Startup playbook: reverse-engineering Clay Christens’s market disruptions"