Clearing up some misconceptions

Some folks misunderstand me when I say: 

"Go after a market with strong demand." 

Here's what I'm not saying:

✘ "Build a product in a popular market."

✘ "Build a product in a market with lots of competitors."

✘ "Build a copycat when you notice a product doing well."

The shape of a good opportunity

When I talk about a "market" I'm describing the sum of demand for a particular thing: 

  1. Number of potential customers
  2. How much they spend
  3. The frequency at which they buy
  4. Their willingness to pay

Building a new product is an enormous risk. You're risking your time and energy (which you'll never get back), the investment of your own capital, and potentially lost wages.

So before you build a product, you want to see some evidence of demand. Essentially, you need to know:

"Is there a strong desire by a group of people for this product to exist?"

Often, you'll notice opportunities in existing categories. There's evidence that folks are already buying, but they're itching for a better solution. 

However, sometimes, the category doesn't exist yet! In these cases, you might notice a group putting considerable effort into hacking together their own solution. (Feedback Panda is a good example of this).

Examples of demand

In the past, I've used examples to illustrate this concept. For example, in my town, you can see evidence of "demand for coffee" because there are lineups outside many of the coffee shops.

Compared to alternatives (tea and milkshakes) there is more demand for coffee.

However, my point isn't that you should start a coffee shop. No! 

My examples are illustrative, not prescriptive.

Likewise, when I use examples of successful companies it's for context. I'm not advising that you go and try to start a similar product in a similar market just because it worked for them! 

Don't ride their wave, find your own.

The right opportunity, at the right time, for the right person

Successful founders saw an opportunity at the right time and had the skills, connections, and resources to take advantage of it. 

Most good opportunities are not obvious (especially to outsiders). It's unlikely that you'll spot an opportunity in a space you're not familiar with. You're looking for evidence of unmet demand in a category that you understand.

Characteristics of a good opportunity:

  • Folks have a strong desire or need for a solution,
  • They're applying effort (time or money) to solve the problem,
  • And they're unsatisfied with their current solution.

If customers already have multiple options (that they're happy with) it's most likely a low-demand opportunity. 

This is why bootstrappers probably shouldn't build another to-do app or project management app too. Those categories are saturated, highly competitive, with well-funded incumbents. (unless you've truly noticed some untapped demand).

The founder is the surfer

Without a wave, a surfer's skill is worthless.

It doesn't matter how good of a surfer you are. No wave? No surfing.

It doesn't matter how talented of a founder you are. No demand? No business.

However, when a surfer spots an oncoming wave, their ability to ride a swell depends on their skill, their position in the water, and their strength.

Likewise, the skills, network, timing, and execution of the founding team do matter.

This is why developing your fundamentals is so important:

  • Gain relevant skills
  • Make connections
  • Build a positive reputation
  • Develop a deep understanding of a market or industry

These attributes become your "unfair advantage;" especially if you target an existing category.

Beginners vs Pros

Don't go head-to-head with existing incumbents unless you feel you have the chops!

Beginner surfers shouldn't compete with Kelly Slater. But Italo Ferreira can because he's also a pro surfer.

Likewise, Ruben Gamez can go head-to-head with Docusign because he has a major strength (SEO). DocuSign is massive and dominates the digital signature market, but Ruben feels like he's got a chance.

Can you reach the market?

You might notice a good opportunity and have the skills to execute on it, but if there's no efficient way to reach the market, you'll be in trouble.

Building something people want is not enough. You need reliable channels for connecting with customers. And, those channels can't cost you too much (in money, or time).

For Transistor, my personal network allowed me to reach beta users, and my audience helped us make a big splash when we launched.

But it wasn't until we found good marketing channels that we hit traction. For us, and our market, SEO, referrals, and PR have been helpful. For you, and your market, it might be something different.

How people find success

Ultimately, none of this is easy. There are a lot of questions you'll need to ask yourself before you start pursuing an idea:

  • How do you know people want this?
  • How have you seen demand demonstrated?
  • What gaps exist that nobody else is serving?
  • What strengths, skills, and connections do you bring to the table?

As you can imagine, it's unlikely that the first idea you have for a business will be "a winner." 

Josh Pigford famously went through over 50 ideas before he arrived on the idea for Baremetrics. Adam Wathan was working on a SaaS idea (which he abandoned) before he stumbled on the idea for Tailwind.

It's that characteristic, that drive, that seems to distinguish successful bootstrappers. They'll paddle out, get crushed by a swell, and paddle out to try it again. And they'll keep trying until they catch a good wave.

Hope this helps clarify a few things,
Justin Jackson
@mijustin

Published on October 2nd, 2020
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