“ I should make a product a lot of people will use, or better still, everyone will use “, answered the would be Entrepreneur. This got me thinking and wondering.
As a person starting up , should you go broad or go narrow ?
When you are trying to please all, are you able to please all or disappoint all?
The biggest fortunes on earth have been made by people selling to top of pyramid or bottom ?
Apple, the most successful company ( Market cap U$ 826 Bn on 13 Feb 18) is selling to 0.1% of top population or to the bottom ?
Those frying Pakodas which serve the bottom 10% of population, are they likely to grow BIG?
Is Nike which makes shoes for the richest on top of pyramid a more successful company or a Sri leather creating cheap footwear for masses at the bottom?
Its often misguiding to look at Facebook and say, here is one example where a product has been made for all. However, if you dig into history, you find that even Facebook was built only for Harvard campus male students at inception to let them ogle and lech at pretty faces of girls on campus.
What are the challenges of starting up and looking for a large, diverse audience in the beginning ?
- Heterogeneous acceptance : For the same need, different humans have different quality, shape, color, experience, price at which people will accept
- Very low HCF for positioning : Different positioning of product appeal to different people and its impossible to create a marketing message which appeals universally at start to everyone.
- Huge customer acquisition cost and low profits: When you are aiming wide, the messaging needs to travel very very wide and there is huge cost to just reaching an audience. Then comes the cardinal law that a normal user must hear good things about your product/ service from 7 different sources before she decides to give your service a try. Its impossible to have a high NPS ( Net Promoter Score) in early stages. Being a mass product, the margins have to be kept low.
These principles can be well understood if you look at the philanthropic cause Ratan Tata took up to make Nano. He target the bottom of pyramid, kept the margins low, thought a multitude of people will pick up this car for various reasons and did multiple bets on it ( Singoor, Gandhi nagar, integrated plant etc) .
Think about this. When a product backed by enormous financial muscle of Tata, despite a large market failed Nano as a product, how far can a mass aimed product from an entrepreneur travel?
So what should an entrepreneur do ?
Who am I to sermon the brilliant ? Andrew Chen , the early investor of Facebook had once shared a hack. If you are creating a digital product, do just this one thing :
a) Create a Google Adwords account and run a search keyword tool. Now, try to find the search volume using sentences normal people use to find your offering in the geography you are targeting.
If ( Search volume is < Few millions )
Either the need for your offering doesnt exist or its too small to make your business viable.
One of the better strategy is to look at a niche but rich homogeneous segment who are in a state of dislocation/ disturbance and are concentrated in one physical or digital location. Examples : New mothers in Grade X hospital, Fresh batch of students at College, Tourists arriving in peak season, Youth flocking to Game of Thrones 😉
What are the exceptions to this hypothesis where people targeting at bottom through fair means have survived and won the startup battle ?