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Allyson Plosko:
I recently participated as a mentor for a startup accelerator. All of the companies were pre or early revenue and as mentors and you met with the founders back to back to brainstorm how they might overcome company challenges. The meetings were short and the goal wasn't to completely solve the problem, but point out potential blind spots. The founders might be missing in the day to day of running the business. Not surprisingly, the top issues for companies in the program were how to build the top of the sales funnel and, or convert customers quicker. While some of this was reflective of normal, early stage sales challenges, when probed deeper, it became clear a portion of this was a symptom of a target customer base that was just too broad. Few founders could clearly articulate exactly the type of customer they felt was most acutely experiencing the pain associated with the problem being solved. We've discussed how important specificity is in relation to the problem value prop, but my recent mentoring experience got me thinking about how important narrowing down the profile of the initial target customer is. It's not enough to say that the focus is on banks or hospitals. In the early days, it needs to be laser focused on the profile of those that are in the best position to buy. This is why customer discovery is so important. It's critical to understand who gets the problem being solved and feels the urgency to purchase today. Versus those that are going to need more time and proof points. That's not to say you shouldn't be talking to folks who fall in the latter category, but that you should understand how they fit into your go to market strategy. During diligence, a key area an investor has to get conviction on as the potential of a business to quickly scale. A founder needs to paint a picture of how the company starts with a segment of customers and ladders up to a larger opportunity. Successfully doing this shows an investor that the founder knows the market and their customers, both of which are essential traits that investors look for when evaluating founding teams. A big part of startup success as quickly validating or invalidating assumptions, they get the company one step closer to product market fit. Being very precise and customer discovery and effectively communicating your customer focus, instills confidence in investors that founders can lay the groundwork for scalable growth and build a fantastic business.