Market First!

Lessons From Julian Shapiro's Startup Handbook.

Throughout my career, I've had the joy of discovering and building new products. The pursuit of crafting products that perfectly align with market needs consumes my thoughts day and night. Recently, I came across a post shared on a friend’s Whatsapp story and it said something about how even seemingly inexperienced founders can launch remarkable products when the timing is right.

That quote was from Julian Shapiro’s Startup Handbook, specifically the first chapter titled Market Pull. In that chapter, Julian defined market pull as “the force behind Product Market Fit (PMF)”.

To break it down further since PMF always seems vague:

Market pull is when consumers reflexively want a product upon learning of it, and they’re willing to do whatever is required to get it. Julian Shapiro.

Often, we prioritize testing the usability of a product before considering its demand. As product professionals, we invest time in testing wireframes and user journeys. However, it's essential to pause and evaluate if there is a sufficient market for the product. Have we assessed whether users will abandon existing alternatives to embrace our offering? Are there enough potential users who genuinely need and will use our product? It is crucial to examine the market landscape and the number of players in the space to make informed decisions and ensure the product's success.

In the Startup Handbook, Julian highlights a quote from Paul Graham, which is important to take note of:

“If you wonder how someone who seems crazy or incompetent could be the CEO of a successful startup, the answer is that some startups are so viral that they'll grow (for a while at least) almost regardless of who's in charge.” Paul Graham.

So How Do We Evaluate A Market?

It’s all part of product discovery. Product Discoveries are not just about interviews and surveys, before jumping into all that, you need to conduct market research to understand the following:

• Market Landscape: Understanding the market landscape involves identifying key actors, analyzing their numbers, and assessing their interconnections. Conducting competitive and outcome-based analysis is crucial. Additionally, considering factors like regulation, policy risks, and other influences on existing companies is essential for informed decision-making.
  

• Target Market: Next, you need to figure out the customer segments, you need to assess their value and satisfaction with existing alternatives. This perspective allows the exploration of viable markets with proven potential. Traits like digital literacy, market fragmentation, and cultural aspects of the target customer play a significant role in understanding market dynamics and tailoring solutions to meet their specific needs effectively.
  

• Market Size - Next, you need to understand the size of the market by looking at the Total Adressable Market (TAM), the Serviceable Adressable Market(SAM) and the Serviceable Obtainable Market(SOM). To learn more about how to approach calculating these, check this resource. TAM assesses the whole market, SAM focuses on the specific subset you target, and SOM indicates your short-term acquisition. These numbers reveal if you pursue high-value opportunities without manipulation.
  

All these are going to be part of a viability study that encompasses factors like market analysis, competition assessment, and regulatory considerations. Based on this evaluation, a recommendation is formed on whether to pursue the market or not. Aim for markets with high TAM, high-value customers, and underserved segments, as highly competitive markets may pose constraints on growth and attractiveness.

You may find it difficult to capture market data especially if you are building in an emerging market or with new technology, where understanding underlying behaviours is difficult. In such cases, comparables play a crucial role.

For instance, if you were to explore the Mixed Reality/Virtual Reality Space, you’d have to strip it down to the use case you are targeting in that space. So let’s assume you are applying Mixed Reality to gaming by using VR glasses to enhance gaming. In this case, your TAM may be gaming, and the initial SAM could be confined to the gadget enhancement space.

In some cases, you will need to speak with experts, they may shut down your idea and solution but don’t make the conversation about that, you will need to tap into their experience in the market. The conversation should be about the size of the market and the factors that contributed to the adoption or failure of their product.

I particularly enjoy conducting market research, if you are looking for a product discovery lead to help you navigate the market you are operating in, reach out to me here.

Related Materials:

• Startup Handbook By Julian Shapiro
  

• Market Sizing By Toptal
  

• Outcome-based Competitive Analysis By Iterate
  

• Product Discovery Is Simply Risk Management By Nina Torabi