Who are we excited to build a venture for?
We’ve decided to focus on small businesses! Here’s how our team narrowed down to one target population that all of us are excited about.
For our project, we are not starting with a problem and/or an idea, which are typical starting points for startups. Instead, we are starting from a target population — without presupposing particular problems or solutions. By taking a human-centered approach and diving into people’s lives in a more holistic way (i.e., looking across many different issues faced by the population for systemic patterns that emerge), we hope to uncover deep, cross-cutting problems that we can tackle through an innovative venture.
As a first step of our project, we needed to identify and agree on a population that…
- …is massive (i.e., large TAM)
- …likely has meaningful, systemic pain points that we could address via a startup
- …each person on the team is excited about
To align as a group, we first individually researched populations we are intrigued by and then met together to discuss.
Preliminary research
We gave ourselves 5 days to think about populations that we potentially wanted to serve. For each population, we put together a quick information packet with the following info:
- Definition. What is the population?
- Size & makeup. How big is this population? What are its key subsegments? Are we likely to uncover scalable opportunities by diving into this population?
- Attractiveness. Why is this population appealing? Are there qualitative narratives that suggest deep, unaddressed needs?
- Concerns. What challenges do we foresee trying to build a business that serves this population?
Note that the goal of our preliminary research wasn’t to do in-depth market research. We wanted to get a high-level sense of the different populations so that we can be directionally correct in choosing our target and transition to actually talking with people as soon as possible. It likely would have been wasteful to spend too much time reading.
Population definition meeting
After each having thought about different populations, we met together to share our preliminary research and agree on our target.
Warm-up exercise: gathering everyone’s life experiences
Before we began diving into our core discussion, we started by taking a stock of everyone’s life experiences. As a venture design team, recognizing how our experiences to date have shaped our individual opinions, passions, and expertise helps us understand what our competitive advantages are and how we can maximize our human/social/financial capital throughout our project. Specifically, we chatted through the following questions:
- Tell us about your childhood.
- Tell us about your family. What do your parents do? Any siblings? Any other family members who have had a significant influence on you?
- What do you do for fun?
- Anything else that has deeply influenced your life that you want to share with the team?
Sharing preliminary research
Collectively, our team had researched the following populations (all in the US):
- Job seekers
- Working mothers
- Remote workers
- K-12 students
- Small businesses
- Immigrants
- Elderly
By going around the table and letting each person share their research, we quickly narrowed down to the following 3 populations to focus our discussion:
- Working mothers
- K-12 students
- Small businesses
To look at these 3 populations, we used 2 different techniques: context map and SWOT analysis.
I. Context map
A context map is a technique that helps you take a systemic view of a target population’s environment — looking at various external factors/trends at play as well as at internal factors that the population cares about. We created a context map for each of the 3 shortlisted populations.
Here’s an example of a context map (unfortunately all our pics from this session came out blurry):
II. SWOT analysis
We filled out a 2x2 SWOT table for each of the shortlisted populations to lay out our team’s strengths and weaknesses for targeting each population as well as the opportunities and threats that the population presents.
Working through the context map and the SWOT analysis enabled our team to look at the different population segments holistically before choosing one. To decide, we gave ourselves 5 votes each.
Our target population: small businesses!
Here were our voting results!
- Working mothers (7 votes)
- K-12 students (1 vote)
- Small businesses (12 votes — winner!)
For now, we are following the US SBA’s very broad definition of SBs as “any businesses with <500 employees” but we will surely be narrowing down over the next several weeks.
Key reasons why this population excites us:
- Massive. There are ~28M SBs in the US (~5.5M employers and ~22.5M nonemployers). We hope that the sheer size of the population gives us opportunities to apply different cuts to the population without sacrificing too much of the scalability potential.
- Potential for social impact. SBs form the backbone of the economy, accounting for 50%+ of all sales and jobs, and many people’s livelihoods depend on the strength of this segment.
- Salient in today’s economic and political discourse. The growing wealth inequality is an alarming problem, and the narratives around the upcoming presidential election suggest that a significant part of this population has deep-seated frustrations about the status quo. We hope that the human-centered design process would help us really unpack what is going on.
- Many unaddressed day-to-day needs. SBs have myriads of problems they need to solve every day, and there are few players that dominate the SB segment (only a handful number of unicorns, e.g., Intuit, HubSpot, Salesforce).
- Easier than a pure B2C play. While SBs are highly fragmented and harder to solve than large enterprises, they are likely still easier target economic buyers to serve than consumers (because there are fewer of them and they likely have higher willingness/ability to pay).
- Can iterate quickly. Serving SBs will likely involve shorter sales cycles and lower reputational risk from failing each customer.
But this isn’t to say that we don’t see challenges in going after this segment:
- Very large and heterogenous. The small business market is extremely broad and diverse, so it’s a segment in which we will need to be strategic about narrowing down. This will likely require some heavier lifting work up front for our team, but we think it’ll be worth it — especially if we are able to uncover insights that cross-cut many types of industries/types of small businesses.
- Costly to serve. There is a reason why organizations have struggled to serve SBs — they are fragmented and many operate in a state of chaos. This will be a nut we will have to crack to ensure our customer acquisition cost (CAC) doesn’t become prohibitively high.
Overall, our team is thrilled to dive into this population and start understanding the pains and gains that SBs face.
Next, we will share how we are organizing ourselves for both secondary and primary research to uncover insights about this population. Stay tuned!
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