CEO Quest Insights
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CEO Quest Insights

The Four-Way Fit — Chapter 2: Market Claims (Part 1)


The first domain that makes up the Four-Way Fit is the Market domain. If you are to become an iconic global enterprise, you must achieve a value breakthrough, expand upon that breakthrough by optimizing it, and then make it sustainable — in a large and ready market. But how do you confirm that the market is large and ready? How do you confirm that there are customer segments within this market that have gaping problems and screaming needs, ones you can address with a valued product and viable business model? You do so by confirming your assumptions in three subdomains:

  • Market Viability Claims
  • Customer Segments Claims
  • Gaping Problems / Screaming Needs Claims

In this chapter, you will learn how to leverage the framework canvas to develop your most fundamental Market claims in Phase I, and then how to leverage the framework spreadsheet to develop a more detailed and comprehensive set in Phase II.

Phase I— The Canvas

The Market domain is the first domain in the Four-Way Fit framework for a reason: it anchors everything else. If you don’t understand your market, you don’t understand anything. If you were to skip this domain and dabble first in the other domains (Product, Model and Team), it would be like playing “pin the tail on the donkey”. To create a great product you must first know your Market. As Market clarity emerges, the blindfold comes off. You can pin down the other domains with greater confidence.

As noted earlier, the purpose of the canvas is to promote high-level conceptual understanding. It’s to be used at the beginning of a company, or when a new product extension is being conceived, or when the fundamental assumptions that anchor an existing business have been disrupted. The canvas helps you to build a set of integrated claims that, if true, can carry you through to a value breakthrough.

Market Viability Claims

Within the Market domain, the first of its three subdomains is Market Viability. Determining market viability is especially important at the beginning of a company. Founders of a new startup sign up for years of work (assuming they can achieve a value breakthrough). So it’s important at the outset to ensure you’re operating in a viable market. There are six consideration topics that need to be considered in the Market Viability subdomain:

  • Market boundary
  • Market structure
  • Market trends
  • Disruptive factors
  • Market size
  • Segmentation scheme

The first consideration topic is the market’s boundary. What is your field of play? A market is different from an industry. Your market’s boundary reflects the reach of your product vision. It encircles the cluster of economic activity relevant to your domain of interest. It’s possible your market will be synonymous with an industry. That’s called a “vertical market”. Or you might prefer to define your market in a way that cuts across industries — a “horizontal market”.

The global economy is comprised of three sectors:

  • Primary (retrieval / production of raw materials)
  • Secondary (transformation of raw materials into physical goods)
  • Tertiary (services)

Sectors are made up of industries; industries are made up of companies with certain attributes. Segments can be defined within an industry, differentiated with attributes such as size. Or a segment can be defined as cutting across industries, by focusing on certain differentiated attributes.

“Market” is a high level abstraction that addresses the customer and competitor context for your business. You will get more granular later, once you define the specific segments within it. As you define the boundary of your market, be sure it captures a wide basket of adjacent value exchange activity — even if your initial point of product entry is narrow.

After you define the market boundary, the next consideration topic is your market’s structure. Within your chosen market, who are the market actors that comprise the demand side and the supply side? What is the specific value exchange between them? How does your product impact that value exchange? Are you one of the direct actors in this market, or is your company’s role to support the direct actors? Are you entering an existing market to compete on performance (better / faster), as Salesforce did in the CRM space? Or are you re-segmenting an existing market, so that you can compete on price — as Vanguard did when it introduced low-cost index funds? Are you re-segmenting so as to better serve a niche in the market — as Embroker did by focusing on business insurance products for SMB and mid-market companies? Or are you creating a brand new market, as Amazon did when it created the “cloud hosting” market in 2006? Apple created a new “smartphone” market when it launched the iPhone in 2007. Bitcoin created a new “cryptocurrency” market in 2009. Your structure claim is a fundamental claim; it should be conceived with care.

The third consideration topic is trends. Is your chosen market growing or shrinking? This is important to clarify, especially if your total addressable market is at or below $2B. You don’t want a cap on your growth simply because the market you entered is shrinking below the point at which a big business can be built.

The fourth consideration topic to consider is disruptive factors. What is the degree of market disruption? Are emerging technologies, business model shifts, new entrants, government actions or other factors changing the game? Who are the winners and losers? Can you alter the makeup of winners and losers, perhaps by turning losers into winners? Can you drive the disruption? Markets undergoing significant disruption can be high opportunity markets because market participants are intensely focused on how to emerge from the disruption alive and on top. If as a service provider you can help market players win, they will beat a path to your doorstep. Or perhaps you seek to be a direct market player yourself — believing you can be the disruption, or leverage it to emerge “on top”. That works too.

The fifth consideration topic that impacts market viability is size. Size matters. Is your market big enough to attract investment? The right way to calculate market size is to envision your fully developed, end-state product (or set of products). What would you charge the average customer per year? How many customers exist in this market? Multiply those two numbers together and you will have the “total addressable market” (TAM). As a general rule of thumb, VCs tend not to invest in businesses with TAMs less than $1B.

The sixth and final consideration topic within the Market Viability subdomain is critical— your segmentation scheme. Customer segmentation guides product development, pricing and customer acquisition. Your value proposition will be stated by segment. Teams may be organized by segment. So it’s important to get it right. Customer segmentation requires some explaining, so take a seat. We have some ground to cover.

Different business types demand different schemes. If you are a B2B or B2C SaaS business, or a B2C ecommerce business or B2C gaming company, your segmentation scheme will simply focus on the demand side. If you are a media company, however, you will need a segmentation scheme for both consumers and advertisers. If you are a marketplace, you will need a segmentation scheme for every side of your marketplace (most marketplaces businesses are two-sided, but come have three or even four sides).

To create a segmentation scheme, I’m a big fan of what I call the “Use Case Scenario” exercise. I encourage you to conduct this exercise prior to filling out the framework canvas. I first proposed this exercise in my book Scaling the Revenue Engine. Its biggest benefit is that it forces you to adopt a bottoms-up, “atomic” approach to segmentation.

The first time you do it, this exercise will take a couple of weeks’ work. It’s high-leverage time. One big benefit is that it will help you to verify whether you have immersed deeply enough in your market to truly understand it. Assuming the answer is “yes”, conducting this exercise will help you complete the framework canvas more quickly. If the answer is “no” — you don’t actually understand your market well enough — then that will become your first priority; the canvas will need to wait.

To complete the Use Case Scenario exercise, the first step is to come up with at least 50 different use case scenarios for your envisioned product concept. The more the better. The idea is to work with specific use cases (the atomic level) before building up towards a segmentation scheme. The 50 use case scenarios are “raw material”; later, once you have analyzed them, you will bucket them into segments. By taking this atomic approach, you will build a much more complete and nuanced understanding of your segments than would otherwise be possible.

To come up with use case permutations, the first question you will face is “what segmentation dimensions matter most?” Cast a wide net. You’ll narrow later. Here are some dimensions to consider for a B2B company:

  • Size of company (revenue / employees / market cap / Alexa ranking / etc.)
  • Product usage profiles
  • Buyer or User profiles
  • Product demand indicators
  • Technology maturity
  • Legacy technology
  • Manufacturer / vendor affiliation
  • Geography

For a B2C company, you might consider:

  • Gender
  • Age
  • Income
  • Psychographic profiles
  • Product usage profiles

Then create the following columns in a Google Sheet, Excel or Airtable:

  • Use case scenario: what is the description of this permutation (in terms of your chosen dimensions of variation)?
  • Use: What is the exact job to be done within this permutation? The job can be functional or psychological
  • Example customers: List companies (for B2B) or people (for B2C) who exist within this use case. Describe these companies or people. What makes them potential customers within this use case?
  • User personas: Who are the key user actors? Describe each user actor’s unique job to be done, and the psychographic profile of this user
  • Buyer personas: Is the user the buyer? If not, describe the buyer’s job to be done, decision factors and psychographic profile. Is the buyer ready, willing and able to buy now?
  • Limiting factors: For the relevant personas, what obstacles stand in the way of completing their jobs?
  • Competitive alternatives: What current methods do actors use to address the limiting factors? How effective are these?
  • Intensity of problem or need: What is the magnitude of the problem or need?
  • Value of solving the problem or need: What economic or psychological benefit will accrue if this problem or need can be overcome?
  • Current market / product fit: To what degree does our product in its current state address the problem or need? What features in our product are most valued by this use case? What remaining gaps must be filled to fully address the problem or need?
  • Price sensitivity: How will the buyer evaluate pricing? What reference products might be used to gauge the reasonability of our pricing?
  • Customer concentration: Within this use case, are there 100 prospects? 1000? 1M?
  • Use case TAM: Given the annual revenue we could expect to receive from an average customer, and the number of customers that exist within this use case, what is its size (expressed in TAM)?
  • Sales complexity: Given buyers, influencers and users and the decision process that is operative within this use case, how complex is the sale? What is the time it will take from initial prospect exposure to Closed / Won?

For example, let’s consider a company that boasts a SaaS lead response tool for auto dealers. Here is a partial view of a Use Case Scenarios Exercise spreadsheet:

The rows are your use case permutations. Once you have listed all the permutations you can conceive of, you can begin to fill in the rows. As you work through it, you will find yourself adding rows. You may change the dimensions themselves, and iterate the exercise a couple of times. That’s good! It means you’re really thinking it through.

Depending on your stage, your answers to these questions will vary in certitude. If you’re an early stage company (for instance at the Minimum Viable Concept or Minimum Viable Product stage), you’ll need to guess for most of the questions. And your capacity to verify them will be limited by your access to visionary customers and the time your product has been in the market.

Don’t just do this exercise yourself. If you’re an early stage company, ask fellow founders to complete it. Go over your answers with your visionary customers and others in the market. If you are at a company stage where your company has salespeople, ask them to complete it. Top salespeople have good instincts; tap into that.

Of course, if multiple people fill out the spreadsheet, you will need to consolidate the sheets into a unified view. Once you’re done, you should have at least 50 rows on your spreadsheet, with all columnar questions answered. As you look at the sheet you will no doubt feel that many answers aren’t much more than a “gut-level guess.” That’s OK. They are, after all, just claims. But it is important to grade the certitude of each answer.

Go through each row on the sheet, one by one. As you scan the row, think about each answer. How confident are you that you are correct? If you are highly confident, mark the cell “Green”. If you are somewhat confident, mark the cell “Yellow”. If your answer was a guess, mark the cell “Red”. Like this:

Once you have completed this for all rows on the spreadsheet, you will have created a “heat map” that reveals the use case claims most in need of testing. All the “Reds” and most of the “Yellows” need further research. This focuses your efforts. You can now pick up the phone, or meet with your visionary customers or current customers or prospects or other market actors, gathering further data until you gain a higher level of confidence.

With much iteration and research, the sheet will eventually become more and more green. Perhaps there will be a few splotches of yellow. At that point you are ready to construct your segments. As you consider the use cases, do they form into natural clusters? Leveraging these natural clusters, organize your chosen market into 5–7 segments. Your segmentation dimensions might be company size, or region, or technical sophistication, or segment size — that’s on you to decide. Your selection of the attributes that drive your segmentation scheme is important, so choose well.

The result of this work will be your segmentation scheme. It is a fundamental claim. It’s placed in the canvas within the Market Viability subdomain.

Top Priority Customer Segment Claim

Once your basic segmentation scheme is defined, you can now prioritize these segments. Which one is the most attractive to focus on now? During the “discovery of a value breakthrough” phase of company-building, it’s important to focus on just one top priority segment. To choose it, consider variables such as:

  • Segment size (TAM)
  • Purpose
  • The job that must be done to achieve the purpose (I call this the meta job)
  • Gaping problems and screaming needs encountered when trying to complete the job
  • Your capacity to solve these problems and needs
  • The efficacy of competitive solutions
  • LTV profile
  • Your own knowledge of and experience within this segment

Of course, during Phase I, answers will be speculative. Nonetheless, the more customers and prospects you engage with, the more likely it is that your speculations will trend towards roughly right. That’s why customer immersion is so important early on. It helps you select the segment with the “hottest center” of problem and need, so that your initial product and business model can be planted in fertile ground. Choose well.

Once you do choose your top priority segment, your next step will be to highlight its most important attributes. What is the segment’s purpose? What essential “meta job” does this customer segment seek to perform? What personas exist? What roles do these people hold? What gaping problems do they experience? What screaming needs do they feel when trying to complete their jobs? These are examples of the consideration topics you must address as you seek to serve this segment.

Gaping Problems / Screaming Needs Claims

Once you have clarified the segment’s purpose, meta job and supporting jobs to be done, you need to identify the problems standing in the way of getting them done. This is where the rubber hits the road. The claims you create in this subdomain will be the foundation for your product. Great products solve problems that are gaping, and needs that are screaming.

To find gaping problems and screaming needs, you must ponder the biggest limiting factors that make completing the job hard, frustrating or impossible. Conceive of the role technology might play in attacking these limits. How big a deal would it be if you could break through? Would it create a transformational outcome for the customers within this segment? How transformational? If your customer is a company, would it increase revenues by 20% or more? Would it reduce costs by 20% or more? If your focus is on the consumer, would your solution save 20% or more in a key spending category? Would it create a transformational psychological benefit?

This is not just an intellectual exercise. Answers here emerge from deep immersion inside the world of visionary customers. You may need to immerse for six months, or even a year or more — enough time to observe daily work, to conduct research, to track the interactions between people, workflows and existing technologies, to find the key sticking points — in order to reach a sufficient level of understanding. In the four stages of company building that make up Phase I, many of your initial assumptions will be wrong. They will require continuous testing and iteration so as to narrow in on truth.

As you ponder the jobs to be done in your top priority segment, you’ll need to build hypotheses for the following consideration topics:

  • The specific problem or need
  • Why it is gaping or screaming
  • Obstacles standing in the way of addressing it
  • The economic benefit of addressing it
  • The psychological benefit of addressing it

If you can validate that your fundamental claims for these consideration topics are true, then your product concept will be anchored in truth. Only then can you find the path to a value breakthrough.

Phase II — The Spreadsheet

The framework spreadsheet comes into play once you have achieved a value breakthrough. At that point you move into Phase II, wherein you seek to optimize and extend that value, and build sustainable competitive advantage. To do so requires a more detailed level of planning. The spreadsheet helps you do that.

Market Viability Claims

In the Market tab, the first subdomain is Market Viability (as it was with the canvas). Since by this point the fundamental claims that comprise this subdomain should already be proven, you can keep the consideration topics in this part of the spreadsheet fairly high-level:

Customer Segment Claims

Now that you are in Phase II, it is important to build into your framework spreadsheet all prioritized segments — not just the highest-priority segment, as in the canvas. As you do this work, the spreadsheet’s structure matters.

The Customer Segments subdomain should be built to conform to the unique realities of your business. For instance, a multi-sided marketplace business must show prioritized segments for all sides of its market. If yours is a marketplace business characterized by a simple two-sided market (with a demand side and supply side), the spreadsheet structure might be presented as follows:

  • Demand Side: Segment A
  • Demand Side: Segment B
  • Demand Side: Segment C
  • Supply Side: Segment A
  • Supply Side: Segment B
  • Supply Side: Segment C

Within each segment, the important consideration topics should be listed as rows, like this:

  • TAM
  • Purpose
  • Meta Job
  • Gaping problems / screaming needs
  • Why problems are gaping and needs screaming
  • Economic benefit of solving them
  • Psychological benefit of solving them
  • Hurdles to be overcome to more fully address problems and needs
  • Roles / personas
  • Supporting jobs to be done
  • Intensity of demand for the product today
  • Intensity of competition today
  • LTV profile of the average customer
  • Why a top priority segment

In the spreadsheet it will look something like this:

The spreadsheet shown above assumes a multi-sided market. It displays Market Side A, Segment 1. Of course the full spreadsheet display would reveal all prioritized segments, for all sides of your market. Notice that in the spreadsheet, the Gaping Problems / Screaming Needs subdomain is now subsumed into the segments themselves. It’s easier to view this way, since they vary by segment.

It might seem to be a lot of work to stipulate and validate claims for all these consideration topics, for every prioritized segment. That’s true. It is a lot of work! But it’s necessary work. You will invest a lot of time and money to build out your product features. Customers will find them compelling if and only if they meet their needs and solve their problems. You’ll also invest a lot of money in customer acquisition. This investment will only pay off if you understand the customer-defined value of your product. So too with your pricing decisions. They’ll only be sound if you understand the value you deliver.


The Market domain is the starting point for value creation. If you don’t get the Market right, the other three domains in the Four-Way Fit won’t matter. It is a sad reality that far too many startups never crack the code on the Market. They fail to adequately appreciate the importance of market viability factors. Or they don’t delve deeply enough into the variations between segments. Perhaps they can’t find problems that are truly gaping or needs that are screaming. The point of the framework, in both its canvas and spreadsheet forms, is to discover these failures as quickly as possible — so that you can course-correct quickly, reducing the waste of money and time.


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