As I mentioned in previous posts, I have been focusing on testing customer profiles and appetite for professional services in social innovation sector for a while. And here is a brief summary of what I have learnt so far, including some "yes" and of course some "no" (which I believe are more valuable).
1. Pivot is part of the nature of start-up.
No one like changes but they are the destiny in the world of start-up. The underlying reason of that is I started from a hypothesis which came from a combination of interest, experience and fantasy. The hypothesis is untested and therefore useless. Until I put it (somehow) in the market should I find flaws and surprises. This is the time when I revise my hypothesis or even develop a new one. Every time I test some hypotheses, I change some of them. This is the overarching take-away I got from testing and this class.
2. Market is always big and growing, depending on how you define it.
I found defining market and calculating the total addressable market was a little tricky. I aways ask myself, what is the point of knowing the total addressable market? Is that an assurance to investors or to me? As I develop my hypotheses, talk to potential customers and of course pivot, I found the mindset of a founder is to constantly connect to future to the present. And a successful founder who can raise team and money is the one who can constantly connect the future to the present with the team and investors. In that sense, the total addressable market is the biggest background picture where all these connection happens. And however you define it, it should be big and fast growing.
3. I was right and wrong.
I was right about us and wrong about the market and customers.
I was right about us because our vision, mission, skill sets, network, partnership, channels are genuine, aspiring and inspiring. We never lose our passion to serve the public sector with proven skills and tools from the private sector.
I was wrong about the market and customers because the market-service fit is not there perfectly. The market might be smaller than I expected and the growth might be slower than I expected. Customers are not fully aware of the benefit of professional services, let along paying for such services. What do these mean to us? It means that we need to
a. Lower TAM and future perspective
b. Change our fee structure (we might take the cost of being a market educator for a while)
c. As a result of (b), our P&L perspective should be updated
I plan to further test some of my hypotheses and talk to more market players during the Christmas holiday when I travel in China. I sense that what I conclude here is still not the whole picture and there is a chance that I was misled due to the inherent issue of a small sample. No matter how I pivot, I am confident about the growth and development of China's social innovation and impact sector. I guess this is the ultimate driving force of BetterPartners.
1. Pivot is part of the nature of start-up.
No one like changes but they are the destiny in the world of start-up. The underlying reason of that is I started from a hypothesis which came from a combination of interest, experience and fantasy. The hypothesis is untested and therefore useless. Until I put it (somehow) in the market should I find flaws and surprises. This is the time when I revise my hypothesis or even develop a new one. Every time I test some hypotheses, I change some of them. This is the overarching take-away I got from testing and this class.
2. Market is always big and growing, depending on how you define it.
I found defining market and calculating the total addressable market was a little tricky. I aways ask myself, what is the point of knowing the total addressable market? Is that an assurance to investors or to me? As I develop my hypotheses, talk to potential customers and of course pivot, I found the mindset of a founder is to constantly connect to future to the present. And a successful founder who can raise team and money is the one who can constantly connect the future to the present with the team and investors. In that sense, the total addressable market is the biggest background picture where all these connection happens. And however you define it, it should be big and fast growing.
3. I was right and wrong.
I was right about us and wrong about the market and customers.
I was right about us because our vision, mission, skill sets, network, partnership, channels are genuine, aspiring and inspiring. We never lose our passion to serve the public sector with proven skills and tools from the private sector.
I was wrong about the market and customers because the market-service fit is not there perfectly. The market might be smaller than I expected and the growth might be slower than I expected. Customers are not fully aware of the benefit of professional services, let along paying for such services. What do these mean to us? It means that we need to
a. Lower TAM and future perspective
b. Change our fee structure (we might take the cost of being a market educator for a while)
c. As a result of (b), our P&L perspective should be updated
I plan to further test some of my hypotheses and talk to more market players during the Christmas holiday when I travel in China. I sense that what I conclude here is still not the whole picture and there is a chance that I was misled due to the inherent issue of a small sample. No matter how I pivot, I am confident about the growth and development of China's social innovation and impact sector. I guess this is the ultimate driving force of BetterPartners.
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| Keep Calm and Make Change |
I'm glad you are taking away lessons from the testing that are useful, such as rethinking the likely market size. You are right that TAM is somewhat theoretical and designed to reassure investors. At the same time, if you think of entrepreneurship as an optimization exercise, you want to make sure you are climbing the right mountains. When TAM is too big, you likely need to segment to find your most fruitful initial pathway (that leads to a broader market). When TAM is too small, you would need to discern what "assets" in the broadest sense you are gaining by working hard to develop a small market. Of course, if a market is too small you may also want to redefine your targets/ approach to make it larger.
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