Four ways early stage founders screw up market segmentation

(And how to do it better ✅)

1. Not choosing a customer segment

• "I'm just focusing on building a great product — I'll figure out how to market it later"
• Dumb for many obvious reasons

2. Choosing a customer segment that's too broad

• Lack of specificity leads to an uncompelling product
• One-size-fits-all = One-size-fits-none

3. Choosing a customer segment that isn't real

• An example from music: "I'm starting a country/Dubstep/Jazz fusion band — I'm gonna corner the market!"

4. Choosing multiple segments at once

• Your product gets pulled in 100 directions
• You offer too much for too little
• Feature-bloat turns off customers ("It's too complicated!")

What makes a good segment to target as an early stage founder?

1. People in the segment evaluate products in similar ways

• They use the same criteria of what's good and what's bad
• Another music example: lovers of Pop Punk music LIKE whiny singing, while lovers of Pop music do not

2. People in the segment shop for products in similar ways

• They read the same publications
• Use the same social channels
• Prefer self-serve sales over booking a demo

3. People in the segment talk to each other

• They go to conferences together
• Hang out in Slack groups
• Join the same Facebook groups
• Post in the same subreddits

4. There's enough people in the segment to meet business goals

• If you're bootstrapped, this can be a smaller number (there's nothing wrong with being a $10m ARR business)
• If you're venture-backed, this needs to be large enough (or small with extremely high ACVs) to please investors’ goals