Ask first-time entrepreneurs who they plan on selling their product to, and the most likely answer you’ll hear is an enthusiastic “Everyone!”
Those a bit more savvy back off from global hegemony by proposing a vertical slice, such as “financial services companies,” or horizontally, “the Fortune 1000,” or by product, as in “people who buy milkshakes,” or even a specific demographic, such as “women between the ages of 18 and 73.” Unfortunately for new businesses, these ill-defined segments are neither realistic nor helpful.
segment: A defined group of people who share the same problem or passion and speak the same language.
Products likely do exist that are purchased by both those 18 and older and 73 and younger, but not by all women between 18 and 73. Why do those who buy, buy?
Imagine you were a commercial fisherman. Your livelihood depends on catching and selling fish. If you are asked, “What sort of fish do you plan to catch?” and you answer, “All the fish in the sea,” you are surely doomed as a commercial fisherman.
It turns out there are not only many fish in the sea, but they have different forms and different ethologies. Methods of fishing that work well for some species don’t work so well for others.
Battle-tested entrepreneurs know how to fish, and when asked who will buy their product, they respond not by reciting demographic characteristics, ...