The Lean Entrepreneur: How Visionaries Create Products, Innovate with New Ventures, and Disrupt Markets

Growth Waves

Growth isn’t magic. Growth is determined by customer passion + cash-flow-positive customer acquisition. Yes, you can buy customers, but that’s only sustainable in very high-margin businesses. Think dot-com fiasco of the 1990s. That was a lot of buying customers and little of customers buying.

First Wave

Customer passion indicates that you’ve nailed the value proposition per customer subsegment. Your first wave of growth comes from learning and then executing on marketing and selling to that subsegment.

Danger lurks in acquiring customers from multiple segments at this point.

We once worked with a company whose CEO came to us all excited about their growth. “We’ve hired this great vice president of sales, he’s totally kicking butt. We’ve closed half a dozen deals in the last month and things are really taking off!”

Several months later, we heard from him again: “We had to let the sales guy go. Turns out he sold 10 deals to 10 different segments. They all wanted different things. We couldn’t find any commonality. It was a nightmare!”

Thing is, that sales guy was doing what he was supposed to do, but he was the wrong salesperson for the company stage.

For online products, it’s difficult to not acquire multiple segments. This is okay as long as you rigorously create buckets to store them in and monitor sales, marketing, and support costs. Here are some potential differences between subsegments:

• Varying depths of pain felt will result in different engagement, different ...