Start with a Niche [14/100]

The most popular products don’t become mass popular overnight. It’s a process. Usually, their popularity is uneven, they are unknown in some niches, but very popular in other niches.

When you start a product, sometimes you know the niche already and can easily define target customers. However, in many cases, you just don’t and try to find the niche and this miraculous niche-market-fit.

One of the most common mistakes is to ignore niches and just try to attract all kinds of customers. It’s essential to find 1-2 ponds to start from and then expand to the other, larger, and more promising lakes and oceans 🚰 → 🛁 → 🌊.

Here are a couple, maybe surprising examples, that demonstrate how popular products took off.

Electrical telegraph (1837)

Its adoption was not easy, since it was not clear what are the benefits for commercial institutions. Stockbrokers and reporters got the benefits first. They understood that fast information transition increases efficiency and helps to get an edge. In a short term, all major news agencies and major stock markets were connected to the telegraph.

Telephone (1876)

Telephones were adopted by police departments and fire stations. Fast reaction to crime reports and fires was great, but the telegraph was not enough. You have to have two-ways communication to get some details that the sender maybe is not expecting to report initially.

Phonograph (1877)

Try to guess the first niche market for the phonograph. Rich music lovers? Nope. First phonographs were coin-machines in bars. Throw a nickel and enjoy Stephen Foster ballads.

Car (1886)

Cars are almost among the lucky exception to the niche rule. However, there was still one group of people in the USA that moved from horses to cars enormously fast — farmers. Cars just expanded the borders of farmers’ social life and business activities. Suddenly you can buy goods, not from a local dealer, but a dealer in a remote town (much cheaper). Suddenly you can visit a town and watch a movie. These benefits were not important for the urban population, for they were life-changers for the rural population. Nevertheless, cars were adopted in cities quite fast as well.

In addition, the car delivered you to the door and was faster than a horse-and-buggy, thus allowing longer trips in shorter time. Farmers had traditionally felt guilty about taking such trips, even when the time was available.

Radio (1895)

Radio was immediately adopted by the British Royal Navy, they thought that radio can speed up communication between ships and were right. Fun fact: in 1912 Titanic sent CQD (distress signal), however, radio receiver was turned off on the closest ship:

Meanwhile, the closest ship, Californian, didn’t receive Titanic’s distress calls at all. Its wireless operator had switched off his receiver and gone to bed after Phillips told him to shut up.

VisiCalc (Excel predecessor, 1979)

First, it was adopted by accountants. Businessmen and analysts joined the party much later. Accountants just saw the value right away (and quite many people pirchased Apple II just to get VisiCalc):

Like an accountant, I remember showing it to one around here and he started shaking and said, “That’s what I do all week. I could do it in an hour.” … I meet these people now, they come up to me and say, “I gotta tell you, you changed my life. You made accounting fun.”

Facebook (2004)

Everybody knows that Facebook got its popularity in universities first. Everybody knows the rest of the story.

Within 24 hours, 1,200 Harvard students had signed up, and after one month, over half of the undergraduate population had a profile. The network was promptly extended to other Boston universities, the Ivy League and eventually all US universities

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Can you start without any niche in mind? Yes, you can, but this is just hard. The most problematic part is product marketing. Who are your ideal customers? How to reach them? How to target your message? Product is the message, so without proper marketing startup success chances are low.

My experience

In Fibery we did our first release in April 2020 as a general work management tool. We were not sure in what types of companies it will work better and what use cases will be more valuable. In just a month it became clear that we had all kinds of leads from all kinds of companies. Leads demanded all kinds of improvements that just didn’t form a sane strategy.

We quickly decided to select a single niche and focus on it. The niche we choose was product companies from 20 to 200 people. And it made everything much simpler. Finally, we can quite accurately say what features are important and what features are not so important, what is our value proposition, who is our ideal lead (Product Ops or CPO). It took us 9 months to prepare the second release, but in this niche Fibery can fly much better, I believe.

OK, niche strategy looks convincing, but how to find the niche? We used Conway’s law, and it’s just partially a joke. We’ve reviewed a couple of alternatives and selected one we knew best and were confident that our product will provide a significant value boost. There were other alternatives, like education space or digital agencies space, but our knowledge here was not deep enough. It means we should rely on some domain experts, etc. It’s not a huge problem, but we also did not feel that these niches are better.

A startup should be an experimentation facility that hypothesizes, executes, and measures the results. The faster you can do it, the faster you find your niche. Why it took us 9 months to make this niche release? In fact we spend time to create a niche-probing framework. Now we can asseble solutions for various niches in 1-2 weeks and check initial response in 1-2 months. If the first niche will not be successful, we at least have a decent experimentation framework 🧬.