Which market? Avoiding kiddie soccer, bright shiny things and cocktail party banter.

This is part of a blog series on the key questions that climate tech companies should be asking as part of their business, product and market strategy. To be clear, these blogs are not step-by-step guides. And many of the ideas are pretty obvious– yet they are repeatedly overlooked in the startup hustle.

In this blog, I’ll be discussing how to dig more deeply into the questions regarding which market,  who in that market, and why are they going to care. 

Which market? 

Kiddie soccer 

Young kids playing soccer don’t play positions, plot out strategy or predict where the ball is going. They just all run after the ball and try to kick it. Too many startup founders do the same thing, and it’s easy to see where startups are bunched up in climate tech, just like seven year olds chasing the ball in a bunch so tight kids can’t even get past each other’s feet to kick the ball. (Yes, I’m a soccer mom.)

How many startups are chasing carbon offset platforms? Battery optimization? EV trucking? This is not to say we don’t need multiple innovations and approaches in these sectors, but there are many sectors that are neglected (see this illuminating chart that was just published from Project Drawdown). 

Project Drawdown: Emissions Cuts Needed Compared to Investments

These neglected sectors may be harder because you’ll have to do more ground-breaking, but the competitive landscapes are far less crowded– you actually have a chance at getting to the ball and making a real play. You’re going to have to hustle no matter what in a startup– I find it’s better to go into relatively more greenfield markets and know that you have to do more educating of customers and investors. You may have to wait a bit longer to touch the ball, but you’re more likely to be able to get it into the goal without eight other pairs of feet all frantically kicking right next to you.

That being said, going into a market where literally there are no other players is usually a doomed plan– if you’re completely alone on the playing field, there may not be a game there at all (and one of your parents is probably in trouble for screwing up the game location). The sweet spot is having a couple of players who are doing something adjacent in a space, but where there is enough room to have a fairly different take.

Bright shiny things

Many technologies can be applied to multiple markets (some horizontal technologies can theoretically be applied to any market), and startups need to spend a lot of time researching markets to figure out which segments and use cases are viable, relevant and attractive. 

For companies where the technology can easily address multiple use cases and markets, the issue that I see over and over again is lack of sustained focus. Founders and leaders do their homework, set off in one direction, and start making headway. But of course there are bumps in the road and it takes longer than they had originally anticipated to make commercial progress. In the meantime, an adjacent use case or market pops up (the bright shiny thing)– sometimes completely serendipitously– and it seems like it would just take a few tweaks to go after that opportunity, so why not? More opportunities equals more growth potential and less risk, right? 

Wrong. Over and over I have seen companies flounder, lose traction in their core market, and even go bankrupt because they lost focus. Startups need relentless focus and ruthless prioritization to get enough traction to get to scale and eventually profitability. They need to stay laser focused on winning in their core market and use case until they have a dominant position and repeatable success in that space. Or until they have determined their core market is not viable and they have to find a new market. Only then should they consider pursuing adjacent use cases and markets. If they kinda sorta have traction in their core, and start diverting resources and attention to a bright shiny thing nearby, momentum in the core often grinds to a halt, before it is self-sustaining. And then they’re in trouble.

Of course, startups often have to change tacks when things are not working. Many will need to experiment with multiple use cases and markets before they figure out which one to really go after. I am not saying they should not be agile and flexible. I am saying that once a market opportunity has been validated and you’re starting to get commercial traction, stay focused even when the going gets tough– leave the bright shiny thing for someone else, or for another day.

Who in that market and why are they going to care?

Cocktail party banter

Another common pitfall as people are looking at markets is they are not digging into enough depth into who the people are. In the B2B segment, target markets are often expressed as companies and departments/teams. For an investor pitch, that may be sufficient– it’s like cocktail party banter– enough to fill a five minute chat and seem intelligent and interesting. However, to design the right product and the right business strategy, that level of target market definition is not nearly detailed enough. You’re not likely to marry someone if you only have a cocktail party level understanding of them.

In particular, a lot of startups think it’s enough to identify someone with a pain and start pitching them on how they will make the pain go away. But it’s critical to dig in deeper– to understand their organizations and what actually motivates buying decisions.

Deeper buyer and persona research questions

Now the trick is that you can’t simply grill someone with all these questions. There is an art to getting time with people and getting them to share this level of information. That is beyond the scope of this blog– ping me if you want more on how to conduct customer research so that you can actually get at this information.

Worth the Effort

To sum up, a lot of startups need to dig more deeply into the questions which market, who in that market and why are they going to care– deeper than their investors are most likely asking. This upfront work will pay off many fold as you move down the path to commercialization and scale.