Everyone focuses on the Total Addressable Market (TAM), which gives an unrealistic expectation of your market size.
Instead SOM gives you a more practical estimate.
14 mental models that helped me build 10 startups and sell (a bunch of them) for millions.
Everyone focuses on the Total Addressable Market (TAM), which gives an unrealistic expectation of your market size.
Instead SOM gives you a more practical estimate.
Is the number of new users an average customer generates and a strong indicator of how highly your users like your product.
The higher your viral coefficient, the cheaper your acquisition costs.
The process of exposing your users to different versions of the product/ messaging to determine the most effective one.
All top companies do this on a regular basis.
The different stages that a buyer goes through before making a purchase.
Understanding what stage they're in helps you strategize your marketing accordingly.
A comprehensive step-by-step plan that companies deploy to bring a new product/ service into the market.
The basic version of your product with core functionality that's just enough to launch and gather feedback.
A measure of how much your product/ service is being used relative to the total market.
Eg: Netflix has a 21% share in the streaming services market in the US.
The activities that a user performs repeatedly while engaging with your app, reinforcing them to use it again, and again.
It comprises the different touchpoints that take a person from a complete stranger into a happy customer.
It measures how much a customer is worth relative to the cost of acquisition.
If it's less than 1, you're burning your cash by bringing in more customers.
The percentage of customers who cancel/quit your product relative to the total number of customers.
To increase LTV, you need to have a lower churn rate.
The gap that exists between a user's problem and the value delivered by the solution.
The higher the gap, the more you can charge.
Refers to the interaction that makes the users realize the value of the product or causes them to change their impression of the brand.
A plan designed to help owners/ shareholders sell their ownership partially/ completely.
14 mental models that helped me build 10 startups and sell (a bunch of them) for millions.
— Joe Speiser \u26a1\ufe0f (@jspeiser) October 24, 2022
More from Startup
I just gave a talk to the W2021 YC batch. It's my favorite startup audience to talk to. Here are some of the highlights:
Finding product market fit is the critical thing to do in a startup.
Everything else: demo day, what investors you get, how much you raise, what press covers you -- it is all window dressing.
Many founders don’t want to talk to their customers because it makes them vulnerable, because it's hard work, because it's scary. Creating a tight feedback loop with customers is the one thing that will help you discover PMF.
If a customer isn't one of your cofounders, try to create a customer panel that allows as tight of a loop as possible. Call them daily. Put them in your Slack.
My Twitch cofounder Emmett Shear has a great analogy on PMF here: it's like rolling a boulder downhill.
Finding product market fit is the critical thing to do in a startup.
Everything else: demo day, what investors you get, how much you raise, what press covers you -- it is all window dressing.
Many founders don’t want to talk to their customers because it makes them vulnerable, because it's hard work, because it's scary. Creating a tight feedback loop with customers is the one thing that will help you discover PMF.
If a customer isn't one of your cofounders, try to create a customer panel that allows as tight of a loop as possible. Call them daily. Put them in your Slack.
My Twitch cofounder Emmett Shear has a great analogy on PMF here: it's like rolling a boulder downhill.
1/ What is \u201cproduct/market fit\u201d? I\u2019m not sure I can give you a definition. But maybe I can share what the subjective difference is in how it feels when you have it and when you don\u2019t. Founding a startup is deciding to take on the burden of Sisyphus: pushing a boulder up a hill.
— Emmett Shear (@eshear) July 27, 2019
Every single time I set foot in every store/restaurant/place of business in Latin America. Only if they are not completely ignoring me from jump. Or following me bc obviously I came to carry out my plans to rob a store that is approximately 2 sq ft. big.
The part that’s also relevant is I’m oftentimes viewed as respectable-negro adjacent in the dominant culture imaginary. So what of those who are never identified as such? I always think about that. I get surveyed & harassed bad...yet and still there’s levels to the profiling.
When I have to do errands in Panama City, I make sure to apply makeup, perfume, an outfit with cleavage, or booty emphasis, heels and an “expensive” purse. There are STARK differences in the service and treatment I get when I do this vs. when I don’t. STARK. Pero, *STARK.*
LatinAmerica is psychotic in identifying who has money and who doesn’t based on how they are dressed, and how they imagine, carrying themselves. An “elegantly dressed” Black person will face less violence on an errand-run versus one who isn’t. This isn’t absolute so sit down plis
And then the times when I am dressed super-revealing. All of the help and care in the world from male workers. The same white mestizo men who would ordinarily follow me to “prevent theft” are happily helping me find things. Again, race, color, gender, class and more.
That \u201chere\u2019s a White customer, they\u2019re automatically more important\u2014despite the fact neither have you spent money yet so I can\u2019t even claim a paying customer is more important than a browsing customer\u2014so lemme interrupt helping you to go to them\u201d thing just happened to me again.
— \U0001f183\U0001f181\U0001f184\U0001f173\U0001f188 (@thetrudz) January 8, 2021
The part that’s also relevant is I’m oftentimes viewed as respectable-negro adjacent in the dominant culture imaginary. So what of those who are never identified as such? I always think about that. I get surveyed & harassed bad...yet and still there’s levels to the profiling.
When I have to do errands in Panama City, I make sure to apply makeup, perfume, an outfit with cleavage, or booty emphasis, heels and an “expensive” purse. There are STARK differences in the service and treatment I get when I do this vs. when I don’t. STARK. Pero, *STARK.*
LatinAmerica is psychotic in identifying who has money and who doesn’t based on how they are dressed, and how they imagine, carrying themselves. An “elegantly dressed” Black person will face less violence on an errand-run versus one who isn’t. This isn’t absolute so sit down plis
And then the times when I am dressed super-revealing. All of the help and care in the world from male workers. The same white mestizo men who would ordinarily follow me to “prevent theft” are happily helping me find things. Again, race, color, gender, class and more.
