How most founders get their beachhead wrong
Three waves? You're still drowning in wave one
The common mantra for startup is: start with a beachhead.
A beachhead is an initial customer segment, which should contain early-adopters that are open to new things and have very high problem urgency.
Most founders intuitively get this, but many struggle to succesfully execute on it.
Here’s why it’s easier said than done.
Three waves of market entry
The famous Tesla-example with 3 cars for 3 segments is often used to illustrate this point. Let’s quickly revisit the Tesla example.
Tesla started with their Roadster for a very expensive segment, the sportscar. Afterwards, the Model S, for the premium segment, and then the Model 3 as mid-market car.
Elon lined it all out in his Tesla Master Plan, arguably made way before all cars were released. Visionary, some say.
Three waves take longer than you think
Looks pallatable, right? Just think about your 3 waves and presto: your startup has product-market fit and even world dominantion is nigh.
Not so fast. At what timescale did the Elon’s Masterplan unfold?
Tesla spend 9 years on wave 1.
At least 5 years on wave 2 (development likely started some years earlier)
Wave 3 starts 14 years after founding.
FOURTEEN YEARS. Now think about your pitch deck. You might have 3 waves. Just imagine: your wave 3 could be 14 years from today.
Yeah, that’s why I believe it’s irrelevant for most early-stage startups struggling to get their first 10 to 100 customers.
Yes, Tesla is a hardware company with severe capital requirements which often take longer, especially true for complex machine manufacturers as cars. And yes, a SaaS startup might go faster.
And yes, some of these AI startups grow really fast. But, mostly serve just one segment with one product, that happens to be very big (developers and Cursor, for instance).
Even with some hedging, the truth holds that most startups don’t conquer three different segments within five years. There’s something that complicates that, often present in 3-wave strategies.
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Every wave requires a new product
Each wave of Tesla’s strategy required a completely new product. Not just another colour option: an entire new car. The size and complexity of the organisation required to pull that off, not even speaking of the capital required.
Making one succesful product is already hard enough: it’s the biggest cause of failure among startups. Let alone making three successfull products.
Having such a strategy can distract founders from focusing on making one thing work. Sometimes, I see founders betting on all three at the same time. This never works.
“But Jeroeeehoeeeen, investors want to see a roadmap” (Thanks Shaun)
Sure. But I much rather see you have traction in your beachhead market. And so does your (potential) investor.
The fact that you can imagine future products for imagined market segments doesn’t really prove anything about the success of the first wave.
In general, most companies don’t really expand into very different teritories to begin with. What have Notion, Slack, Bumble, Spotify, AirBnB done so far in terms of product? Vastly different new products? Not really, right?
Broad beachheads are hard to operationalise
Another struggle with such strategies is that founders have too broad waves. I was recently talking to a founder who had ‘Small and Medium Enterprises’ as wave 1, ‘Corporates’ as wave 2, and ‘NGOs’ as wave 3. Why is that a risk?
In my experience, these segments are way too broad. As a result, it’s unclear where to start the marketing efforts for Wave 1.
Which SMEs? Any industry? Any region? Any particular role in organisations that can buy you? Which particular Jobs to be Done for that role are you targeting?
As a result, startups with this issue have zero or very low sales, and it’s not taking up.
How to fix this? You need to be more niche.
Get more niche
You need to make your beachhead market more concrete. This means you need to articulate the underlying structure of that beachhead you identified.
That means, identifying segments within segments. And on steroids: identifying segments within segments within segments. For Tesla, I made up some ideas to illustrate what making that stuff conrete means for Wave 1.
So, who are your niches A, B and C within your beachhead? That’s the actual question if you are serious about getting your startup to market.
This is why it’s hard
Anyone can identify three waves. That is a top-down activity most people can do. But detailing the niches within Wave 1, that is the hard part.
You can’t do that top down using market research reports. You need to talk to customers. Yes. Scary stuff, I know.
Because without the answers from potential customers, you don’t know what to segment them on. You need these ingredients, and find a way to segment them.
How to identify your true beachhead in Wave 1 is deserving of an entire article on its own. This will come in the near future.
Key take-aways
Making up 3 waves is not a challenge
Every wave requiring a new product increases the length of your roadmap significantly and adds complexity: don’t sweat it.
Broad beachheads hinder operationalising your marketing
You need to go one layer deeper in terms of segmentation to make your waved strategy operationalisable.