This week I had the pleasure of listening to Jim Goetz of Sequoia Capital talk about their investment strategy, the power of markets outside the valley, and this over-hyped concept of a "Unicorn" (a private company worth more than $1B).
One of the things I took out of this (as a simple guy who needs to break complex arguments down into simple frameworks) was this notion of fish and ponds. You remember the clich'; something around the idea of, would you rather be a big fish in a small pond vs. a small fish in a big pond?
I got to thinking that there are four variations of this clich and deciding which strategy you are invoking can make all the difference in the world for your business.
Small Fish--Small Pond. Does anybody really want to execute on a strategy with a small company impact in a really small market? Feels like a nice lifestyle business (nothing wrong with that) but understand that you can't get investors or high profile/Type A people to come join you. Most importantly, your marketing budget best be small but effective and include plenty of zero-cost tactics.
Big Fish--Small Pond. My current business operates with this idea. My partner and I at The Startup Factory are one of the largest investors in North Carolina and possibly the southeast area of the US. Not only are we happy with that designation, our investment thesis is built on it. Our marketing strategy includes speaking gigs, outbound telemarketing, even paid online advertising, all focused on the southeast.
Small Fish--Big Pond. Large markets have lots of competition which means your burden to position yourself as unique is quite high. Not insurmountable but a challenge nonetheless. What are you going to do to message appropriately? What tactics can you employ that drive enough customers to your door where you usurp more value than the cost of acquisition. (This is why lawyers charge so much in crowded markets.)
Big Fish--Big Pond. Big name investors like Sequoia look to fins entrepreneurs and ideas that address large markets. And of course they want to find teams that can execute to that Big Fish status. To that end, they need to find leaders who think this way. In my world this is more DNA than a learned behavior. In terms of your market penetration strategy, this does not mean you swing big and wildly coming out of the gates. To the contrary, you will need to find that market opening that builds early traction and momentum; all of this with an eye towards a large pond.
So, who are you and what market strategy are you going to employ? Big Fish? Small fish? Big Pond" Small Pond?