ClearPurpose

In an earlier article, I explored the target market for SDG Games, and in the process I came up with a rough market sizing. Today, I want to start building the market sizing story for potential investors.

A common way that startups explain market sizing to potential investors is by talking about it at three levels: Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM).

The most common market sizing mistake that entrepreneurs make is to say something like “the mobile app market is $200B and rapidly growing; if we just got 1% of that, we could grow our startup to a multi-billion dollar business”. A statement like that will likely ruin your chances to raise money from any experienced investor. In my opinion, the best approach is to build the market sizing bottom-up.

Read the full article for more details and to see how I sized the market for SDG Games.

One of the most common questions asked of a startup is “what is your business model?” In most cases, I think what people really want to know is, what is your revenue model — how do you make money? There are many different forms of revenue models that different companies have successfully implemented in different industries and markets. It is a fun and interesting exercise to think about how some of these models might work for SDG Games.

The top two revenue model options for SDG Games are to be a game publisher, manufacturing games and selling them to Christian families for a price with a markup above cost, and for SDG Games to license games to a game publisher who would then make and sell them to Christian families. 

Using a Strategy Sieve process not only helps us identify the best option, but also helps us see the strengths and where we might face challenges for each approach.

Read the full article here for more details on the process and on the approach we selected.

One of the key elements of the Lean Startup movement is quickly getting a “minimal viable product” (or MVP) into the hands of customers and learning whether or not your hypotheses about customers, problems, and your value proposition are correct. The MVP is really just the first in a number of iterations as you learn and adjust on the road to a successful market launch.

The most important hypotheses for a startup business are those dealing with the customer and the value proposition. Do you understand the customers and their needs, and does your product or service (and the way you are delivering it) meet those needs in a compelling way? While the customer discovery process can give you some level of confidence, you won’t really know until you put a product in the hands of a customer.

The minimal viable product is the fastest, cheapest form of your product that clearly communicates the core of your value proposition. This isn’t the product that you’ve dreamed of. It’s not beautiful. It doesn’t have all the features that you’ve imagined. In fact, LinkedIn founder Reid Hoffman famously said “If you are not embarrassed by the first version of your product, you launched too late.”

Read the full article linked here to learn more about MVPs, Validated Learning, and SDG Games’ MVP.

For the past several weeks we’ve been walking down the startup strategy path for SDG Games, a new business concept that has grown out of my desire to learn more about Biblical geography. The initial business concept was captured in a startup strategy strawman. We identified and then further developed an initial target customer persona. We captured our value proposition and validated a level of problem-solution fit. Now, we are far enough into the journey to develop an initial hypothesis for a business strategy.

What is a business strategy and how do you develop one?

Read the full article to find out how I approached it for SDG Games.

Over the past few articles we have developed a better understanding of our target customer. While SDG Games products likely will appeal to a very broad audience of Christian families, we’ve decided to focus first on the busy homeschooling Christian mom who wants to integrate faith, learning, and fun for her family. In this article, we explore whether we have a value proposition that fits that mom’s desires. In other words, do we have Problem-Solution Fit?

Read the full story here.

A couple of weeks ago I shared with you the Customer Profile I’d developed for the initial target customer persona for SDG Games. Kelly Jo is a (fictional) homeschooling mom with a couple of kids. I developed some hypotheses about the jobs, pains, and gains for this persona. How could I test these hypotheses?

Steve Blank says that the number one goal of customer discovery is “turning the founders’ initial hypotheses about their market and customers into facts.” And the phrase he’s famous for saying in how to do customer discovery is “get out of the building.” Customer discovery is all about spending time with potential customers to deeply understand how they live and work so that your offers truly fit their needs.

For customer discovery to test my hypotheses for SDG Games, I pursued three approaches: an online survey, interviews, and participating in Facebook groups.

Read the full article here to see how each approach worked and what I learned.

One of the most important early decisions that a startup can make is who they are setting out to serve. A startup generally is built upon a key hypothesis that someone needs something. Clearly identifying that “someone” sets the stage for testing that hypothesis and eventually being very focused in marketing to the right audience.

Since a key focus for SDG Games is that our games be educational, perhaps our initial target market should be Christian Homeschooling Families. By my estimate, there’s somewhere in the range of 200,000 to 1 million Christian homeschooling households. That’s a big enough market to go after, but a focused enough market to deeply understand and target.

Identifying the target market is good, but to deeply understand the needs of this market, we need to take our thinking down to the level of the individual decision maker and how she will value what we have to offer. We start by creating a persona for our target buyer and then identify the jobs, gains, and pains that drive her decision making. We put it all together in a Customer Profile.

Of course, all of these are hypotheses which will be tested. More about that in my next article in this series.

Read the full article here.