William Truong

An Overview of MITx: 15.390x Entrepreneurship 101: Who is your customer?

I recently took a free 6 week course about Entrepreneurship at edx, a website that offers online courses from the top universities about various topics. The course format was divided into short slides and short videos that diverges from the traditional webcam in classroom setting. These courses were made for the online audience, equipped with one page slides and short videos produced with a complete film crew, ranging around 2 to 10 minutes each. I highly recommend taking courses at this site if there is something of interest.

I will now give a brief overview of the class I audited:

MITx: 15.390x Entrepreneurship 101: Who is your customer?

By lecturing about Market Segmentation, Beachhead Market, End User Profile, Total Addressable Market, and Persona, Bill Aulet and Erdin Beshimov attempt to show students how to:

  • Explore and analyze potential applications for their idea.
  • Choose the most promising markets and estimate their size.
  • Develop a comprehensive, actionable understanding of the prospective customer.

Market Segmentation

Market Segmentation is a systematic categorization of potential markets for your idea.

  • Description of multiple groups of target customers that are homogeneous and distinct.
  • Understand the differences of each group to decide which market to pursue first.

How to do Market Segmentation

  1. Identify potential industries.
  2. Subdivide each industry by markets and market segments.
  3. Find end users for each market segments.
    • Describe various tasks and how they would use your product each end users.
  4. Narrow to 6 - 12 opportunities.
  5. Go out and perform primary customer research by interviewing the potential end user.

Organizing Primary Market Research

You want information for each market about:

  1. End User - Who specifically will be using your product?
  2. Application - Why would the End User use your service?
    • What tasks will be dramatically improved by using your service.
  3. Benefit - What problem is solved by the end user using your product?
    • Does the end user save money?
    • Does the end user save time?
  4. Lead Customer - Who are the potential influential customers?
  5. Market Characteristics - What are market characteristics that would promote or impede?
  6. Partners/Players - Which companies will you need to work with to provide a solution that integrates with the customers workflow?
  7. Market Size - Estimate, how many potential customers exist if you achieve 100% market penetration?
  8. Competition - Can the End User go to different providers?
  9. Complementary Assets Required - What else does your customer need in order to get the "full solution", or full functionality of your product?

Beachhead Market

A beachhead market is the first market that you will choose to pursue. It must give you the advantage and capabilities that you will use to pursue other markets.

How to Pick a Beachhead Market

  1. Does your customer have the money to pay for your product?
  2. Can you easily get the product to your customer?
  3. Does the target customer have a strong reason to buy your product?
  4. Can you deliver the whole product as a package or solution?
  5. Is there entrenched competition that could block you from getting this business?
  6. Is this a strategic market that will give you capability, credibility to win other markets that will be equally profitable?
  7. Is the market consistent with the values, passions, and goals of the founding team?

End User Profile

An end-user profile is a description of a narrowly defined subset of end-users with similar characteristics, needs, and word-of-mouth.

How to Build an End User Profile

Separate into three broad categories:

  • Demographics - Gender, age range, income range, geographic location.
  • Motivation - Motivations, fears, wants.
  • Behavior - Where do they go to eat, drink, and play?

Narrow Down Further

Narrow down your target customers so you are able to find the need, wants, and desires of a small group. Once you've addressed them (beachhead market), then you can expand to other end users.

Total Addressable Market

TAM is the amount of annual revenue expressed in dollars per year if you achieved 100% market share. Many markets that seem very attractive at first glance, often end up being much smaller on closer inspection.

Bottom Up Analysis

The best way to determine TAM is through a bottom up analysis. This means to do primary customer research to determine how many people fit your end user profile.

Complement with a top down analysis, but never replace primary market research with it.

What if TAM is low?

If the TAM is close to zero, then you need to capture this market very quickly and convincingly, dominating the market. This beachhead will give you a powerful position from which to attack better markets quickly and efficiently.

Persona

A persona is a description of a single person that your idea is targeted to?

Why Do We Need a End User Profile and Persona?

The end-user profile tells you who your end users are, but the persona makes your target end user tangible, unambiguous, and concrete. The persona should be a real person, someone you know, so that you can ask them questions and characterize their behavior.

A persona is also important to ensure that your team doesn't deviate to far away from the target end user.

Looking Back at this Class and EDX

This class was one of the better ones I have taken online. Lectures were brief and segmented in such a way where it is easy to consume the material in chunks. Another nice thing was that Bill and Erdin brought in MIT graduates to interview them about their startups.

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