Why Most First Businesses Choose the Wrong Customer

So here we see that the #1 most common mistake in a first business is focusing on the wrong customer. And that’s exactly what most first businesses do. At YC, we ask a founder to explain the target customer in their application. It’s astonishing how often the description is of someone who could benefit from the product but doesn’t want it. Typically someone over 40, middle class, and female. Notably, first-time founders are often young, male, and technically-minded. So the most common type of first business is a product that’s primarily for people of the opposite sex and of a significantly different level of technical sophistication. It’s not a coincidence that most first businesses choose the wrong customer. The most common type of first business is a solution to a problem for someone else.

Many startups fail, not because their product is bad, but because it’s made for nobody. And when it’s for nobody, the message is weak and the direction is unclear. You can help yourself out by trying to find a specific group with a specific problem rather than a specific identity. Don’t talk about young professionals or small business owners. Talk about a busy coffee shop that needs more customers on weekdays or graphic designers who are getting burned by clients with too many revisions. The more specific the condition, the easier it is to find the solution.

One trick for increasing focus is to picture one typical day in the life of that customer. Where does the pain occur? Where are the time- and effort-sinks that don’t pay dividends? Try writing a one-sentence snapshot of the instant that the pain is most acute, like the moment you glance out at all the empty seats at the start of a workshop, or the minute you begin sorting through the day’s unsold inventory. It makes you address a tangible situation rather than a broad “market.” If the situation is vague or could apply to anybody, your target is too broad.

For example, if you’re new to this, you tend to find customers that are convenient to approach rather than those that have the problem worst. The people you know will be too polite to ignore you. But “being too polite to ignore you” is not the same thing as actually wanting what you’re offering. The best markets are the ones where people want something urgently. If you leave them alone and they aren’t losing money or feeling a lot of pain, they’re probably not an urgent case. A good rule of thumb is to try to find cases where people are visibly desperate, or where you can at least imagine them being so. They should be losing money because of this problem, or be worried that they will soon, or time-constrained, or scared, or some combination thereof. These are all warning signs of a good problem.

You can cultivate this ability with a daily practice: spend ten minutes reading reviews or complaints about companies like the one you’re thinking of, with an eye to common patterns rather than individual anomalies. Then spend five minutes rewriting your idea to solve one of them. After a few days of this it will be a lot more focused and realistic. It’s better to observe than to imagine what people want.

If you’re still unsure, define it smaller rather than larger. With a smaller audience, it’s easier to get feedback and learn. What works for one small niche will often be applicable to the next, so you can expand from there. You can’t fail by aiming small. You can only fail by making it impossible to succeed.