Vertical

Should you pick an industry or vertical to focus on first?

Aleksandra Czajka Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack

June 3rd, 2013

I have a concept for a web service that is general and applicable to a lot of people. Think email as a service.

I want to get thoughts on whether I should take it vertical (i.e. attack one particular industry) or just have it as a general service. 

If I go vertical, how do you propose to do this? That is, should the messaging on the homepage be 'service for this and this industry', which will obviously alienate other possible industries, but, that is the nature of going vertical I guess. Or perhaps going vertical should be strictly in my approaching new customers and the home page should be kept general?

I'd love your thoughts on this. I understand it's a general topic since I'm not mentioning the idea, but, if you could provide any general thoughts, that would be appreciated.

all my best,
Aleks

Jeb PhD Decision & Data Scientist / Experimental Psychologist / Business Intelligence

June 3rd, 2013

Hey Aleks, I wish you the best of luck with your idea. My own experience: I built a SaaS recommendation engine as a general service (Selloscope.com) a couple of years ago. Our sales have been terrible. Contrast that with all the vertical-specific recommenders out there, which seem to get news coverage all the time: Real-estate recommenders, book recommenders, music recommenders, etc. From a media coverage standpoint, it's just hard to write about general services; if you target a vertical, media gets to cover the industry and say how you make it better. My advice: Target a specific vertical that you already have the expertise and network connections to effectively sell into. Then worry about expanding from there. Best, -Jeb

Michael Hanson Entrepreneur in Residence at Greylock Partners

June 3rd, 2013

I would make sure you are clear on whether your reasons for going vertical are product- or sales-centric.

Product-centric decisions would be specific feature development, integrations with external partners or data sources, or patterns of usage in a particular vertical.  Those will affect your development schedule and budget, and will require discipline in prioritization and support. 

Sales-centric decisions are more about where you choose to spend your PR, advertising, social, and direct sales effort, and have more to do with who you want to reach.  In that case, you are crafting a message about why your technology is a good fit for a problem that people in a particular industry, region, or market have.  In that case, you want to think about all your communication and sales channels, both inbound and outbound, to understand how your target vertical is going to learn about you and engage with your product and sales process.  This speaks to your home page question -- you should know how (e.g.) a real-estate customer will find you and how you will engage with him or her.  This probably means multiple landing pages and some SEO to make sure the right queries go to the right pages, as well as, potentially, a focused ad or PR campaign.

I wouldn't worry about "alienating" customers -- but I would worry about them concluding, in the first 20 seconds of their search, that you don't care about them.  Lead with your value, and design your site to help people get to the right place fast.

Paul Travis Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development

June 3rd, 2013

And the examples of FB and LI are outdated -- the landscape was immensely different +/- 10 years ago when they began.

Jonathan Vanasco

June 3rd, 2013

I think the email space is a bit crowded right now across all the different parts in the chain ( webmail / mail apps, mailing list services [mailchimp,campaignmonitor], infrastructure serivces [sendgrid/sailthru] , other email operations).  I'm not sure what angle you're looking at, but I'd take the competitive landscape into consideration.

Anything email related is also an immense amount of work.  Programming is the easy part - maintaining high deliverability can be a FT job for several people.

The specifics of email aside...

I don't know many/any "General Products" that people like using.  Usually a "general product" is something that you have to use because of critical mass ( Google, Facebook, Twitter, LinkedIn ) - and it's been made to be so vanilla and non-assuming, that it's usability and reward suffers.  Think of all the cottage-industries built around customizing twitter, or how people always want an app that makes gmail work better (to their needs).  

Someone mentioned the problems with sales... I'll go a step further: you can't do any sort of decent customer development on a broad general category.  One group wants FeatureX, another group hates FeatureX and demands FeatureY.  You try making everyone happy, so you end up making no one happy.  User acceptance testing will be a nightmare.  Featureset prioritization will cause you to pull out hair.  By the time you finally get to market, someone comes around , says "We make Task X really easy for Group Y" and then everyone in Group Y flocks to it.  And they love it.  And everyone hates your product and hopes that other company grows into their industry. How many times do you see growing companies describe themselves as:  "It's like _____, but for people in ___" .

Everyone wants something that seems custom or made for their style of work/pleasure.  It's human nature.   Everyone also hates that stuff they sell in supermarkets as "white bread".   It's white and has a lot of random uses ( enough to be on every store shelf)  but it looks and tastes nothing like real bread.  The only people who buy it can't afford good bread.

It looks to me like you have a secondary question that is worth a deeper conversation -- the notion of how to approach branding and marketing when you have a targeted product and want to eventually expand it to a larger audience(s).

Alan Peters VP Product and Technology at BusinessBlocks

June 3rd, 2013

I would advise attacking a vertical as a tactic of your sales or GTM strategy. But separate this from your market position (and its representation in your website copy and the like) which should be part of your product strategy. And before you get bogged down with any of these considerations, make sure you're talking to prospects and validating that you're solving a real problem that people will pay for. The rest will surface from there.

Rob Mathewson

June 3rd, 2013

To be honest, from your description it appears that you do not yet know who your customer is. I strongly suggest that you identify exactly who will be willing to pay for your service before you worry about who you are excluding. If you haven't already done so, Running Lean is a must read. You need to nail your problem/solution definition. Doing so successfully, means that you have also identified who your customer is. -- Rob Mathewson CEO Geedra 206-396-0449

John Wallace President at Apps Incorporated

June 3rd, 2013

Unless you have incredible wealth and can buy a market, or an incredible product that makes all competitors instantly obsolete, then it is very difficult to go horizontal. Let's look at one of the world's most successful companies: Google. They've had tremendous success, but even with their wealth and talent they have had many products that fail (just google "google failures").

We're always fighting on multiple fronts:
• our product needs to beat the other products, 
• our marketing/sales/bizdev needs to be competitive with other companies,
• our support needs to be adequate,
• we need to convince enough customers to use our product that we can make money or attract investment. (!!!)

All of that points to finding a vertical owned by a vulnerable competitor. Sure that vertical may have incredible potential to widen horizontally (like FB or LI), but until you have enough resources to prevail it is hard to fight successful, entrenched competitors on multiple fronts. BTW, even if your product is revolutionary you may still want to pursue a vertical to maximize your leverage. There is likely some vertical that needs your product more than others do, and would either pay more or would adopt your product faster. Both of those pave the way for the resources needed to widen the vertical or to pursue new verticals. Good luck!

Michael Brill Technology startup exec focused on AI-driven products

June 3rd, 2013

Is there a way to make this thread less abstract? Industry focus may be a great way to to go to market... or maybe it's functional area, company size, existing technology base,  etc. Who knows... there are a lot of ways to slice a market. In any case, +1 on Michael Hanson's comment... I think that's spot on. 

Michael Brill Technology startup exec focused on AI-driven products

June 4th, 2013

Personally, thank you to everyone who generously took time away from their own busy startups to provide insight... I thought it was a great flurry of discourse and I'm certain it will provide useful content for the next person who needs to think through this issue.

Gaurav Garg

June 3rd, 2013

Aleks, My 2 cents.. I would recommend setting up a beach-head in a specific industry. Ideally, you will need to create a message specific to a industry, using their lingo. You need to solve a specific pain point within a niche. This will give you a specific market segment to target. Hopefully, your idea will appeal to the decision makers or you will quickly get feedback. After few wins, you may be able to claim victory in that segment and then repackage the product for the second industry and so on. IMHO, the days of creating MS Office (you can do anything with it) are gone. These days, everyone looks for an App to do something specific. As long as you do it very well, your app will catch fire. I have need Microsoft create a fantastic platform for Healthcare which is failing because it was based on the platform play. Best of luck! Gaurav