The Bootstrapped Founder Newsletter Episode 41 – August 21st, 2020

Dear founder,

You can position your product in different ways in many different markets. You may have started describing your product in a certain way, only to find that your customers understand it very differently.

Many first-time founders make the mistake of iterating on their product but keeping their positioning the same. Even if they’re capable enough of describing their product correctly the first time around so that customers really “get it,” they then miss their opportunities to keep the distance as small as possible between what their product does and how their customers perceive it.

April Dunford has an exceptional approach that will help you align how you position your product with what your customers can understand. Find the competitive alternatives first, then highlight the unique features you have that they don’t. Show how those features produce value for your customers in fields that they care about, then contextualize it within the market segment. You will end up with a comprehensive narrative that ties together your unique offering and your customers’ needs.

Competitive Alternatives Are Not Just Competitors

The term “competitive alternatives” is intriguing. Competitors are not just competing businesses doing more or less the same things you do. Excel, Word, and plain old Post-its can be the current way a problem is solved. Anything that provides your prospective customers some level of help when solving a problem is a competitive alternative.

Making sure you know what is “comparable” to your product will be necessary for highlighting the differentiators of your product. Look for things that are very different from your product. It may not be a SaaS, but an installable piece of software. It may not be software at all, but just a few sheets of paper and a grid. It may even be something completely different, like an intern or the work being outsourced to an agency of sorts. All these things have entirely different value generation potentials and economics. Make sure that the positioning of your service is clearly better than all those alternatives.

Positioning and Value

Know who your product is for and speak their language, understand their problems. Having domain expertise is very helpful here, and you should validate your messaging before you apply it at scale. It’s another rendition of “talk to your customers.” You’ll be surprised by how something that’s perfectly clear to you can be confusing to someone in the industry you serve if you don’t know the intricacies of the domain-specific language.

When you want to convince a customer to buy a product, you usually show them your value propositions. Value propositions can be leading or lagging. That means some features have an immediate impact when being used, and others will only show themselves in the long tail of using a service. There are retention value propositions that you only use in customer service situations (think of a conversation that contains the phrase “See how easy this was? Next time you’ll use this, it won’t take more than a minute”) that are not going to sell the product to someone who is just browsing. Make sure you use leading value propositions early and discuss long-term benefits later in the customer journey.

I recommend listening to Andy Raskin’s talk about storytelling. He recommends laying out the stakes: make your customers wonder why they are on the road to ruin if they continue to do what they’re doing. Show them what the losers are moving away from, so they can understand that the winners are moving toward your product. What does it take to win? What do winners move toward? Answer those questions with your service, and you’ll have a strongly positioned product.

Talk about the problems you solve as obstacles to the goals of your customers, not just disembodied issues. Give evidence that your solution fosters belonging to the group of winners and believers. This results in great opportunities for conversational marketing. An authentic message gets spread for free.

There is nothing wrong with being specific. Going narrow could feel like you’re excluding parts of the market that could be your customers, but it’s an illusion. By making your positioning so compelling that your best-fitting customers “get it” completely, you allow them to rephrase it most fittingly when they talk to their peers. Trust that once you have conveyed the value you provide to those who can most use it, they will take care to explore the ways it can be described to a larger customer base for you. You will see this in their public communication, in the social media posts they create, and in the way they describe your product to other people in the market. Find those conversations, and you can learn incredibly useful terms and phrases that you can then leverage in your marketing.

The Context of Positioning Is Competition

When you position your product, don’t obscure your competition. It may feel dangerous to show your customers alternatives to your product, but it really isn’t, as long as you focus on what makes your product unique. That way, you will allow people who use your competitors’ products to have a frame of reference and see if your service is a better fit for them. Additionally, by talking about competitors, you will find that people reach out to you and ask if you can also do something that services that you would never have expected to be competitors allow them to do.

At FeedbackPanda, I never thought to encroach on the territory of text-expansion products by building our own text snippet templating with keyboard shortcuts. It was only after several customers asked if our product had that capability that I noticed this was a competitive alternative to our fully featured text templating application. The fact that we offered “something like TextExpander” for their feedback attracted a number of teachers who previously had not understood the use of our product. We wouldn’t even have needed to implement similar functionality: the category alone made a number of prospective customers check out our product.

Positioning Is an Ongoing Process

Once you have your positioning working for your product, don’t stop there. There are two kinds of events that will require you to revisit your positioning: product evolution and changes in the environment surrounding your business.

Your product will change over time, either gradually or through a major pivot. No matter how fast you get to this point, there will be a time when the description you use in your positioning needs to be adjusted to fit the service. Features come and go, and your product is a different beast at launch than it will be a few years later. What started as a very niche product could expand into a suite of tools, or what is learned from operating your product for years will result in positioning or product changes later. A previous startup that I co-founded pivoted from being a marketplace for local food into local food subscription services for small businesses and agencies. We had to adjust our positioning completely, as our audience shifted substantially, which required an entirely different approach to product, marketing, and sales.

Markets can change, as well. The longer you’re around, the more the business landscape will have moved. Things that were once unique to your product may become commonplace, with competitors adopting them in their own products. Regulation could cause your prospects to focus on things that you never had to advertise in the beginning. When GDPR was announced, all publishing services suddenly had to show that they were compliant with the European privacy regulation, or else they would be a risky service for their customers to use. When those businesses were founded, none of them had to position themselves as a GDPR-compliant service. Yet they all were forced to emphasize that part of their businessβ€”and had to scramble and heavily adjust their products accordingly.

The important thing is to regularly update your positioning. At least, take a look at your product, your business, and the landscape around it a few times a year, or when things noticeably change. At those points, schedule some time to reflect on whether your messaging is still aligned with what you offer.

If you’d like to support this newsletter, please consider checking out my recently released book Zero to Sold, available on Amazon and Gumroad. If you have already read the book, I’d love to ask for a rating and a review on Amazon. That would help me out a lot.

I’ve recorded a podcast episode with additional material on positioning, feel free to check it out here.

Links I Found Interesting

In a plea to founders not to raise Venture CapitalJames Skylor, himself a former VC, makes a wonderful case for making freedom the goal of creating a business, not “getting a lot of funding.” The argument I related to most was, “I think VCs may underestimate the extent to which mainstream entrepreneurship is a key input to outliers and moonshots. So many successful billionaire founders had a “never worry about rent again” moment via an exit in a much more boring business before swinging for a home run.” β€” this is exactly why we bootstrap.

If you’re looking into finding your perfect audience, take a hint from this article written by Paul Power, a bicycle shop owner: Why a bike shop should choose its customer wisely. His audience is the people other bike independent shops are not bothered with: elder bikers, beginners, and women. By focussing on the non-mainstream customers, Paul has found a niche that appreciates his service, some customers wanting to pay for his free service or even dropping into the shop to gift Paul a bottle of wine. That’s the kind of relationship that results in long-term stability, and while Paul’s bargain-hunter-focussed competitors have closed down, his store is still doing well. A lesson to behold.

In his newsletter, Justin Jackson of Transistor.fm talks about how many trials you should be getting for your SaaS. It’s all about demand, and having just a few leads every month can point at a severe lack of market pull. Justin shares the numbers for Transistor.fm, and I agree with his suggestions that you should aim for 200-500 new prospects for a bootstrapped SaaS. Our business FeedbackPanda felt very solid when we reached a few hundred trials per month. Of course, this is unique to each business for all kinds of reasons, but reach that level, and you’ll feel like things are working.

If you want to level up your skills at writing better conversational copy, check out Harry Dry’s latest article. Harry is a skilled marketer and a great teacher of what he knows.

Here are a few more interesting links that go beyond bootstrapping:

  • Every played Factorio? Does building a highly complex factory sound intriguing to you? Then you’re likely a software engineer πŸ™‚ In Factorio and Software Engineering, you will find a very insightful explanation of how the game mimicks and explains common software engineering problems and practices.
  • If you are β€” like me β€” very interested in the SpaceX Starlink technology, you’ll be glad to hear that the first beta uses report downloads of 11 to 60Mbps. For people in extremely remote areas and rural settings, this will be life-changing.
  • If you care about modern fishing practices and sustainability, check out this post on redefining what sustainable fishing means.
  • Does the halting problem ring a bell? Ever been reading up on quantum computation? Something interesting happened, and while I am by far not able to fully understand it, it suggests that computational feats beyond what we ever expected have been proven possible.
  • Finally, as a German, I love marmalade. It turns out the British love it even more. Interested in the British Obsession with Marmalade? How could you not be, it’s delicious!

Bootstrapping Successes

I’ve talked about HaKr’s Visalist before in this newsletter, and the intrepid founder has good news to share after a few shaky months β€” after all, a visa-related product with global lockdowns seems to be a risky idea. Well, nevertheless, HaKr has reached $50,000 in total revenue from his business, and it’s his 3rd micro start-up to clear this hurdle. 

Zeno Rocha’s incredibly beautiful theme Dracula PRO has now been out for six months. It’s been quite the success: he sold 1,148 copies, resulting in over $55,000 in sales! Check out what Zeno learned, and take each lesson to heart.

Thank you for reading this week’s edition of The Bootstrapped Founder. If you like what I wrote about, please forward the newsletter to anyone you think would enjoy it too.

If you want to help me share my thoughts and ideas with the world, please share this episode of the newsletter on Twitter or wherever you like, or reach out on Twitter at @arvidkahl.

See you next week!

Warm Regards from Berlin,

Arvid