StartUp Founders: Steal Your Customers

April 21, 2024 4 mins read
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Dear Reader,

Visionary founders die trying to educate the market. Intelligent founders understand it’s a choice whether to create or capture customers. It’s not about innovation; it’s about terrain management aka Blue Ocean vs Red Ocean. (๐• Tweet)

First mover advantage is a myth. You’re better off building within an existing market where you know the players and can fight like hell to steal market share. (๐•)

TLDR; If you choose to create a new vertical, know the risks, or adjust your strategy to begin by competing aggressively within an existing market. Just know which battle you’re fighting. (Workbook)


2.5 Activating Your ICP: Collide Your Idea With Reality


Red Ocean vs. Blue Ocean. The book says to avoid fierce competition (Red Ocean), it’s a zero-sum game, a race to the bottom. It advocates for competition-free, uncontested market spaces (Blue Ocean). I challenge this, without being contrarian for the sake of it.

The great thing about a Red Ocean.. people are actively searching for solutions to their problems, and they’re willing to pay for them. You don’t have to convince people they have a problem; you just have to convince them that your solution is the best.

You don’t need to win, you just need to get a slice. Be the most frugal, smartest, leanest, most ambitious, toughest fighter. Every dollar spent on product or growth must deliver outsized returns. It takes extraordinary discipline to be this lean.

Be an expert in every organic referral channel, anchor your strategy in product-led growth (PLG). Yet understand that unpaid acquisition will never get you to scale, it gets you initial traction. Stay laser focused on solving one customers problem better than anyone else.

If you buy into the Blue Ocean strategy, but lack the capital & time to spend educating customers, it’s weirdly easier to enter via a Blue Ocean trojan horse. (Start in the Red Ocean to gain traction, then execute a switcheroo)

Identify the tiniest niche, perfect a single feature, and fight for every customer in the arena that wants that feature. If you are right, it’s realistic to expect some level of conversion, if you clearly understand who youโ€™re fighting for and why.

The ERRC framework is a good starting point, and it’s grounded in truth:

SU002.6 Red Ocean vs Blue Ocean aka Create Or Steal by James Sinclair

If You’re Still Here:

Bootstrapping in a Red Ocean isn’t for everyone or every idea. Some ideas require capital, just be hyper-aware of this going in, as well as your capability to make that runway happen. The worst would be to not build anything at all.

Understanding the ERRC Framework:

The Red Ocean is crowded, but it’s defined. It’s not a free-for-all and the ERRC Framework helps you identify the opportunities for differentiation and relevance.

Eliminate: Focus on removing features, processes, or offerings that do not add value to your core business or customer needs.

Ex: Dollar Shave Club simplified menโ€™s grooming by offering straightforward, affordable razors directly to consumers, cutting out the frills.

Reduce: Identify aspects of your product or service that can be scaled back without significantly impacting customer satisfaction.

Ex: Canva simplified graphic design with a user-friendly interface, stripping away the complexity of traditional programs.

Raise: Enhance elements of your product or service that increase value for customers and set you apart from competitors.

Ex: Zoom improved core features of video conferencing, providing a smoother and more reliable service than competitors.

Create: Innovate to develop new features, products, or markets that meet previously unaddressed customer needs or create entirely new markets.

Ex: Warby Parker redefined eyewear shopping with a direct-to-consumer model that includes home try-on kits and stylish, affordable options.

Deploying the ERRC framework effectively turns the Red Ocean from a battleground into a proving ground. It’s where you learn, adapt, and prep for the switcheroo into a Blue Ocean.

Happy fishing… If you are stuck trying to educate a market on why your solution is so game-changing, but no one is listening, you are welcome to grab time with me.

โ€” James

(LinkedIn | Tiktok | Twitter)โ€‹

StartUp Founders: If You Build It, No One Cares Next: StartUp Founders: Ecosystem Map Now.
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