Gehm’s Corollary: Sell Magic

Choosing the right market

In a perfect world, a founder would first look for a target market they can reach profitably; then identify an unmet need that market has; and finally satisfy that need with something that feels like magic. That’s how it’s supposed to work.

  • The startup’s founders have complete control over what they make; and talking to prospective customers is messy, uncomfortable, and fraught with rejection. So they do what’s easier and more fun.
  • Checking market demand forces the founders to confront their confirmation bias, and find out they aren’t the unique and special snowflake their mother says they are, which is never fun.

We can rationalize anything

In The Righteous Mind, Jonathan Haidt talks about his research into Dumbfounding Questions. These are questions we react to morally, and only afterwards think about rationally. In one example, he describes a widow who uses the flag from her husband’s coffin to clean up a mess. Offended, one respondent quickly says it’s morally wrong—but then struggles to explain why. Eventually, she argues that “the flag might clog up a toilet when she disposes of it.”

Startups aren’t about fun

I mean, startups can be fun. But your actual job is to unearth a sustainable, repeatable business plan and eliminate risk from it. It follows, then, that if the biggest risk is “nobody will care,” the most important thing to check is whether you can reach a market that does. Being irrational doesn’t help this cause.

Selling to magicians sucks

Here’s a somewhat painful story from my own past to illustrate the point. Fair warning: This is going to get a bit nerdy unless you have a background in network infrastructure and web performance management.

That’s some serious detail, circa 2003.
  1. We found someone who did think it was magic;
  2. We found a way to do something magical for the current target market.

Finding a market that thinks it’s magic

While operations teams understood how we did what we did, marketers didn’t. We could show them where they were losing hundreds of thousands of dollars. And we could show them who was suffering right now. We added features that looked up the source of a visit and guessed who the visitor was, then exported it to a map. And we made it easy to look up a user by name, or locate their IP address on a map, and to see what happened.

Every page and object in Brenda’s session, down to the very last detail, as it happens on the site.

Do something magical for the current market

We weren’t magic to network operators. We needed to find a way to give them some kind of magical superpower for them to like us.

Market maturity and the ability to distinguish

Different audiences have different ability to distinguish magic from technology. A software company probably doesn’t think wireless VR is magical; a realtor still does. As a product category matures, moving from early adopter to laggard, the ability to distinguish changes as well.

What’s obvious to one segment is mysterious to another.

Chase the magic

When you’re picking your target market, remember Gehm’s Corollary. Is the market able to understand how you do what you do, or is it magical? If they can distinguish it from magic, it may be insufficiently advanced. And to fix that, you can alter the product—or find a more easily amazed target audience.

(One more thing…)

There are plenty of other criteria to consider when testing markets, of course. They’re covered in most marketing textbooks, and they include:

  • Shared need: Do those in the target market have the same problems and values?
  • Segmentable: Is the target market easily identified and distinguished from other segments?
  • Profitably reachable: Can you get the market’s attention in a way that won’t break the bank? Billionaires are a great target market that’s hard to reach.
  • Big or fast-growing: Is the demand large enough to fuel your ambitions for growth — or growing fast enough that you can grow with it?
  • Loyalty: If you’re looking for recurring revenue, loyalty matters a lot. If you’re doing one-time sales, it’s less important.
  • Social: Does your market share things? Will it amplify your message? A gregarious, vocal market is worth spending more to reach.

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Alistair Croll

Alistair Croll

Writer, speaker, accelerant. Intersection of tech & society. Strata, Startupfest, Bitnorth, FWD50. Lean Analytics, Tilt the Windmill, HBS, Just Evil Enough.