Wedge strategy is not as simple as choosing an initial niche
It’s a strategic framing that all startups should constantly tune.
Climate PMF Newsletter by Peter Nocchiero
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Let’s dive in.
OK, very quickly. As you all know, a wedge strategy is commonly defined as your initial entry point into market – aka a beachhead or niche. The basic logic is, start small to get a foothold by making a subset of customers really happy.
It’s an advantageous approach because it’s a lot easier to provide outsized value to a smaller group of people. The classic saying “you can’t be everyone to everybody” rings true. Also, your strategy, product, resources, and attention won’t get spread too thin.
Here’s how I think about it:
One thing that is easily overlooked: the scope of your wedge matters.
Too wide and you won’t be able to get into market at all – remember, you can’t be everything to everybody.
Too thin and you won’t capture enough market share to survive to your next round or you’ll be boxed in.
You’re building a wedge, not a needle or a block.
Sounds nice, is nice. But it’s also not that simple.
If you’re only thinking about the tip of your wedge you are only listening to and analyzing part of the overall conversation.
As a result, you are going to miss a ton of critical signals from your customers and the market at large.
Let’s break this down.
For simplicity sake, let’s just say that the tip of your wedge is your first ideal customer profile, or ICP 1. What if you learn that this is not actually the right entry point into market?
And not so fast there startups that are already in market and have revenue, this can happen at any early stage.
In an ideal world, you would learn that your initial entry point into market is wrong within your first 5-10 customers or, even better, before you’ve really built anything substantial.
Unfortunately, it rarely plays out this way. Since you’re smart, you’ve chosen an initial beachhead with plenty of potential customers and revenue opportunity. This means that you can get pretty deep into market with your initial focus and if you do this myopically you might go whizzing by a bigger, better, more scalable entry point or miss the dead end looming with your first choice (I will talk more about The Local Maximum Challenge in a future post, which is related).
So what’s the fix?
Defining your entire wedge will keep you nimble and open minded as you gather feedback on what you’re building. If you know what your next in line ICP targets are – ICP 2, ICP 3, etc – you can be thinking more critically about the entire market landscape while simultaneously focusing most of your energy on building for ICP 1. You can/should also fill your wedge with prioritized use cases – shoutout to use case scalability, which I wrote about in a previous post.
Said differently, your wedge is a container for your overall vision, strategy, and execution – not just a beachhead, niche, or initial entry point into market.
Defining your entire wedge and a willingness to make larger iterations or pivots based on market feedback is a critical part of this. Something for startups with less revenue to pay attention to to avoid future quagmires, something for startups with more revenue to think deeply about to ensure they can scale the way they want to.
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