Huge Markets with No Revenue: Initial Product-Market-Fit

I had two pitches last week where the entrepreneurs were talking about huge billion Dollar markets … but the initial “customers” they were talking to didn’t feel the urgency and sales were lagging. “I know this is a huge market. There is a lot of research about it. We need to spend more money for marketing and demand gen so people will find us” one founder said to me.

Usually one or more of three things is happening here:

  1. You sucked up to research that was paid by a company that wanted to demonstrate a large market. But it isn’t.
  2. You were not able to articulate the problem or need or urgency in a way that the prospect (not “customer”!) understands and shares.
  3. There might be a huge market but your prospect qualification sucks. You’re talking to the wrong sub-segment of the market.

Spending more in marketing and demand gen won’t help if you don’t know your initial target prospects (the ‘early adoptors’), how to talk to them, what motivates them, what makes them spend money on a solution from an unknown startup over an established vendor in another business area. Don’t start spending before you hit the relevant milestones.

Thoughts? Opinions? Comments? Corrections?