The two flows – Established Enterprises vs. Entrepreneurial Ventures

Slide1See the full research here.

In finding the first customer within their immediate vicinity, whether within their
geographic vicinity, within their social network, or within their area of professional expertise, entrepreneurs do not tie themselves to any theorized or pre-conceived “market” or strategic universe for their idea. Instead, they open themselves to surprises as to which market or markets they will eventually end up building their business in or even which new markets  they will end up creating.

While a traditional (read established) business start with well defined markets, segments, targeting and product positioning to reach end customers entrepreneurial ventures start with single customers they have and move up to market definitions and sometimes creating new markets in that process. Of course, once they reach market definition the ventures now become established enterprises and revert to the first flow for their decision making.

The problem is the risk involved and how many of the startups actually move past each stage. The fact that some have made it does not mean any startup can succeed by starting with few available customers, identify more and move to define an entire market. What it really means is, as many startups try their hypotheses, testing different customers, a few will eventually traverse the path to define the market.