The Embedded Entrepreneur

  • Author: Arvid Kahl
  • Full Title: The Embedded Entrepreneur
  • Tags: #Inbox #books

Highlights

Introduction

  • The working title for this book was "Audience First." (Location 107)
  • Quite likely, someone explained it as "build a following on social media, then sell them something." To me, this is too narrow a definition of something that could be so much more. I believe "audience-first" starts long before you build an audience: from being part of a community to observing, interacting, and being embedded among the people you want to serve, there are many things to do before you start building a following. (Location 107)
  • Focusing on your audience from day one has several advantages over the common product-first strategy, where founders come up with a product idea before they do any market research or audience discovery. (Location 116)
  • Founders that go "idea-first" often build businesses that are "solutions looking for a problem." The “idea-first” approach results in products that are lacking validation and are built without a clear audience in mind. (Location 117)
  • You create a personal brand that transcends the business you're currently working on: even if your startup fails, you continue to be a domain expert in that field. (Location 124)

The Audience-Driven Movement

  • The Audience-Driven approach is about making every business choice with your audience in mind, including what to offer in the first place. (Location 151)
  • An audience is everyone who should be interested in you, your business, and your products.  They are not just walking wallets. An audience is a group of real people with desires, dreams, and problems. If you want to build an audience-first business, you will need to build honest and authentic relationships with actual human beings. (Location 170)
  • community looks in all kinds of directions, but an audience looks at you. In a community, people show up because of each other and what they create together. In an audience, they show up because of you and what you create. (Location 178)
  • The Audience-Driven approach's core principle is simple: you delay defining “the idea” and your product until after you have chosen and explored an audience for your business — because you can’t know what your future customers need without understanding them first. You first choose a market to operate in, find a potential audience to serve, embed yourself within their communities, and learn what you need to create to solve their critical problems. Then, and only then, do you work on your idea — and create a following along the way. (Location 180)
  • Every day, a developer somewhere considers building another variation of an existing tool. They build this because they need it themselves, but they don't consider if their need is a commonly shared one. Many first-time entrepreneurs consider their problem perception and how they approach solving their issue to be the truth for all other people in their industry. They focus solely on building, and then they try to find a market for their product2. But this is self-delusion: it's building upon unvalidated assumptions. (Location 207)
  • Audience Discovery: Find your audience. The most important choice is who you want to serve. Deliberately selecting an audience is the foundation of a successful business. I will show you a tested and actionable five-step process to find the audience you want to empower. (Location 218)
  • Audience-Building: Create (for) your audience. Working with and for your audience will allow you to build a product and a business that solves real problems for real people. By consistently showing up and providing value, you will become an expert that your audience will gladly follow. I will share the stories and approaches of the founders who have succeeded — and failed — to build their audience and businesses in public. (Location 222)

Audience Discovery

An Actionable Guide to Finding Your Audience

  • Let me introduce you to a data-driven method of finding a potential audience for your side business. It will allow you to discover an audience that will sustain a business for many years and make it an enjoyable journey. (Location 236)
  • Very often, we’re also afraid to talk to people. We fear being ridiculed, ignored, or laughed at. Our ideas are still forming in our minds, and we’re afraid that if we share them too early, people will trample on those precious seeds. We come up with all kinds of stories about why we know what people would say and think. (Location 252)
  • First, explore which audiences you want to help. Select the audience you think is most likely to support your business endeavors. Validate: Make sure the audience is interesting for you, is the right size, has exciting problems, and is willing to pay for a solution. (Location 263)
  • Then, observe that audience and detect their most critical problems. Select the most critical problem among them. Validate: Ensure the problem is genuinely critical, people are already looking for solutions, and it can't be easily ignored or delegated. (Location 265)
  • Then, envision a solution that solves this problem within your audience's workflow. Validate: Make sure that your solution doesn't have unintended side-effects and solves their problem without adding additional work. Finally, and only now, think of the product. In which medium do you need to provide your solution? Will it be a mobile app? A SaaS application? A platform? Or will it have to be a technical solution at all? Now is the time for the "idea" and the "product." (Location 267)

Step 1: Awareness — Think of Possible Audiences

  • Seth Godin uses a wonderful definition for tribes: “People like us do things like this.” (Location 293)
  • What tribes do you belong to? (Location 296)
  • What communities are you part of, consciously (because you participate, like being a chess club member) and unconsciously (by affiliation, like being a sports fan)? It can involve virtual communities and real-world groups alike. What hobbies do you have? What do you enjoy enough to spend money on, even though it’s not essential? Examples here are things like craft beer or fixing old cars. Find activities you have a budget for. What has been your lifestyle in the past? How did you find things to do every weekend back when you were in college or just starting out working? What groups did you hang out with then, and what was it that they found exciting to do? Can you reconnect with those groups? What professions do you have? What kinds of jobs have you been doing throughout your life? What types of professional communities have you been part of? What companies do you work for? Which companies are you a customer of? Think of all the different businesses you interact with and mentally categorize them into the groups they belong to. What is your significant other doing? What groups do they belong to that are different from your groups? What groups did they belong to before you met? When they were kids, what clubs and associations were they part of? What groups do your parents and siblings belong to? What jobs are they working in, what groups do they hang out with for fun? What are the things you talk about at family gatherings, about which they have surprising levels of insight? What are the social circles you frequent? What kinds of people do you interact with? Think of a party, meetup, or gathering you’ve been to recently. Who are the types of people you click with most, and what do they do? Reflect on your past experiences, even if they are not as recent as a few years ago. You might want to revisit old movies, books, or videos from that time period, too. Just remember: the aim here is to reflect on who’s been a meaningful part of your life so far and how they relate to one another. (Location 296)
  • Another way of finding audiences that you might not already be aware of is by looking at the things around you. For every object you see, think about 1) who made it, 2) how they made it, 3) who it is for, and 4) how they use it. (Location 318)
  • While 1 and 4 give you audiences immediately, 2 and 3 allow you to think about the interactions that the object went through either while it was being made (think of all the many businesses and activities involved in the production chain of something like a sheet of paper: forestry, logging, paper mills, distribution, sales, marketing) or while it is being used (Location 320)
  • You will be done with this step when you have a few dozen audiences, though it is best to aim to identify a hundred or more audiences. (Location 334)

Step 2: Affinity — Find Out How Much You Care About Them

  • No business was ever successfully built by a founder who didn't care about the people they were selling their product to. You need to feel the desire to help your customers genuinely, or you will lose interest in providing value to them at some point. (Location 345)
  • Add a new column to your spreadsheet, called "Affinity." For every row in your spreadsheet, you will need to produce a rating between 0 and 5. Zero means that you don't care about serving this audience at all, and 5 means that you want to devote your life to serving the people in that niche. (Location 349)
  • To find out how much affinity you have for an audience, ask yourself these questions, and quickly note down a 0–5 rating for each. Do you believe that the members of this audience deserve to succeed much more than they currently do? Do you imagine conversations with these people to be interesting, fruitful, and enjoyable? Do you see a more profound reason, a passion that drives this audience's members to do what they do? Is the audience doing something meaningful? Could the people in this niche be doing something more substantial? Do you think you would benefit from learning a lot about the work in this niche? (Location 352)
  • Step 3: Opportunity — Find Out If They Have Interesting Problems (Location 370)
  • Find a community forum or social media group where your niche audience hangs out and go through their recent posts. (Location 378)
  • The idea is not to become an expert in every audience candidate on your list. It’s about diving deep enough into the field to see if it can reliably sustain a business. The moment you have a feeling for this — good or bad — you can stop exploring. (Location 404)

Step 4: Appreciation — Find Out If They’re Willing to Pay

  • Purchasing agency: Can the people you’ll be selling to make their own decisions when it comes to buying a professional tool? Will you have to make classic sales, or can you sell in a more low-touch, highly automated way? The less work and the fewer people involved, the better. (Location 419)
  • Budget scope: What kinds of budgets can your prospective customers in this niche usually spend on products and services? Look into other services that cater to your prospects to see how they are priced. Think about if people are even aware that they have a budget for professional tools. (Location 421)
  • The more agency and reliable budgets you find in an audience, the better. (Location 426)

Step 5: Size — Find Out If This Market Can Sustain a Business

  • For bootstrappers, a market has to be both large enough to sustain your business and small enough not to attract giant competitors. (Location 439)
  • To find this sweet-spot, the “Goldilocks zone1,” you will need to know how big your business will have to be to support you. For some founders, this will be $10,000/month in after-tax earnings, while others will need this to be much more or a bit less. Take that number, double it as a precaution to account for all the unknown unknowns in the market, and divide it by the price you think your audience would pay for your offering. This will be hard to discover, so look for similar products in the space or draw parallels to products in adjacent industries. That will be the number of customers you need to have, at least, to get to your desired income levels. (Location 440)
  • If there aren’t enough beekeepers in New Jersey, you might need to zoom out and include other states. If there are too many, you can zoom in and focus on a subset, like hobby beekeepers or beekeepers with more than 10 swarms. That’s how you’ll find your sweet-spot. (Location 455)
  • Spend as much time as you need to figure out if an audience is big enough for your business. Then, make sure there are not millions of potential customers in your niche. If you own a small, bootstrapped, sustainable business, you won’t have the resources to go up against gigantic competitors with deep pockets. Your niche should not be attractive enough for those businesses. (Location 461)

Tallying the Results

Audience Exploration

  • The Embedded Exploration phase ends when you have established yourself in several communities that your audience frequents and have started a note-taking routine about commonly experienced issues and challenges. If you're planning to build a business on the side, this is a long-term activity that you can do while you're working a day job. (Location 514)

Embedded Exploration

  • Take note of links and resources that are being shared in the community and curate them in a database of your own. You’ll (Location 548)
  • For inspiration, visit community exploration tool resources like The Hive Index and find your initial communities to embed yourself in. If you can’t find anything there, don’t worry. Community discovery will be a cakewalk once you understand how communities work. (Location 571)
  • You can categorize communities depending on two properties: their purpose (the "why") and their platform (the "where"). (Location 573)
  • Goal-driven communities Practice-driven communities Interest-driven communities Location-driven communities Circumstance-driven communities Hybrids (Location 577)