WEBVTT 00:00:10.000 --> 00:00:15.560 Kia ora koutou. Hello and welcome to episode 8 of NZangels.com, a guide to raising angel 00:00:15.560 --> 00:00:20.880 investment in Aotearoa, New Zealand. I'm Dave Moskovitz, one of New Zealand's most experienced 00:00:20.880 --> 00:00:23.280 angel investors. 00:00:23.280 --> 00:00:30.560 This is episode 8, customer, market and business model. Let me ask you a question. Who's the 00:00:30.560 --> 00:00:37.680 most important person in your business? It's not the inventor, the head of sales, the CEO 00:00:37.680 --> 00:00:44.040 or even the investor. It's the customer. Your customers are going to dictate your fate more 00:00:44.040 --> 00:00:47.980 than any other people associated with your venture. They're the people who are going 00:00:47.980 --> 00:00:53.300 to pay your bills. There's a surprising number of pre-revenue founders who have not talked 00:00:53.300 --> 00:00:58.660 to many, if any, potential customers. Instead, they're focused on building a product they 00:00:58.660 --> 00:01:07.300 believe the market wants. They rarely succeed. Don't be that founder. Your ticket to success 00:01:07.300 --> 00:01:12.100 is finding a customer problem and solving that problem so well that customers fall in 00:01:12.100 --> 00:01:17.860 love with and can't live without your product. They sing your praises to everyone they meet. 00:01:18.060 --> 00:01:22.180 But that starts with understanding and validating who your ideal customer is. 00:01:23.780 --> 00:01:29.140 Most startupd do this by identifying a number of made-up customer personas, finding real-world 00:01:29.140 --> 00:01:34.740 people who match those personas and then interviewing them to discover where their pain points are, 00:01:34.740 --> 00:01:40.100 even before you try to sell your product to them. HubSpot have a great tool for enumerating 00:01:40.100 --> 00:01:44.860 your personas and there are many others too. And you just need to do a little bit of online 00:01:44.860 --> 00:01:50.620 research for how to conduct customer discovery interviews and you'll get a good idea of how to 00:01:50.620 --> 00:01:56.460 proceed. You may already have active customers that you've either sold to or who are interested 00:01:56.460 --> 00:02:01.820 in buying your product and that's great too. The more specific you can get about your customers 00:02:01.820 --> 00:02:08.380 and their attributes, the better. Part one of your homework is to define your customer personas, 00:02:08.380 --> 00:02:14.380 find a few potential customers and go out and talk to them about what you're doing. Do you think 00:02:14.380 --> 00:02:22.140 you've achieved problem solution fit? Who is your market? It's a whole big world out there. 00:02:23.180 --> 00:02:27.260 One common mistake early stage founders make is to try to be all things to all people. 00:02:28.140 --> 00:02:34.380 In 2026, many of the most investable businesses are specialized for a single industry vertical 00:02:34.380 --> 00:02:40.220 and are integrated into the workflow of people in that vertical. Even if you want to be all things 00:02:40.300 --> 00:02:45.660 to all people, it's usually best to start with a narrow group - your beachhead - and work out from 00:02:45.660 --> 00:02:51.820 there. The alternative is being buffeted about by a diverse set of needs and trying to fulfill all 00:02:51.820 --> 00:02:57.740 of those at once. There may be a particular niche in your chosen industry that you want to serve 00:02:57.740 --> 00:03:07.980 initially. This could be demographic, for example young, psychographic like adventurous, situational 00:03:08.619 --> 00:03:14.299 such as busy or any one of a number of other dimensions or focusing on a subset of the problem 00:03:14.299 --> 00:03:20.459 that you're solving. Geography is another component of your market. New Zealand is a very 00:03:20.459 --> 00:03:26.620 small market with only five million people, so maybe it's your first test market. But every week 00:03:26.620 --> 00:03:31.339 you spend gaining hard-won knowledge about the New Zealand market is a week you're not spending 00:03:31.339 --> 00:03:37.260 learning about a larger market. On the other hand, if you don't have experience in other geographies, 00:03:37.980 --> 00:03:43.980 maybe it makes sense to start here. You want to find a good balance which lets you focus on 00:03:43.980 --> 00:03:49.980 establishing a beachhead that you'll be able to serve well and expand somewhere between everyone globally 00:03:49.980 --> 00:03:59.739 and left-handed, middle-aged, busy vegan dentists in in Invercargill. Part two of your homework 00:03:59.739 --> 00:04:05.339 is defining your initial beachhead market. How big is that market? Once you're successful in that 00:04:05.340 --> 00:04:09.820 market, how will you expand? How will you know when you've achieved product market fit? 00:04:11.900 --> 00:04:17.019 Once you know who your customer is and what market they occupy, you can have a crack at your business 00:04:17.019 --> 00:04:27.100 model. Business models usually fall into one of the following categories B2C, B2B, B2B2C or platform. 00:04:28.300 --> 00:04:34.140 For example, B2C, if your customers are individuals and you're selling directly to them, 00:04:34.140 --> 00:04:41.099 that's B2C. Your main focus will be acquiring customers through advertising, social media, 00:04:41.099 --> 00:04:46.300 search engine optimization or SEO and so on, as well as product-led growth. 00:04:48.300 --> 00:04:53.340 B2B, business to business. If your customers are small to medium businesses or SMBs, 00:04:53.900 --> 00:04:59.020 that's a B2B business model. Your main focus will be acquiring customers through outbound 00:04:59.020 --> 00:05:06.219 lead generation in sales. Variations of B2B are B2B-enterprise and B2B-government, which typically 00:05:06.219 --> 00:05:11.900 involve high touch account management. The thing to remember is that the bigger the entity, the 00:05:11.900 --> 00:05:17.740 longer the sales cycle. Even though the price may be large, it could take you years to get in the 00:05:17.740 --> 00:05:26.700 door and close deals. B2B2C or business to business to customer. If you're selling your product 00:05:26.700 --> 00:05:31.820 indirectly through a channel, your main focus will be onboarding, motivating and managing channel 00:05:31.820 --> 00:05:36.860 partners. The tricky bit here is that even though your product is solving a problem for the end 00:05:36.860 --> 00:05:43.020 customer, you're only going to make money by solving a problem, which is often sales, for the intermediary. 00:05:45.500 --> 00:05:50.060 A platform business model kicks in when you're providing a platform that connects buyers and 00:05:50.060 --> 00:05:55.820 sellers and you're probably doing all of the three things above. And there are more too. 00:05:57.660 --> 00:06:01.980 Each one of these models require completely different sales, customer success and support 00:06:01.980 --> 00:06:07.260 configurations. I've seen startups flip-flop between these business model classes with 00:06:07.260 --> 00:06:13.260 essentially the same product, which is usually painful, time consuming and expensive. It's best 00:06:13.260 --> 00:06:18.220 to settle on one to start out with and go hard on that rather than try to dabble in more than one at 00:06:18.220 --> 00:06:25.740 a time. Your business model has quite a few attributes, but they can be encapsulated in a 00:06:25.740 --> 00:06:31.100 tool like the Lean Canvas, which you can download from this episode page on nzangels.com. 00:06:33.420 --> 00:06:37.020 Part three of your homework is to fill in a Lean Canvas that describes your business. 00:06:39.180 --> 00:06:43.900 I won't go through it here, but Isaac Jeffries has a great guide to filling in a Lean Canvas, 00:06:43.900 --> 00:06:51.099 and I suggest you have a look at this on isaacjeffries.com. The Lean Canvas is a dynamic 00:06:51.099 --> 00:06:54.299 tool which would change as you learn more about your business and your customers. 00:06:55.820 --> 00:07:01.739 And now here's the really hard part. Part four of your homework is to list out the assumptions 00:07:01.739 --> 00:07:07.419 inherent in each one of the statements you've made on the Canvas. Once you've made the list, 00:07:07.419 --> 00:07:12.780 reorder the assumptions from riskiest, that is, if proven wrong, they would kill the business 00:07:12.780 --> 00:07:20.380 really quick to the least risky. Your main job as a founder on your way to product market fit 00:07:20.380 --> 00:07:26.059 is to validate or invalidate those assumptions. The list will change over time, and when you make 00:07:26.059 --> 00:07:30.940 a new assumption, you'd be well advised to construct an experiment to validate or invalidate it. 00:07:32.059 --> 00:07:37.900 This is the science of building a startup. We'll talk more about the science of building a startup 00:07:37.900 --> 00:07:45.500 in our next episode. So the pithy quote from today's episode is, your ticket to success 00:07:45.500 --> 00:07:51.500 is finding a customer problem and solving that problem so well that customers fall in love with 00:07:51.500 --> 00:07:57.179 and can't live without your product. Until next time, ka kite!