Market Whisperer: Knowing Your Customer Better Than Investors

Hello friends and welcome back to the Product in Public newsletter, where I give you an inside look at how I help companies attract capital and build better products.

Before we get to today's newsletter, here’s some of the content I’m consuming that you might find interesting.

What I’m consuming

This week I drove over 1100 miles to hang out with some of my team and attend an annual budget planning session.

One of the ways I passed the 11+ hours of driving time, each way, was to listen to podcasts and audiobooks.

On the way up, I listened to Joe Rogan’s interview of Elliott West regarding his new book, “Continental Reckoning: The American West in the Age of Expansion.” I learned a lot about US history with Native Americans.

For the return home I bought, “New Cold Wars” by David Sanger & Mary Brooks. I’m only four hours into the book, but I’m learning a lot about our relationship with Russia and China, including why they act in the way they do.

I’ve never been a huge history buff, but I do find my tastes starting to bend in that direction. Maybe that’s part of getting older (I’ll be 50 next month).

Want to land investors? Know your market better than they do

High-interest rates are tough on borrowers, but not investors. Whenever rates reach this high, investments into startups, and other ventures, tend to dip because those investors can get high-interest risk-free returns.

To some degree, the frenzy around artificial intelligence (AI) has kept investors interested in funding startups. But, overall, startup funding from 2022 to 2023 saw a huge drop-off.

Not only did overall investments in startups drop off by 30% between 2022 and 2023, but valuations saw a 12% dip.

I’ve looked at three startup investment opportunities in the past two weeks. My interest level has been evenly balanced between interested, somewhat interested, and not interested.

I spent some time thinking through those opportunities and what it was that made the one, that I was the most interested in, stand out.

Then I landed on it - the founder was a “market whisperer.”

What’s a market whisperer? A founder who has an intimate understanding of their target market and customers.

If you want to raise capital, knowing your customers is a key differentiator for investors.

Investors won’t always be experts in your industry. However, don’t let that lull you into a sense of security. You still need to know your stuff and know it well. Because investors know other investors or have subject-matter experts they lean on when they need a better understanding of an industry.

For example, just yesterday my friend who runs a large angel investing syndicate sent over a fintech startup that he was interested in. He knew I worked in that space every week. They had an interesting story, but there was a fundamental flaw in their assumptions. Their target market was community banks and credit unions, where I’ve spent 20+ years, and they were assuming those traditional lenders would play in alternative credit. While some might, most are gun shy to that lending arena.

Another startup I spoke with had no sense of its target market at all. They were basing all of their assumptions on a conversation with one prospect. One.

Then there was Katrin of GetFrich.com. She was customer-obsessed. Not only was she personally part of her target market, she knew it intimately. She also knew the market she was going to be selling into, community banks and credit unions.

In one instance she knew it better than me.

When I was first introduced to Katrin I was concerned that their tagline, “f*ckin rich” might be too much for buttoned-up bankers. I was wrong. Two days after sharing that concern I learned they had landed one of my company’s larger customers.

Katrin is a market whisperer.

How can you become a market whisperer?

• Be part of your target market - one of the easiest ways to know your market is to be part of it. It’s easier to target Baby Boomers when you are one and are experiencing their pain points.
• Conduct more customer interviews than you can stand - some incubators that I’ve been exposed to put a target on founders of conducting at least 25 customer interviews. At a minimum, I’d double that. In a perfect world, you’d hit the triple-digit mark.
• Look for data, listen for tone - what I mean is that you should keep and monitor data points in your customer interviews, but listen for the truth behind what you hear. Customers don’t always say exactly what they are thinking and, let’s be candid, people don’t always know what they want.
• Leverage co-creation workshops or betas - customer interviews can be powerful. Still, if you want to turn that type of research activity up a notch, find a way to make them as interactive or hands-on as possible.

Securing funding for a startup is never easy. But, you can make it easier by becoming a market whisperer. Not only will you impress investors, but the insights you have will help you build better products and a loyal fanbase because you are building products they love.

If you’ve found this information helpful, I hope you’ll do two things for me.

1) Subscribe to this newsletter. That way, new copies are delivered directly to your inbox.

2) Share this newsletter with one other person that you think might benefit from the information I share.