Based on my recent experience at Ziply as well as working with founders, I realized the continued importance of starting in a niche segment in the early stages. What should that niche be? What are the flavors of this niche segment?
Background
At iCharts, I was employee #2. The first thing we had to figure out wasn’t the product. It was who we’d sell it to first.
I was a student of Steve Blank at Berkeley. So I already believed in selling to a niche. The hard part was figuring out which one.
Our software was a data visualization tool. Upload a CSV, or connect to a data source, and create interactive HTML5 charts you could embed on your site — public or private. It was horizontal. Anyone could use it.
That’s the first mistake almost every founder makes. We believe our product is so good that anyone can use it.
Sure. But you can’t sell to everyone.
Fortunately, I’d already learned that lesson. So I talked to 80 prospective users across a wide range of domains. Associations like AMA, who put out charts and data regularly. News organizations like Wall Street Journal and Forbes, who wanted interactive visualizations for their digital properties. Analyst relations teams at public companies, sharing results with investors. Market research firms, sharing survey results with clients. Business analysts inside enterprises, sitting on Excel sheets, trying to make charts for presentations.
(Yes, Excel and PowerPoint make charts. But they’re not interactive, they’re a pain to embed on a website, and they don’t update in real time when the data changes.)
After all those conversations, I grouped them into segments — associations, enterprises, market research, media, government agencies. Then I plotted each one on a 2×2: extent of pain, and willingness to pay.
Market research won. They had a real, painful problem — visualizing survey results in real time — and they were ready to pay to get rid of the manual effort and give their clients faster answers. That narrow focus is what got us our early revenue.
Why going narrow gets you to revenue faster?
Here’s the actual goal for a startup: repeatable sales. That means landing your next customer takes less effort than landing the last one. Not more. If you can’t get there, you don’t have a business. You have a string of one-off deals, and each one means reinventing the pitch from scratch.
Niching down is how you get repeatability. Sell to ten different types of customer and you need ten different pitches, ten different messages, sometimes ten different channels — because a hospital ops director and a real estate broker don’t read the same publications or care about the same proof points. That’s not a go-to-market plan. That’s ten of them, running at once. You can’t afford one yet, let alone ten.
Pick one niche, and your message stays the same from the first call to the fiftieth. That consistency is what actually lowers your cost of acquiring a customer. Not a clever ad. Not a bigger budget.
It changes how the customer experiences you, too. If you build a generic CRM, then each customer type or segment has to do the work of figuring out if it’s even for them. But, if you say we are “a CRM for real estate agents,” then your chosen segment of real estate agents will understand that this is built specific to them. Friction gone before the sales call even starts. That’s the difference between a long sales cycle and a short one.
A niche isn’t a limitation. It’s a filter.
If you’re a new B2B founder with an idea, the most important decision you’ll make early on has nothing to do with the product. It’s deciding which narrow segment of people you sell to first.
That segment isn’t an industry. It isn’t a company size. It’s four things, all true at once:
– They have a huge problem they need to solve today
– Their current alternative is bad
– Something has them motivated to act now
– They have the budget to actually pay you
A niche, for an early-stage founder, is just the set of customers sitting at that exact intersection.
Most founders skip this and go looking for a market instead. Niching down feels like settling — like you’re limiting your ambition before you’ve even started. To complicate matter, their investors are asking for a big TAM. Don’t confuse the two. TAM is the end vision. Niche is where you get momentum.
Founders who get to revenue fastest are the ones who find that narrow intersection first, then expand. The ones who try to serve everyone from day one spend months chasing interest that never converts.
A niche answers one question: who, specifically, sits at that intersection? Not “enterprise companies.” Not “small businesses.” A specific job title, at a specific kind of company, dealing with a specific situation. The more specific you get, the easier it is to find them, talk to them, and sell to them.
Here’s what each of those four conditions actually looks like.
1. They have a huge problem they need to solve today
Not someday. Not “on our radar for next year.” Today. If a prospect can shrug and say “we’ll get to it eventually,” that’s not your niche. That’s politeness, and politeness doesn’t convert.
I teach founders to think in three layers: vitamin, painkiller, chemotherapy.
A vitamin is nice to have. It gets cut the second budgets tighten, because nobody’s business breaks without it. A painkiller fixes real, current friction, and gets renewed first, because the pain doesn’t go away on its own. Chemotherapy is different. The customer isn’t shopping around. Isn’t comparing features. Isn’t waiting for next quarter’s budget cycle. They need it today, because the alternative is existential — a compliance deadline, a security breach, a vendor shutting down, a regulatory mandate with a hard date. They don’t ask “is this worth it?” They ask “how fast can you start?”
As a new founder, you can’t afford to sell vitamins. You usually can’t win on painkillers either, not yet. There is also a lot of competition in pain killers. You don’t have the brand or the case studies to compete on “this would help.” What you can win is chemotherapy — the customer who needs it fixed today, who isn’t negotiating on price, because doing nothing costs more than anything you’d charge. And they do not have the time to shop around.
Here’s what that looks like. Say you’re selling a tool that flags expired vendor certifications before an audit. Most companies will say “good to know, we’ll look into it next quarter.” That’s a vitamin. But the company that just got a letter saying their audit moved up two months, and three certifications are already expired? They’re not comparing you to competitors. They’re asking how fast you can start. Same product. Completely different customer.
2. Their current alternative is the villain
Every customer is already solving this problem somehow. A spreadsheet held together with duct tape. A manual workaround three people maintain by hand. A legacy tool everyone complains about but nobody’s replaced.
That status quo is your villain. And here’s the gift: you don’t have to convince them it’s bad. They already know. They live with it.
Your job isn’t to invent the pain. It’s to find the niche that’s already furious about it.
Check social platform like Reddit, X or Quora. Check our G2 or Capterra reviews. You will find users complain about their current solution.
3. They’re motivated to act now
A bad alternative on its own isn’t enough. People tolerate bad tools for years. You need a trigger — something that changed recently and took “we’ll deal with it later” off the table.
A new compliance deadline. A new VP who won’t accept the old way. A competitor that just pulled ahead. A headcount cut that makes the manual workaround impossible to staff. Something concrete. Something dated.
If you can’t point to a specific reason this niche needs to move now, you’re early to their problem. Not wrong — early. And early is expensive when you’ve got no runway to wait.
4. They’re willing to pay
This is the one founders skip, because it’s the one that tells the truth. Interest is cheap. A demo request is cheap. “This looks promising, keep us posted” is cheap.
Payment is the only signal that counts. Budget they already control, today, that they’re willing to commit before your product is even fully built. If a niche has the pain, the villain, and the urgency — but no budget, or no authority to spend it — you’ve found believers, not customers.
What to do with this?
A niche that checks all four boxes is small on purpose. A small group of people in real pain is easier to find, faster to reach, quicker to close than a broad market of people who are mildly curious. You can name them. Call them. Learn their language well enough that your copy makes them feel understood, not marketed at.
Close even a handful of customers inside that niche, and you have something worth more than a clever idea: proof. Proof that people in real pain will pay to solve it. That’s what funds your next round, earns your next referral, and tells you exactly which adjacent niche to chase next.
Don’t write down generic segments like “mid-market companies.” or “Manufacturing companies”. Be as specific as possible.
Here are some examples :
1. Payroll compliance for healthcare staffing agencies
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HR ops manager at a mid-sized healthcare staffing agency
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A new state wage-transparency law just took effect, and their manual payroll process can’t track it
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Their spreadsheet-based system was fine until the rule changed overnight
2. Inventory reconciliation for specialty e-commerce brands
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Operations lead at a DTC brand selling through 3+ sales channels (Shopify, Amazon, retail)
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Just had a stockout during a viral spike, and manual reconciliation across channels couldn’t keep up
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Now leadership is asking why inventory wasn’t caught in time
3. Contract renewal tracking for boutique law firms
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Office manager or junior partner at a 10-30 person firm
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A client churned after a renewal date was missed, and it became a visible, embarrassing miss
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The firm has no system beyond someone’s calendar reminders
Write down the actual job title, the actual trigger event, the actual budget line your first customer would pull from. Then go find five to ten people who match all four conditions — not five hundred who match one.
Ask your early customers, why they bought from you. That will help you define your niche.
Start narrow. Get revenue. Expand from there.
