Two Types of Businesses. Advice For Startups

There are two types of businesses: 1) cost driven and 2) value driven. But almost all businesses crave both.

A customer doesn’t walk into a Whole Foods expecting to save a lot of money; they’re value-driven. They walk-in with a desire to have a premium grocery shopping experience and to shop for the highest quality ingredients. Similarly, a customer who shops at Wal-Mart for groceries may still desires obtain quality groceries, but is much more price sensitive and likely makes their decisions based on cost.

This decision calculus essentially applies to all businesses. From car shopping to vacationing; from home buying to professional services; from enterprise software to internet providers.

So, if you’re running a startup or are a small business owner, it’s critical that you put your customer in the middle and build around them. You cannot be everything for everyone; certainly not in the early stages. Knowing who you’re building for will reduce friction around the problems you’re solving.