How the SLAM diagram changed 2 people’s lives!
When 30-year-old partners Jake and Patricia started to think about growing their side-hustle or part-time freelance business which offered quality photography to small businesses, a friend told them that they should use Osterwalder and Pigneur’s one-page business model canvas online. But having played with it for a few weeks and even watched a couple of explanatory videos they were no further ahead. Another casual conversation suggested a different one-page diagram that was easier to use called the startup launch assistance map or SLAM diagram (shown below) and the 2 founders immediately took to it because it was so easy to follow and entirely sequential as a pathway to explore.
The Startup Launch Assistance Map, is an 8-step sequential process, starting on the far left, moving across the center to the far right, establishing the key boxes needed to consider product-market fit, and then going clockwise thereafter.
So how did Jake and Patricia use this new SLAM diagram?
1. The Unmet need(s) and which segments (including the most likely “beach-head”) experience the most pains or gains that would be alleviated by your solution?
Jake and Patricia saw that step 1 on the SLAM map was about carefully establishing the “unmet” needs of the customer. Unmet needs are issues, frustrations or challenges that customers experience in their business or personal lives for which a better solution would either remove/lessen the relative “pain” or represent a significant improvement in the experience –a “gain”. Sometimes these issues are tangible and/or known but can also be less tangible and/or not readily recognized. In Jake and Patricia’s case these needs were pretty tangible in that small businesses needed quickly available, high-quality photography for their web site, brochures and other documents describing the company and all sorts of other marketing materials. They could use stock images but not for the owners or founders and even the employees if they wanted to feature them. They could also use their own photos but these weren’t necessarily good enough for publishing purposes and often needed a lot adjustment in ‘post’ production.
For a startup, the task at step 1 is to hypothesize about the target or segment in mind, as clearly as possible so that real and ideally face-to-face interviews with the target set of customers who appear to have this issue the most (often called the most likely “beach-head market) can take place. A beachhead strategy is about focusing your resources on one key area, usually a smaller market segment or product category, and winning that market first, even dominating that market, before moving into larger markets. One way to think about this is what this particular customer group would pay for getting something done that is difficult/frustrating/ problematic today or for which they are experiencing far too much “friction”? For Jake and Patricia then the beachhead appeared to be companies with 10–100 employees within a 50-mile radius of their home (so they could easily travel to the ‘shoot’ and not waste too much time).
2. The Key Team (founding members)
Once a startup has a few identified unmet needs and ideally listed in priority order, it is important to think about how and who can best address the issues and develop the possible solution or service. Although these are usually called “founders”, when looking to grow a business beyond a side-hustle, it is often useful here to think about the skills needed to solve the problem, technically, from a marketing perspective and in terms of leadership. Although an early-stage startup will rarely give people job titles other people will likely be sought who have the ability to think about these key areas. The first of these is someone who can consider the particular market or target segment and how demand for a product is best generated (often eventually called the Chief Marketing Officer or CMO). Secondly, it is someone who can consider the technical or technology or sometimes, operational path necessary to meet demand (often eventually called the Chief Technology or Chief Operations Officer).
While Patricia was a very good photographer and Jake was a very good editor in post-production with ‘Photoshop’ and ‘Light-room’ (so they believe they had the leadership and technical side covered well) they both realized they needed someone experienced in small business marketing and after a lot of interviews they invited Sara to join them as a co-founder because she had worked in marketing with small local businesses and been involved with a technology startup which had grown quickly before.
3. Product or Service offering and how it offers unique and specific value to each identified key segment with unmet need(s).
Although most founders will have a product or service idea they may believe is a “winner” it is critical to ensure that the product or service in mind is ultimately designed to satisfy the unmet needs identified in step 1 above and to offer relatively unique and specific value to this niche or segment of customers (often called the “value proposition” to the target customers). For Jake and Patricia and now Sara, as the third partner, they thought they were just selling “photo-shoots’ but quickly realized, from the feedback they had started to gather, by interviewing small businesses that what they really wanted was a ‘one-stop-shop’ where photos could be taken, edited in any way desired, rendered in multiple ways and for many possible uses and stored safely for future use as needed. They also wanted a fast response and speedy turnaround.
Jake, Patricia and Sara, were aware that the first three steps on the Startup Launch Assistance Map were the most important for a startup team to craft as accurately as it can, and often takes the most time to develop, with real customer feedback making ongoing adjustments which can lead to small adjustments and sometimes significant “pivots”. This is because the “fit” between the product and the target market is what they were trying to establish, after which a startup business can attempt to then sell its product or service to the one segment, and if that starts to work well, even identify new adjunct segments that may fit too and more customers are willing to pay.
4. Proof points/metrics that the channels, metrics and target customer segments are the right ones?
Once founders have clearly established the unmet needs of a particular target customer segment (“beachhead” and first adjunct markets) and carefully defined the product/service offering that appears to be most attractive to that beachhead market (carefully lining up particularly value propositions with each unmet need), the SLAM diagram suggested that it is now time to start to solicit real and substantial customer input, so that confirmable patterns can emerge. This means a startup has to go beyond the educated guesses, the “desk-top” search efforts, internal conversations, discussions with friends and family about the idea, etc. and actually get in front of the target customer, face-to-face, and in volume To do this well the startup needs to design the “experiments” or hypotheses it wants to test and adopt the best approach. This actively and practically tests “what they believe” without declaring it. This is not a “pitch” conversation where the startup founders describe the product or service and asks the customer what he or she thinks about it, but a “listening centered” conversation in which information is solicited about the apparent unmet need(s) and whether or not it is real, how significant it is, and how he or she may be practically dealing with it.
Jake, Patricia, and Sara decide to split up the customer conversations and each talk with local businesses with 10–25 employees, those with 26 to 99 employees and then a few with more than 100 employees. In each case, they try to target a marketing manager/ director. They quickly learn that fewer than 25 employee companies often don’t have a marketing person and the larger than 100 employees have their own marketing department and don’t often ask for photography. It is, therefore, the 26–99 employee companies that prove to be the best target and the more technology-focused they are the better. Software, application development, and IT services and similar companies appear to be the best target where the head of marketing is often female and in her early 30’s and willing and able to find good and able external partners to work with.
5. Size of market calculations and speed of traction to breakeven given the investment (TAM, SAM, SOM)
Although size of market estimates can be generally guessed at, with a little research, at a very early stage, once a startup has validated that it seems to have reasonable “product-market fit” in the target segment, it is important to see whether or not the potential for revenues are large enough to justify going “all-in” and the capital that may be needed to overcome the risks of failure. This is also important to identify how much “traction” with customers, or “scale” may be needed in order to grow quickly enough given the competitive threats along the way, and eventually achieve break-even, or the point at which revenues are greater than expenses (and side-hustlers can quit their day jobs!). One well-established way to do this “market-sizing” is to calculate the TAM, SAM, and SOM. The “TAM” or “Total Addressable Market” is the whole universe of possible buyers. This does not mean “everyone on the planet” but rather who is capable of buying his product or service in total in the segment that has been identified. Finally, the “Serviceable Obtainable Market” or “SOM” is the realistic market of customers in the segment that can be practically reached.
Having focused on small companies with 65 or so employees (plus or minus 30) Jake, Patricia, and Sara calculate that there are 10,000 of these within their target range of 50 miles, so this is their TAM. Their SAM is technology, hardware and software and information services and related firms and they estimate there are 1500 of these to target. This leaves their SOM as 2–3 firms that they can target each week so around 125 a year or 600 over 5 years. As they think each contract would be worth $15,000 this would mean total revenue over the 5 years of $9 million. Jake, Patricia, and Sara estimate that they might perhaps achieve $300,000 in revenue annually by year 2.
6. Specific go-to-market channels that achieve greatest growth and traction (including gaining, sustaining and growing customers)
Although it is customer feedback that will determine exactly which market and the sales channels that are likely to be best to reach individuals, this step according to the SLAM diagram is all about making educated guesses about the type of market the startup is trying to enter and which channels appear to be most applicable to both attract customers and then retain and grow more (through referrals).
A channel is a way for customers to be reached and includes many possibilities such as advertising, public relations, trade shows, affiliate programs, speaking, Search Engine Optimization (SEO) and Management (SEM) the use of email, the use of social media and many others. No early-stage startup has the “bandwidth” or usually the money to use multiple market channels so must choose the two or three likely to be most successful at the outset.
Jake, Patricia, and Sara know from their interviews that the target audience small business marketing customer persona respond well to email campaigns with embedded videos that demonstrate their photographic project capability, and to being invited to talks given by one of the founders (both live and via webinar-which share tips and techniques). This is best supported by SEO/SEM so any searches will find the company organically and in paid advertising. Jake, Patricia, and Sara tested all 3 of these marketing channels with a few of their existing clients so as to gather direct feedback and use it to hone the best and most valuable approach.
7.Business model and monetization strategy and why (with support evidence)
Many startup founders believe that their product and service simply needs to be priced and then offered to see if this works. However, there are many ways to invite customers to think about removing a pain point or to receive a tangible “gain” (such as less time taken or less effort) and then determining the “value-added” as a result.
These “business models”, including rental, leasing, subscription, the “razor/razor blade” model and many pricing approaches (‘below the competition’, ‘for volume’, etc.). All of these “monetize” the startup differently and the SLAM diagram suggests that each approach needs to be thought through carefully with as much supporting evidence as possible as to why this is likely to be effective and acceptable to customers, something that will be tested fully in the discovery process, of course.
Jake, Patricia, and Sara know that theirs is mainly a service business that charges a fixed project fee usually based on the length and complexity of the work to be done. However, they also determine that small business clients like the idea of being able to get work minor work and changes done quickly when needed and are prepared to pay around $500 a month to be in the “platinum club” that Jake, Patricia and Sara offer (which gives special advice, input and some marketing collateral editing services).
8. Start-up Eco-System Map (a. Competition and potential saboteur(s), b. Buyers/End-users, c. Suppliers/Resources, d. Direct and indirect influencers
The final step simply involves thinking about in what existing eco-system a particular startup will compete when it is trying to sell to customers, and how the various players in it might respond both positively and negatively. The startup founders will have already thought about the type of market it intends to enter but now must be much more granular in their thinking about:
a. Competition and potential saboteur(s). Competitive offerings may be direct or indirect (existing businesses that could easily pivot into your market segment or emulate your product/service features). These should each be listed and evaluated in terms of what they currently offer and why the startups' solution is tangibly better. This step also includes any potential saboteurs or eco-system participants that will possibly resist or threaten the startup’s market entry.
b. Buyers/End-users
A buyer of a startup’s product or service can take many forms and will vary depending on whether the startup is B2B or B2C focused. An end consumer may also be a buyer, but sometimes there are “economic buyers” who are also intermediaries (parents, teachers, managers, purchasing officers etc.). Each of these, need to be listed and considered carefully in terms of how commonplace this buying person is across the chosen target sector.
c. Suppliers/Resources
Suppliers are all those people in the possible supply chain that can help the startup get to market. These may be manufacturers, developers, distributors, resellers, IP attorneys, for instance.
d. Direct and indirect influencers
An influencer is not usually a buyer but is someone that encourages others to buy. These may be direct influencers who often, at least partially, directly benefit from the startup’s success, or indirect influencers, who may have deep knowledge about the target segment in question and believe that solving for its “pains and gains” is worthy (and may, therefore, provide support on the right basis).
Once again, the first eco-system described on the Startup Launch Assistance Map is unlikely to be the last, and customer discovery is likely to both change it and enhance it over time.
Jake, Patricia, and Sara saw that most of their direct competitors are “lone-wolf” photographers (these have little business experience and can be narrow in services but are often slightly cost-effective). However, indirectly there are many marketing and advertising agencies that offer photography as part of what they do (although these are usually much more expensive).
Summary
The Startup Launch Assistance Map is intended to be a simple template for ideators, early-stage startup founders and new product managers to relatively quickly test whether or not their thinking, hypotheses, and guesses about an unmet customer need and a solution to improve the situation are the basis of establishing a new organization to tackle it. In other words, it helps founders to test whether their proposed startup/early-stage business is scalable, repeatable and profitable in the future by testing structured thinking with real customers in an identified target segment. In essence, this is a process for starting to establish “product-market fit”. Product/Market fit has 3 main questions:
1. Is the apparent unmet need urgent or vital to lots of possible customers?
2. Does the proposed solution meet the unmet need at a price that customers will happily pay?
3. Are there enough customers in the suggested “universe” to build a scalable and ultimately successful business? For Jake, Patricia the SLAM discovery/exploration process took at $50,000 a year side hustle business to one that was able to generate $400,000 a year (allowing them to quit their jobs elsewhere) and employ them full time and take not only Sara on as a co-founder but 2 other junior employees as well.
Author: Jon Warner. The Startup Launch Assistance Map or SLAM model is fully expanded on in Jon’s new book “SLAM” published as both a physical and eBook now at $9.95 and $14.95 respectively. The kindle version is available on Amazon.com at:https://www.amazon.com/dp/B07VYBVLT5/ref=sr_1_1?keywords=SLAM+startup&qid=1564530579&s=digital-text&sr=1-1
