In many cases, food-tech founders extend their line of products to capture as many customers as possible, if they aren’t convinced about the size of their target market. There is a business case for extending into multiple product lines to provide complementary options to a loyal target market, but the decision to go wide right at the start is like opening a new udupi restaurant in Mumbai that serves all cuisines to cater to every guest but loses its core of serving the udupicuisine. Therefore, I jokingly call a ‘go wide’ approach of an early stage founding team as the ‘udupi restaurant approach’ as this approach is harmful whether you are in food-tech or not.
Let’s be honest, sales matter. But when you have limited resources in an increasingly noisy world, the quality of sales matter even more. Therefore, it is important to build a niche and own that space in your target segment. That will make your customers your best salespeople i.e. they will recommend you to their network which will bring in tons of new customers. For example, when I randomly asked people in my network for the best place for South Indian food in South Mumbai the answer was Muthuswamy, for people in Central Mumbai it was Madras Café, in Bangalore it was MTR and in Hyderabad it was Chutneys. These people were willing to advocate why their recommendation was the best.
However, when I asked the same audience for
the ‘best food place’s in their vicinity, – they were stumped. They almost immediately
questioned me about what my preferred cuisine is, whether I was looking for a family
restaurant or a date place, what my budget was etc. They did not know how to
answer the question until they had some clearer direction. Can you imagine
(now) what happens when your start-up does everything? Even your best and loyal
customers will not know what to recommend you for!
What is dangerous is that they could be
recommending you for something that isn’t even the path you planned. More dangerously, the customer who is promoting
your product may not even be in your target segment. And most dangerously, they
may not be promoting you to people who fall under your target segment. Such a
sale is more toxic than beneficial!
I understand that it is scary to be focussed but there is a lot of value in doing so. Customer feedback focussed on a concentrated product line will indicate whether you should pivot or accelerate your build-out. However, when there are multiple product lines catering to several audiences it pollutes the feedback, creating a lot of noise, making it hard for you to tune out the disturbance and assess what’s important in order to drive decisions – much like choosing what to eat at a Udupi restaurant at mealtime!