When Airbnb started, they thought they were in the budget accommodation business.

They were defined by their competition with hotels and hostels.

But after hundreds of customer interviews, they formulated a deep insight

They don’t want to be tourists stuck in long lines, fighting with the crowds to see the same thing as everyone else

Customers weren’t booking rooms because they were cheap; they were booking them because they wanted to ‘live like a local.’

This fundamental insight transformed Airbnb’s entire business strategy.

And that’s why defining your ICP, although simple-looking, is one that involves deep customer research and conversations. And is one of the first steps to defining your business’ Product Market fit.

So, What is an ICP?

When you define the ideal user for your business, you define your ICP. Your ICP should be facing the problem that your business is solving for, and they have sufficient motivation to solve it. In addition, your ICP should be targettable by leveraging acquisition channels that you have at your disposal.

A business can have multiple ICPs.

The idea is that different ICPs are tangibly different from one another - their acquisition strategy may differ, or what they are looking specifically from the product differs.

ICPs & JTBD at VdoCipher

When it comes to identifying & defining your customers, you need to be obsessed with capturing the right detail about the business.

For instance, at VdoCipher, we built a B2B business that provided video streaming services to EdTechs.

So, what were the jobs to be done for a video creator.

  1. Their tech stack - building a website, and creating video themes for the website
  2. Acquiring customers
  3. Concerns about piracy - identifying which viewer has abnormally high levels of content consumption, to identify cases of password sharing. Share those analytics in detail with customers.

At VdoCipher, we had three unique sets of ICPs :

  1. Online-first education businesses
  2. Offline-first education businesses, that needed technology help in modernizing
  3. Entertainment Content

Again, the ICP got defined through multiple iterations - students have a willingness to pay for Education.

On the other hand, for Entertainment creators, monetization is a major challenge. Small-to-medium level creators are focused on building their reach (or Subscriber count). This was a learning reinforced through 50+ customer meetings across Sales calls & conferences.

One insight with the specific ICP of Education was that our end-users did not have very strong Tech teams. Whereas VdoCipher was a fairly technical product, that required API calls to work (most video platforms work with just a front-end code). Solving for Onboarding scalably was a major problem statement that we identified, and solved for, by creating an entire library of Plugins & SDKs.

ICPs & Finding Product-Market Fit at Spyne

At Spyne the core product transformed product images, applying an appealing background to the images background.

This has applications in all of ecommerce. Early users included Ajio & Swiggy.

However, in retail, margins can be extremely tight. So even though there is a value enhancement from product images, the buyer’s willingness to pay is not so high.

So then, which is the one product that has the following property:

  1. Retails for $10,000+ for 90% sales
  2. Has healthy margins
  3. High volume of transactions required

There’s one category that solves for this, and that is Used Car Dealerships.

Because we have defined Used Car Dealerships as our ICP, our GTM strategy becomes clearer.

There are about 80,000+ dealerships across the US. And for every car they want to sell, they need to list it online.

And to list the car online, they can’t just show the car standing in a crowded lot - they want to present it as standing in a showroom.

Because that’s what is driving store visits, where the sale eventually happens.

Now, we know that there are a limited number of dealerships out there. We can have different strategies to build pipeline:

  1. Inbound - Focus keywords specific to what a dealership would be looking for - for example “Number plate blur” - counterintuitively, this works well for enterprises. Because Inbound leads have already expressed Intent, they are likelier to convert.
  2. Outbound - Purchase data from Zoominfo or Apollo, and use another Data Enrichment tool to further enrich the data
  3. Events - Identify events where you’ll find dealerships or other channel partners, and iterate further from there

User Insights, and not coding, is now the biggest challenge in building an online business

With ChatGPT & LLMs, anyone can create an amazing app.

Heard that one before?

It is absolutely right.

However, it only captures part of the picture.

One of the biggest friction points for any new app developer is the time that it takes to build a web application.

ChatGPT, Claude and specialist coding tools such Cursor & GitHub Copilot solve a lot of the friction in building applications.

ICP-Crafting Exercise - Workplace productivity tracking software

Let’s consider an example

You are AcmeWorks, workplace productivity software for Enterprises.

The problem you are solving for is - how do I evaluate how my employees are spending my time. What are the tools & apps that they are using? How productive are they on the tools that they need to use.

Now, there are all different types of businesses - whether it is in terms of:

  1. The size of the business - is it an early-stage startup, or are they a 1000+ person strong enterprise
  2. The specific problem they have - some businesses may have a clear understanding of what they want to track, whereas other businesses want to track everything, and get it to somehow make sense
  3. What Sales process works best for this type of enterprise

You can easily have multiple ICPs.

One ICP can be HRs at early-stage startups - think headcount upto 200, who are keen to have actionable insights on workplace patterns. The focus for starters may be on the Product team.

Another ICP can be HR at large-enterprises. For them this may be part of their Performance tracking plan, and this may want to include enterprises.

Although both have fundamentally the same problem statement, the details of the problem differ. And therefore a solution tailored for one may not be the same as the solution tailored for the other.

So let’s say AcmeWorks, as it exists now, is more suited for the requirements of startups.

ICP focus on Startups

After multiple iterations and sales calls, the key learning is that:

  1. Although perfect for their customers, the problem is not urgent enough
  2. Even when there is a willingness to pay, the amount they would like to pay does not work for Acmeworks’ business economics
  3. They need a large amount of customizations

Focus ICP - Fortune 500 business

They next try a GTM strategy focused on Fortune 500 Sales. Here, the learning becomes:

  1. They have a different set of requirements than product & its roadmap
  2. Sales Processes are much longer
  3. Enterprise features are a must, such as SOC2 compliance & SSO logins

And that’s when a pivot happens

A pivot is a natural step in a business’ journey, as you further refine the ICP and what specific problem you are solving for the ICP.

ICP-Crafting Exercise - Building a Home Tutoring App for Indian diaspora

References:

Largest Airbnb Campaign