Finding "good" demand
The two most important criteria
Months ago, the brilliant Vince Jeong challenged me to think about different “dimensions” of demand - what makes demand “good” or “intense”? What is “lukewarm” demand? I have been thinking about this a lot, examining a bunch of different startups’ growth patterns and sales calls - in addition to exploring this in my own work on Waffle and Finding Pull - and have come up with two criteria
Before we jump in, two quick FAQs:
I’m new here. What exactly IS demand? Demand is a buyer’s #1 priority. I think of it like a project on their Trello board. When they prioritize a project, they have to figure out how to get it done, and consider options (e.g., DIY in a spreadsheet, buy a tool). Demand exists whether or not our business exists.
Why should I care about “good” demand? Because the “better” or “more intense” demand you serve, the faster you grow and the less you have to PUSH to get deals done. (More intense demand = more customer PULL.)
Ok, to demand intensity:
Criteria 1: What is the likelihood of this project being a potential customer’s #1 priority right now?
When a project is a buyer’s #1 priority, they might pull. If a project is not their #1 priority, you have to push and . How likely is this project to be a buyer’s #1 priority right now?
When startups grow fast, it’s because a ton of buyers have a particular project as their #1 priority right now:
Lovable: How frequently does a product manager or founder want to mock up some UI? (Answer: At least 1x per day)
Vanta: When Vanta was getting started, how many B2B software companies needed to get SOC 2 compliant? (Answer: Basically all of them! Hence Vanta rode a demand “wave”)
Jump: When Jump was getting started, how many financial advisors had a project they couldn’t take action on - “Eliminate meeting admin for my client meetings.” (Answer: All of them!)
This criteria blends two concepts - “project frequency” and “waves”:
Project frequency: Something I do all the time (e.g., Cursor for code, Lovable for website design, Jump for client meetings). Versus something I do very infrequently (e.g.,
Waves: Tectonic shifts where a lot of people are prioritizing something all at once. (e.g., for Vanta, you don’t get your SOC 2 certification every day… but back in 2018-2020, there was a stampede towards SOC 2 compliance. Other examples: remote work in 2020, the adoption of AI notetakers over the last 2 years, website chatbots in 2018.) When a wave is over, demand reaches an equilibrium based on the natural project frequency.
Most startups grow slowly because demand is rare. It’s rare that a relevant project is a buyer’s #1 priority, and often it’s in the “would be nice to get to this” bucket in Trello. In this case, we mostly grow by pushing and persuading. Or waiting patiently.
Criteria 2: What is the magnitude of difference between us vs. the alternatives a potential customer considers?
When a potential customer prioritizes a project, they consider different options. For example:
the good ol’ “DIY in a spreadsheet”
“Use the tool we already bought that we can jerry-rig,”
our indirect competitors (“hire someone”)
our direct competitors.
What matters is: When they actually consider different options, what is our “magnitude of difference?” In other words, how much better are we on criteria that our potential customers care about - how much better do we fit their true demand?
I really like the Lovable example here. Before Lovable, if I wanted to make a website I needed to EITHER:
Spend hours of my time trying to make a good design in Framer or some other theoretically simple, but actually difficult tool.
Hire a contractor and communicate back-and-forth with them, as they use Framer better than I do to make my website.
With Lovable, I have a live chat and BOOM - my website is ready. I can easily tweak it. This is a massive magnitude of difference here - and it closely fits my true demand: I want to be able to make a website fast and fully control it, without fussing with an editor. (As a result, I actually make many more websites and edit my website way more frequently, too! Lovable unlocks my pent-up demand, in other words.)
Similar with Jump. Before Jump, financial advisors had to manually take notes and manually enter CRM information for their client meetings. They could try a generic AI notetaker, but these generic notetakers didn’t fit their notetaking styles or integrate into their industry-specific CRMs.
When they use Jump, everything is automatically done for them. Integrated into their CRM, with security guarantees specifically made for their industry. It fits their true demand like a glove. One user commented publicly after using Jump, “This must have been how Alexander Graham Bell felt after inventing the telephone!”
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What do you do with these criteria? Score your startup on them! And ask:
Is there one kind of person and project you can serve where you score well on these two criteria? Go all-in on that, versus trying to push to serve lukewarm demand with good-enough alternatives.
Are you weak on one of the two? If so - that’s almost certainly your startup’s #1 bottleneck.
Also, these two criteria are obviously not be the only things that matter, so I’m open to other ideas! Have thought about:
Can the person with the project buy? (aka: one reason Wiz grew so fast)
Friction to buy / get to hell-yes post-sale (aka: one reason Lovable grew so fast)
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PS:
Finalizing the plan for Finding Pull Cohort 8. New name, better programming. If you want a $500-$1k discount, learn more and sign up here before May! (Can also grab time with me to see if you’re a fit.
Waffle’s unfolding journey continues! “1-click infra that scales from idea to IPO”, maybe? Drop a docker image, get enterprise-grade AWS infrastructure generated instantly. Getting close, and focused on articulating criteria #2 from above…