🚀 How to choose your target segment for positioning?

Get tactical advice from OpenAI’s CPO, Lightspeed’s Founding Partner, Higgsfield’s founder and more

Join 200+ founders getting actionable and personalized advice on building startups in the early days at the DECODE Conference on November 15.

💬 Have intimate roundtable discussions with speakers including:

• Kevin Weil | Chief Product Officer, OpenAI

• Tony Jebara | Former VP of Engineering, Head of AI/ML, Spotify

• Arvind KC | Chief People & Systems Officer, Roblox

• Alex Mashrabov | Founder & CEO, Higgsfield AI

🍽️ Join an invite-only dinner with advisors including:

• Keith Enright | Former Chief Privacy Officer, Google

• Mark Settle | 7X CIO (including Okta)

• Esther Wojcicki | ‘Godmother of Silicon Valley’

• Mike Grandinetti | Faculty at Brown, Harvard and Rutgers; CXO with 7 exits

💻 Demo your product to investors including:

• Barry Eggers | Founding Partner, Lightspeed Venture Partners

• David Jen | MD of Finance at X, Alphabet's Moonshot Factory 

• Hamet Watt | Founder & CEO, Share Ventures

• Nicole Baer | Chief Marketing Officer, Carta; Limited Partner, GTMfund

Past attendees have successfully raised pre-seed to series A rounds from investors they met through DECODE, including a16z, Sequoia and Y Combinator, as well as found advisors and team members to help 10x their growth.

Sign up now using promo code: DECODE for 30% off.

“Reply” to this newsletter if cost is a barrier. We provide scholarships to those who are serious about their entrepreneurship journey.

3 tactics to choose your target segment

🔁 Segment by use case, then layer firmographics

• Identify use cases (the core activity or workflow users are trying to get done)

  • SmallPDF -> people who want to shrink their PDFs

  • Slack -> internal business communication

• Choose target segment based on use case and narrow based on resources available

  • Subdivide by firmographics:

    • Department (e.g. Slack started with engineering teams already using IRC)

    • Company type (e.g. logistics companies with 500-1000 employees doing $75 million to $250 million in revenue per year)

    • Vertical focus (e.g. Square enabled card transactions for all small merchants, while Toast focused only on restaurants)

🎯 Pick between immature vs mature use cases

• Use cases fall on a spectrum of maturity; determine which opportunity you want to pursue: 

  • Will you focus on the immature market (i.e. people doing an activity)?

  • Or will you focus on the mature market (i.e. people shopping for a specific product category that emerges from doing an activity)?

• Immature use cases:

  • Pro: Less competition; chance to become the de-facto solution

  • Con: Takes much longer to actualize, and customers need to be educated

• Mature use cases:

  • Pro: No education needed; faster market entry

  • Con: Real meaningful differentiation required for customers to switch (“We are faster”, “We have better customer service”, etc usually isn’t a powerful enough differentiation)

• There is no science to make the right decision and you are betting on the future:

  • Will we be able to effectively reach (and dominate) this segment?

  • Will our differentiation be strong enough to convince people to leave the market leader?

  • Will people still be performing these activities in five years?

🔑 Adjust “width” of use cases

• Wide use cases (e.g. “do Account Based Marketing (ABM)”) = larger markets but less effective messaging

  • More moving parts -> more stakeholders -> varying definitions of success -> ambiguity that inhibits word of mouth and understanding

• Narrow use cases (e.g. “schedule a Linkedin post”) = sharper messaging, smaller market size

• Match the width based on your ability to execute a successful GTM

  • The wider the use case, the more difficulty you’ll face as a smaller company in reaching the larger market. 

  • The narrower the use case, the higher your chances of success

2 traps to avoid

🚨 Confusing outcomes with functional activities as use cases

• Outcomes (e.g. increasing revenue) reflect the results but can’t guide on target users

• Functional activities define how customers actually use the product

• Segment use case by functional activities instead of desired outcomes for clear user target and positioning

🚨 Mistaking positioning for a testable hypothesis

• Conversion experiments (e.g. heat maps, A/B tests, surveys on homepage copy) do not reveal the right market focus 

• They measure which segment converts better based on who visits, not which segment is better for long-term growth

• Positioning is a strategic bet: pick a focus, define differentiation, and double down; use data to inform, not decide

1 tool to leverage

📖 Best practice on defining use case

• Every market has multiple segments using different competitors and alternatives, and each segment needs a different story about your value

• Use this framework of user scenario + product functionality to help define and craft your use case for the various market segments

Bonus: 1 trend to spark startup ideas

📈   The public procurement paradox: High stakes, low tech

• $10-13T is spent globally every year on government procurement (U.S. federal procurement alone is over $700 billion)

• Many tenders attract zero or one bidder due to broken processes and systems designed for typewriters and filing cabinets

• Mid-sized firms abandon opportunities as the process is too complicated and global contractors spend huge resources decoding requirements 

• The bottleneck is understanding requirements, drafting proposals and ensuring compliance, now automatable with AI; traditional software only tracked deadlines and stored documents 

• Opportunities capturing massive savings:

  • Intelligent Document Processing: AI converting tenders requirements in various formats (PDFs, spreadsheets, scans, etc) into structured intelligence 

  • Content Generation at Scale: Analyzing tender language, pulling company history, and generating compliant, on-target draft responses, dropping writing time from weeks to days.

  • End-to-End Orchestration: AI agents coordinate the process: assigning tasks, tracking deliverables, ensuring compliance, even managing subcontractors

  • Smart Discovery: Systems that can monitor portals, surface relevant opportunities, rank them by fit, and flag emerging spending trends

  • Strategic Intelligence: AI that analyzes award data, competition, and pricing benchmarks, helping companies bid more strategically

  • Post-Award Management: AI that streamlines compliance reporting, tracks performance, and flags issues before disputes arise