Good Positioning Makes Everything Easier

When I first  joined Substack back in 2018, it was kind of hard to explain what product category we were competing in.

The founders had originally conceived of it as an all-in-one publishing platform for independent writers who wanted to offer paid subscriptions. So the core product elements were: 1) website, 2) email newsletter, and 3) subscription payments. The thing was, there weren’t yet many writers who were ready to take the jump and build an independent subscription business—and the few that were already doing it didn’t want to go through the painful process of switching to a new platform. So that was a problem.

Thankfully, the founders figured out a subtle shift in positioning around the time I joined that made a big difference. They kept all three core elements in place, but started pitching it as a newsletter platform rather than a paid publishing platform.

It might not seem like it, but little language changes like this can have a large impact. I think it's easy to underestimate the effect this can have because very little about the product has to change—to many product-oriented founders it doesn't seem ”real.” Because of this, many founders choose by default the market framing (aka “positioning”) that popped in their heads when they initially conceptualized the product. They might not even understand that it is a choice.

But it is. And the choice you make makes a huge difference.

In Substack’s case, life in the “paid publishing platform” market was rough, because very few people thought they wanted it, and the people who did were locked up by switching costs from the complex systems they rigged together. But competing in the “newsletter platform” market was a dream in comparison. Hamish could email writers on Mailchimp and say, “Would you like to stop paying $60 a month to send to your list?” and it was a no-brainer. Or he could talk to a Tinyletter user and ask “How close are you to hitting the cap?” (Yes, Tinyletter actually caps writers at 5,000 subscribers.) Or he could ask Medium writers if they would like to own their own email list and brand, or ask Wordpress users if they’d like a built-in newsletter. Shoot, he could even nudge professional authors and journalists to start a newsletter as a sort of career insurance policy—and it would work!

Needless to say, competing in the “newsletter” category made life easier. It wasn't perfect: most of the writers we acquired this way did not start paid subscription newsletters, and we generated no revenue off them. But still, it was absolutely worth it. The “newsletter” positioning served as a wedge, and generated a viral distribution loop where more writers came on Substack, made their readers aware of it, some of whom would go on to join as writers. It created credibility and awareness that were the key to giving more people the confidence to start paid newsletters. And, most importantly, it laid the foundation for the network effect that today helps writers on Substack get more readers without having to do any extra work.

Bottom line: choosing the right market frame for your product is essential.

Traditionally, this is known as “positioning.” But most resources on positioning are too disconnected from strategy for my taste. They are useful, but only tell you how to execute on a position. They don't help you choose the right one.

The best thinking I’ve found on this is in the book Obviously Awesome by April Dunford, but I felt it could be even more useful if combined with strategy concepts like disruption, wedges, shifts in the the basis of competition, etc.

This post is a new way of thinking about positioning, informed more by strategy than marketing. If you’re building something new of any sort, I hope it helps make life easier for you, the same way the “newsletter” framing made life so much easier for us at Substack in the early days.

The Startup Positioning Process

There are five steps:

1. Start wide open
2. Identify the bright spots
3. Anticipate where they lead
4. Choose a path
5. Conform everything around that choice

Let’s dive in!

1. Start wide open

Be on the lookout for different types of people who like your product for different reasons. Don’t assume the default path is the right one.

This advice is dangerous so I’m going to start by saying what it doesn’t mean: “wide open” does not mean “unfocused.” It does not mean “a product that tries to be all things to all people.” Instead, it means “open to many possibilities, able to perceive reality as it is, without warping new evidence to make it fit your prior expectations.”

In this way, you can start narrow and wide at the same time. Your product and target customer should be narrow—just as all the classic advice says to—but your mind should be wide open.

This is important because the vast majority of founders simply stick with the default positioning that occured to them when they originally came up with their product idea. As they process new information, they fail to pick up on the little clues the universe gives them about better possibilities, because it does not occur to them to be on the lookout.

It’s also important not to be too narrow in who you get to try your product. Sure, focus on the people you think are most likely to enjoy it. But be curious about what happens when other types of people try it, too. Casting a somewhat wide net in the earliest days of a new startup is underrated, as long as you know what you’re doing and use it as a part of a deliberate process to find product-market fit.

For example, Figma started out knowing they wanted to build a web-based graphics editor using a new technology called WebGL, but they didn’t know exactly what type of use-case they wanted to focus on. Eventually after a period of experimentation they settled on UI design for web and mobile apps. Who knows what would have become of them if they tried to cling too tightly to an original market?

Of course, this is only good in an early, experimental phase. In order to scale you do need to pick a focus. And the next step in the process explains how to do that.

2. Identify the bright spots