Scale & Strategy
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Here’s what we got for you today:
- The ICP Paradox: Why Going Niche Early Ignites Startup Success
The ICP Paradox: Why Going Niche Early Ignites Startup Success
Choosing a radically specific Ideal Customer Profile (ICP) feels counterintuitive to most founders. You want as many customers as possible, so why turn anyone away? It feels scary.
But the "all things to all people" approach often leads to a scattered customer base and a fragmented roadmap. As First Round Partner Meka Asonye notes, many founders default to their first interested customers (or friends) as their ICP, only to face consequences months later.
"You need to get to know a singular buyer profile well enough that you can nail your sales pitch to 10 more," Asonye emphasizes. A proper ICP gets uncomfortably specific: company stage, industry, buyer persona, current solutions, and even trigger events. It should be so narrow that others might think you're "slightly crazy" for pursuing such a niche.
Even at the earliest stages, a working hypothesis for your company – what First Round calls "the 4 P's" (Person, Problem, Promise, Product) – should start with the person who'll use your product. This clarity, often gained through hundreds of customer conversations, helps you identify "superfans" who desperately want your solution, allowing you to build with focus and sell with consistency.
Your ICP is not anyone with a budget. It’s people who see your product and think, “This was made for me.”
To illustrate this, we've gathered lessons from founders behind unicorns like Okta, Vanta, and Clay. Their first ICP attempts were often way off. They share the frameworks and tactics that helped them pivot to the right ICP, and how you can apply their hard-won lessons.
The Early Stages: Nailing Your Initial Niche
Okta: Starting Small to Go Big
When Okta launched in 2010 with its identity and access management service, the public cloud was still new and daunting for large enterprises. Okta, which now serves two-thirds of the Fortune 100, didn't start there.
Former Chief Product Officer Eric Berg (employee #10) explains their initial ICP was SMBs with three or more SaaS applications. "It’s easier to build a more scalable business and to get started on a problem that a large number of small customers have," he says. Their requirements were more consistent, allowing Okta to hone a clearer product roadmap. "If you have five large global enterprises that all want different things, that makes it harder to build a consistent product." Okta expanded later, finding bigger companies needed similar core solutions with "a few extra things on top" for their complex environments.
Vanta: Imagining a Better World for Your ICP
Christina Cacioppo of Vanta initially chased voice assistants in 2016, but after countless dead ends, she paused building and focused on hunting for a problem. She talked to everyone, asking about daily routines and pain points. Security compliance kept emerging, usually with groans.
Startups were stuck: dedicate scarce resources to security features (low ROI) or grow the business. They almost always chose the latter, until Cacioppo met Figma, then a 30-person startup. When she asked about their security, a Figma engineer "listed about 12 tools and a bunch of best practices and just kept going." Figma had just signed Google as a customer, which sent a long security questionnaire they'd turned into their product roadmap.
This revealed a key insight: SOC 2 certification – proof of secure data practices – was make-or-break for SaaS companies seeking enterprise clients. Vanta's bold thesis: automate SOC 2 for startups, even though "no startup got a SOC 2" at the time. Cacioppo realized that by making it easier, more startups would move up-market and land bigger customers.
Clay: Overcoming Commitment Phobia
Clay, a tool for connecting APIs to spreadsheets, faced the opposite problem: too much interest from too many different markets. Recruiters, salespeople, and even engineers saw potential. Five years in, however, revenue was near zero because initial excitement didn't translate to consistent usage.
Co-founder Kareem Amin realized their early malleability was a trap. "You can't be changing the value prop or even the product itself from meeting to meeting." He says, "When you narrow the scope, it feels claustrophobic. Why are we doing something that’s smaller when we could be doing something bigger? Eventually, we realized that by narrowing down our scope, we were actually increasing our value."
Amin made a bold move: they picked one specific ICP – outbound sales teams – and went all in. This wasn't about being 100% sure, but about gaining the right to expand later. "We need to pick one thing at a time, test it out clearly and get feedback that we can react to quickly. That’s when we’d earn the right to execute on the more expansive parts of our mission."
Iterating and Expanding: Refining Your Focus
Retool: Methodically Testing Assumptions
Retool, a platform for building internal tools, landed 40 customers and hit $2 million ARR before public launch by treating its ICP hypothesis like a science experiment. Founder David Hsu started with two assumptions: FileMaker developers as users and tiny startups as customers.
Both were wrong. Hsu systematically tested them: cold emailing FileMaker groups yielded no interest. But deeper digging revealed a massive market: "50% or 60% of all the software in the world is actually internal facing." They iterated until they found their sweet spot: frontend and backend developers working in React or JavaScript (who hated building internal tools more than drag-and-drop interfaces) at large corporations (a Fortune 250 company was spending $400 million annually on internal tools).
Pilot: Pressure Testing with a Hard ICP
For the seasoned founders of Pilot (a bookkeeping service for startups), they intentionally chose an ICP that would "pressure test the model": early-stage startups. "Two people in a garage is much different than 300 people with a VP of finance and a controller," says co-founder Waseem Daher. This difficult segment prevented them from "over-fitting on one particular use case" and prepared them for broader growth.
Productboard: Finding Your Line of Sight into Bigger Segments
Productboard founder Hubert Palan, a former product manager, sought to build a tool that addressed core PM needs like customer feedback. To narrow his ICP from "PMs," he built a prototype and mapped excited prospects across seven dimensions: company size, product stage, digital focus, product count, org size, customer centricity, and B2B vs. B2C.
This led to an ultra-specific early ICP: an early-stage, digital-first startup with a strong customer-centric, product-led culture, a single product team, building a single (ideally) B2B product. Palan's advice: "If you can create a plausible hypothesis that there are enough people that fit your initial segment, your job is to go and find those people. If there aren't enough people, then you have a problem because you don't have a line of sight for other bigger segments."
Webflow: Picking the Most Disenfranchised User
Webflow's journey began as a side project to visually build web apps, but an early YC rejection pushed co-founders Vlad and Sergie Magdalin, and Bryant Chou, to get more specific. They found their breakthrough by identifying the "most disenfranchised user" in web development: freelance web designers.
Co-founder Sergie, a former freelance graphic designer, intimately understood their pain: splitting 50% of earnings with a developer just to translate Photoshop mockups into HTML. Webflow wasn't just entering a market; they were creating one for a "designer-developer" unicorn persona. As Chou explains, "We were trying to bring together two disciplines that never coexisted... we were, in essence, creating our own market." This focused approach earned them the right to eventually pursue their broader mission of "bring[ing] development superpowers to everyone."
Thena: Finding Your Lookalikes
Mike Molinet, after scaling Branch to $100M, is now applying second-time founder wisdom to ICP at Thena, a modern B2B ticketing platform. His ICP: technical products selling to technical stakeholders (e.g., API, SDK, security companies). "The more technically complex your product is, the more acute need for ongoing engagement and support interactions," he says, directly correlating the ICP with the product's value.
To operationalize this, Thena uses account list building tools like Keyplay to find "lookalikes": 500 companies that closely match their strongest customer profiles. This focused approach replaces "spray-and-pray" tactics.
Defining your ICP is not a static checkbox. As Molinet wisely states, "You have to start with a hypothesis of what your ICP is — but it will change. Not may change, it will."
The founders in this piece didn't succeed by getting their ICP right on the first try. They succeeded because they had the courage to get narrow, the humility to admit when they were wrong, and the persistence to keep iterating until they found their sweet spot. So, pick a direction, test it, and don't be afraid to change course.
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