Choosing a target customer for peak

This details the analysis that led to us choosing students and side hustlers as our target market for Peak Focus.

Admission of Bias

I’m coming into this problem-solving biased. I believe that the best target customer for us are hard-working, ambitious college students who drink caffeine every day but are upset with the lack of focus that proceeds throughout the day.

This is me, and I built this product to solve a problem I’m experiencing. I’m going to entertain other potential customer bases because there’s certainly some cons associated with the one I detail above. However, I want to admit this is the assumption I’m coming into this with.

The Framework

There are a few questions that I believe are important for choosing a target customer.

1. How does your product serve the target customer?
2. What has your target customer tried in order to solve their problem?
3. Will/can the target customer pay for your product?
4. How large is the target customer group?
5. How easy it to reach the target customer and how will you do it?

The most unintuitive of the questions is how large the target customer group is. According to Paul Graham, you should really be aiming for a small group that LOVES your product:

Better to make a few users love you than a lot ambivalent.Ideally you want to make large numbers of users love you, but you can’t expect to hit that right away. Initially you have to choose between satisfying all the needs of a subset of potential users, or satisfying a subset of the needs of all potential users. Take the first. It’s easier to expand user wise than satisfaction wise. And perhaps more importantly, it’s harder to lie to yourself. If you think you’re 85% of the way to a great product, how do you know it’s not 70%? Or 10%? Whereas it’s easy to know how many users you have.

The other questions are a little bit more intuitive. When choosing a target customer, you’re looking for someone who has the problem you are solving, has tried to solve it in unsatisfactory ways, can be reached by you, and has the capital to pay for it.

Hypotheses

While we could first analyze what the ideal customer looks like and then try to find a group that matches it, I believe it’s a more useful approach to come up with some hypotheses for your target customer and then evaluate them on the metrics above.

Some potential targets

1. College students (male and female) whose parents are fairly wealthy and thus have a good amount of money to spend. They’re pursuing their bachelors and are looking to enter a high-ambition, highly-competitive field such as consulting, IB, PhD programs, etc. They drink caffeine every day.
2. New grads who are working in high-ambition fields such as those detailed above. The transition from college to their new profession is hitting them hard - they went from being able to coast to having to work long, hard hours. They rely more and more on caffeine sources but are still struggling to have balanced energy without the side effects of caffeine.
3. Creatives who work long hours, often into the night. They have good income and their outcomes are determined by the quality of their creative outputs. They often work from morning into the night on their passion projects. They love caffeine, but are struggling to keep consistent energy levels to keep up their growth and enhance their work.
4. Side hustlers. These are people who work the 5-9 after their 9-5. They work a traditional job but want the independence and purpose of something more. While they are able to focus at work, they find that their energy is a limiting factor after work. They come home and are distracted and tired from the day. They want to build out their side hustle but struggle to do so.

Evaluating Hypotheses

College students: College students looking to pursue ambitious fields see their brain and its capabilities as the ticket to their success. In 2014, it was estimated that the average caffeine consumption of individuals 18-24 years old is ~122 mg (source). Perhaps surprisingly, caffeine consumption peaks from ages 50-64 at an average of 225 mg. For energy drinks, in particular, 18-24 is the largest consumer group, demonstrating how older consumers frequently choose coffee and tea.

For these college students, they are likely more reliant on caffeine than their average peer. They need to have high degrees of focus and energy and thus frequently choose caffeine.

The problem hypothesis is that while energy drinks give them a quick burst of energy, it comes with the dreaded crash and decrease in focus. If they choose to recaffeinate, then they have sleep trouble.

Regarding whether students can pay for our product, it’s likely yes. Our price point of $20 for 12 sticks is on the pricier side when viewed as the cost of an individual purchase but is far cheaper than what they likely spend ($3+ a day). In fact, it is economically “irrational” for them to continue their caffeine spending habits as is.

This customer group is large. It’s hard to put in exact terms since “ambitious” is loose but if we assume that 10% of caffeine drinkers in the US fit this profile, then we’re looking at a market size of 19.28 million x 40% who drink every day x 10% ambitious = 771,000 individuals.

In regards to how to reach these customers, this is where we think it will be fairly easy. Gen-Z are the largest users of shortform content platforms like TikTok, Instagram, and YouTube and Baltazar and I are getting better at posting on these platforms.

TikTok shop sales are growing rapidly (200% YoY) and we’ve yet to seen a huge energy drink player in the space (although, they’re certainly entering).

New Grads

As I leave college students to describe a different market, I must admit that we haven’t done much customer discovery here. However, I think we can see a similar problem that we’re solving as compared to college students. One of the downsides that scared me from this market early is that for people who go into office, caffeine is often given to them - and it’s not low quality either.

Our strategy to reaching them would likely lean more into Meta away from TikTok. This is a downside because for a product of our low price, TikTok makes more sense (lower sale value on average).

This market is, of course, very big. We can simply estimate it out by look at ages 22-30 and then doubling our estimate for the college students (since it’s 8 years versus 4 years) so 1.4 million.

Also, to throw some context on what ‘big’ really means - I’m just seeing if we would reach 100M+ by capturing them. In this instance 1.4 million x 20 Peak 12-packs per year x $20 = 560M. This is completely arbitrary, but also total market size isn’t a huge concern.

Creatives

I discard this group because I simply don’t know enough people in this group. The cost of having to do the customer discovery here is likely too high compared to simply putting more resources into penetrating another market

The Side Hustlers

The appeal for Peak is exorbitant for these people as they want to be alert and energized at work but don’t want to be burned out when they come home. If anyone is a fan of Huel, I’m thinking of Julian Hearn heading home from his day job to work on his coupons website that blew up.

Let’s add some contour to this group. This group is trying to escape from their jobs. They want freedom to work on their own projects and develop a passive income stream. Side hustlers often optimize their schedules to the max, fitting in exercise, sleep, and their hustle among everything. They’re optimized to a T. All of their solutions to make more time comes with drawbacks - the reality is that it’s hard to have sustainable energy.

Time crunched and pushing their efficiency, side-hustlers are willing to spend money in order to get those extra hours of work in. Their willingness to pay may be the highest of the groups. Translating Peak into efficiency and productivity that matters most - this is what will resonate.

The market is also huge. More and more people are developing side hustles. Most often, it’s the millenials and Gen Z - think Hormozi followers. Moreover, with more remote work, this is an increasingly popular area.

Reaching them will be similar to students and college students in regards to social media. Subreddits may also be the place to go as they’re often looking for advice. Moreover, content marketing can be a good start since many people will be looking up advice on how to improve their side hustle or have the energy to keep working.

Think of Tim Ferriss’ BrainQuicken - he was was building this for people interested in the four hour workweek. Namely, the sidehustlers.

In conclusion

I think side-hustlers are the most promising group for marketing Peak and I think we should pour additional resources and thought into reaching them. That said, I think the student market is also strong, and so developing tests for reaching both these groups will be the most effective strategy. In fact, we can look at the intersection for potentially the best product-market fit.

Reviewing the framework

One of the difficulties with fleshing out a framework and then implementing it for a question like this is that the analysis is inherently qualitative. How does it serve the target customer? You can’t quantify that - especially before going to market.

That said, there’s some changes I would make. When evaluating the size of the target market, I should have gone full out TAM or at least had some necessary condition to be achieved for it to pass inspection.

Regarding how easy it is to target a group, that’s something that will unveil over time, but I think in broad strokes it was helpful to evaluate it the way I did. Willingness to pay is also difficult to measure.