The Best Customers to Study When Scaling Into a New Market

For tech companies worldwide, expanding into a new market is both a rite of passage and a moment of truth. It represents the transition from early promise to meaningful scale — an opportunity to increase revenue, signal growth potential to investors, and unlock powerful sources of differentiation, such as network effects and economies of scale.

But for every company that expands successfully, many more struggle. Some push into new geographies or industry segments only to stall; others retreat quietly, having learned — too late — that the customers they thought they understood weren’t the customers who would ultimately drive growth.

Expansion is hard, not only because new markets differ but because the assumptions guiding early choices often travel poorly across borders, industries, or segments. A product that resonates with users in one environment may fall flat in another, even when the differences seem minor on the surface. Many companies do not have the luxury of long research cycles or deep field teams. Instead, they learn fast, often improvisationally and typically through their earliest customers, their beachhead market.

These first users shape a company’s understanding of demand in the target market. But despite these users’ centrality, executives often overlook the strategic choice of which early adopters to prioritize. Many leaders assume that early users should come from familiar markets, such as the company’s headquarters country. Others assume that successful expansion requires an immediate leap into the target market, however unfamiliar. Both approaches can work — and both can fail. The real challenge is choosing the right one.

My research, which drew on global data on over 1,000 technology startups that was complemented with exploratory interviews and experiments, shows that the decision of which early adopters to target is far more strategic than is commonly appreciated. Early adopters offer information, but that information varies dramatically in its clarity and its relevance. Executives must decide whether to learn from users who are familiar — people whose preferences, norms, and communication patterns can be intuitively understood — or from target-market users, whose preferences match the broader audience the company ultimately wants to reach.

This choice matters because the two groups of people offer different advantages. Familiar users provide clearer signals. Executives understand these users better and can interpret their feedback more effectively.