Four indicators for success

What is the best indicator for success when choosing a vertical market?

Your client history.

Here are two client metrics to look at:

• Retention: Which clients stay with you the longest?

• Average Revenue: Which clients pay you more? 

Here are two founder/client fit questions to ask:

• Connection: Do I like working with this vertical?

• Vision: Does this vertical fit with my vision for my company?

Verticals that pass these filters are good candidates for progressing to the next stages (e.g., validation, etc.).

CQ

Frequently Asked Questions

Why is client history the best indicator for choosing a vertical?

Because it's based on real evidence, not assumptions about a promising-looking market. Retention and revenue patterns from actual clients reveal which vertical is already working, even if that pattern hasn't been noticed yet.

What does retention reveal when evaluating a potential vertical?

Which clients stay the longest. A vertical with strong retention already suggests the service fits well and creates a lasting relationship, a meaningful signal before committing further.

Why does average revenue matter as a filter for choosing a vertical?

Because it shows which clients are willing to pay more. A vertical associated with higher-paying clients is a stronger candidate than one where clients consistently pay less, even if both have decent retention.

Why include a "connection" question alongside the client metrics?

Because sustained specialization requires genuinely enjoying the work. A vertical that scores well on data but feels unappealing to work in day-to-day may not hold up over the years it takes to fully specialize.

Why does "vision fit" matter as much as the data-driven metrics?

Because a vertical needs to align with where the founder actually wants to take the company, not just where the data points. Passing both the metrics and these fit questions is what makes a vertical worth moving forward with.