Eight Sleep's journey: The guts to go very, very narrow on customer segment

General
1

Just absorbed Alexandra Zatarain’s Stanford eCorner talk (Sep 2024) on finding product-market fit, and it completely changed how I think about customer segmentation.

The Five-Year Identity Crisis

Eight Sleep spent FIVE YEARS not knowing what their brand positioning was. Alexandra admits they built from the “outside in” - trying to be everything to everyone.

Then an investor suggested: “You need to reposition. Go narrow.”

That repositioning birthed the Eight Sleep we know today - the sleep tech company dominating a category they essentially created.

The “Go Narrow” Lesson

Alexandra’s core advice: Go very narrow in your customer segmentation.

Counterintuitive, right? Most founders think:

  • Narrow = smaller TAM = investors won’t fund
  • Narrow = limiting growth potential
  • Narrow = missing opportunities

Reality from Eight Sleep:

  • Narrow = clear messaging
  • Narrow = focused product development
  • Narrow = ability to actually win a segment
  • Narrow = easier to expand later from strength

What “Going Narrow” Looked Like

Eight Sleep didn’t try to sell to “people who sleep” (literally everyone).

They focused on: Performance-oriented individuals who treat sleep as fitness.

From their positioning today:

  • “Sleep fitness” not “better sleep”
  • Athletes, executives, biohackers
  • People who track metrics obsessively
  • Willingness to invest $2,000+ in sleep optimization

This segment is TINY compared to “everyone who sleeps.” But it’s:

  • Well-defined
  • Reachable through specific channels
  • Willing to pay premium prices
  • Passionate (become evangelists)
  • Measurable (clear success metrics)

The Qualitative Research Insight

Alexandra emphasized that Eight Sleep starts with deep qualitative conversations - not surveys, not analytics.

They have long conversations with individuals to learn:

  • What problems do they actually experience?
  • How do they describe those problems? (exact language)
  • What have they tried?
  • What would make a 10x difference?

This deep research revealed their narrow segment cared about:

  • Temperature control (not just “comfort”)
  • Data tracking (not just “good sleep”)
  • Performance improvement (not just “feeling rested”)
  • Recovery optimization (athlete mindset)

The Mission-Customer Connection

One of the clips titled “Using Your Mission to Find Your Customer” hit different.

The insight: Your mission should guide customer selection, not the other way around.

Eight Sleep’s mission: Improve health through better sleep.

This could apply to anyone. But they asked: “Who cares MOST about health optimization through sleep right now?”

Answer: Athletes, executives, health-obsessed early adopters.

That’s their beachhead. Later, as sleep fitness becomes mainstream, they expand.

What I’m Taking Away

I’m building a productivity tool and trying to appeal to “all knowledge workers.”

After watching Alexandra’s talk, I’m asking:

  1. Who is the narrowest segment that has the most acute version of this problem?
  2. What exact language do THEY use to describe it?
  3. What channels do THEY use?
  4. What would make them become evangelists?

The Question for This Community

For those who found PMF: Did you go narrow first or try to go broad?

And for those still searching: Are you being too broad in your customer definition?

Alexandra’s talk is a masterclass in the courage to say “no” to most potential customers to say “yes” to the right ones.

2

This resonates hard. I made the exact mistake Alexandra described.

My Broad-to-Narrow Journey

Building a CRM tool, I initially targeted “all small businesses.” Guess what happened?

  • Marketing was generic (“Better CRM for your business!”)
  • Feature requests were contradictory (retailers wanted X, agencies wanted Y)
  • Churn was high (no deep product-market fit)
  • CAC was insane (broad targeting = expensive ads)

After 18 months of struggle, I narrowed to: Real estate agents in luxury markets.

Same core product, but now:

  • Messaging: “Close more luxury listings with relationship intelligence”
  • Features: Prioritize what luxury agents need (referral tracking, relationship maps)
  • Channels: Luxury real estate conferences, niche FB groups
  • Pricing: Premium (they’re used to spending on tools)

Result: Revenue grew 3x in 6 months. NPS jumped from 32 to 68.

The Eight Sleep Parallel

Alexandra’s “go narrow” advice is EXACTLY what worked for us.

The fear is: “What if we’re leaving money on the table?”

The reality: You’re leaving MORE money on the table trying to serve everyone poorly.

Once we owned luxury real estate agents, we can expand to:

  • Mid-market agents
  • Commercial real estate
  • Other relationship-heavy sales

But we needed the beachhead first. Eight Sleep did sleep fitness first, now expanding to general wellness.

Qualitative Research

Alexandra’s emphasis on deep conversations over surveys is spot-on.

I did 50+ hour-long interviews with luxury real estate agents. Learned:

  • They don’t want “better CRM” - they want “relationship intelligence”
  • They don’t track “contacts” - they track “sphere of influence”
  • They don’t want “automation” - they want “personalization at scale”

This language became our marketing. Our product roadmap. Our positioning.

Couldn’t have gotten this from surveys.

3

Hardware founder here. Eight Sleep’s journey is particularly inspiring because hardware makes “going narrow” scarier.

Why Hardware + Narrow Feels Risky

With SaaS, you can pivot messaging quickly. Change pricing. Add features.

With hardware:

  • Tooling costs are sunk (you commit to design)
  • Manufacturing MOQs force volume
  • Unit economics require scale
  • Inventory risk is real

So the pressure to “go broad” is intense.

Eight Sleep’s Courage

They sell a $2,000-$3,000 mattress cover that regulates temperature. The TAM for “people willing to spend $2,500 on sleep tech” seems tiny.

But by going narrow to sleep-fitness enthusiasts:

  • Premium pricing works (they value performance)
  • Word of mouth is strong (they’re influencers)
  • Retention is high (it works for their use case)
  • Expansion is easier (“If athletes use it, I should too”)

The Mission-First Approach

Alexandra’s point about “mission should guide customer selection” is brilliant.

My hardware product is a smart kitchen device. Initially targeted “everyone who cooks.”

After this talk, I’m rethinking:

  • Mission: Make nutritious cooking accessible
  • Narrowest segment: Health-conscious parents with young kids
  • Why them: Most acute pain (want healthy food, limited time, picky eaters)
  • Language they use: “Sneaking veggies,” “weeknight meals,” “kid-approved healthy”

This changes everything:

  • Product: Focus on 30-min healthy kid meals
  • Marketing: Parent influencers, pediatrician partnerships
  • Pricing: Premium but justified (child health = high willingness to pay)

Narrower TAM, but way better product-market fit potential.

4

Market research consultant here. I’ve worked with 50+ startups on customer segmentation. Alexandra Zatarain’s approach at Eight Sleep is textbook-perfect execution of something most founders get wrong.

The Qualitative Research Goldmine

Alexandra emphasized deep qualitative conversations over surveys. This is CRITICAL and underutilized.

Why surveys fail for early-stage PMF:

  • People lie (not intentionally, but they do)
  • They tell you what they think you want to hear
  • They describe aspirations, not actual behavior
  • Multiple choice can’t capture nuance
  • You get data, not understanding

Why deep conversations work:

  • You hear their exact language (becomes your positioning)
  • You discover problems they didn’t know they had
  • You understand emotional drivers (not just functional needs)
  • You see patterns across conversations
  • You build empathy that informs product decisions

Eight Sleep’s Research Approach (From the Talk)

Alexandra mentioned they do 50+ qualitative interviews. Here’s what I bet that looked like:

Questions they probably asked:

  • “Walk me through your bedtime routine”
  • “Tell me about the last time you had bad sleep - what happened?”
  • “How do you currently track or think about your sleep?”
  • “What have you tried to improve your sleep?”
  • “How much would you pay to sleep like [insert their best sleep]?”

What they were listening for:

  • Exact words used (“recovery,” “performance,” “optimization” vs “rest,” “comfort”)
  • Emotional intensity (where do they get animated?)
  • Current alternatives (what are they already doing/spending?)
  • Willingness to pay (revealed through behavior, not asking directly)

The “Sleep Fitness” Discovery

Eight Sleep’s pivot from “better sleep” to “sleep fitness” came from qualitative research.

How I know:

  • “Better sleep” is what EVERYONE says they want (broad)
  • “Sleep fitness” is specific language from a narrow segment (athletes, biohackers)
  • They heard people describe sleep as “training,” “recovery,” “optimization”
  • This segment ALREADY tracked metrics obsessively

This is brilliant positioning because:

  • It’s differentiated (competitors say “comfort” and “rest”)
  • It attracts high-value customers (performance-oriented = willing to pay)
  • It’s measurable (fitness people love data)
  • It creates category (sleep as active optimization, not passive state)

The Courage to Go Narrow

Most founders resist narrow positioning because:

Fear #1: “We’re limiting TAM”
Reality: Narrow TAM with 40% penetration > Broad TAM with 0.5% penetration

Fear #2: “Investors won’t fund us”
Reality: Investors fund DOMINATION of a segment, not weak presence in many

Fear #3: “We’ll miss opportunities”
Reality: You can expand later from strength (Eight Sleep started sleep fitness, now expanding wellness)

Alexandra’s talk addressed this: They spent 5 YEARS being too broad. Once they narrowed, they found PMF.

How to Apply This (Practical Framework)

Step 1: Interview 25-50 people who have the problem

  • NOT friends/family (too biased)
  • People who CURRENTLY pay for solutions (revealed preference)
  • Hour-long conversations, not 15-min calls

Step 2: Transcribe and code the interviews

  • What exact words do they use?
  • What alternatives do they mention?
  • What emotional language comes up?
  • What patterns emerge?

Step 3: Identify the segment with MOST ACUTE pain

  • Not “biggest segment”
  • Segment where problem is 10/10 severity
  • Segment willing to pay NOW (not “someday”)
  • Segment that’s reachable (you know where they are)

Step 4: Use their language in positioning

  • Don’t invent marketing speak
  • Use the EXACT phrases they used
  • Test messaging with them

Step 5: Build for that segment exclusively (at first)

  • Say no to feature requests from other segments
  • Optimize every decision for your core
  • Dominate before expanding

The Eight Sleep Case Study in Numbers

I don’t have their internal metrics, but here’s what I’d bet:

Before “sleep fitness” repositioning:

  • Broad messaging (“better sleep for everyone”)
  • CAC: High (competing against Casper, Purple, etc.)
  • AOV: Medium ($1000-1500?)
  • Retention: Medium
  • NPS: Low-medium (some love it, others just “meh”)

After “sleep fitness” repositioning:

  • Narrow messaging (“optimize sleep performance”)
  • CAC: Lower (targeted channels, word of mouth in community)
  • AOV: High ($2000-3000+)
  • Retention: Very high (integrated into fitness routine)
  • NPS: Very high (evangelists in athlete/biohacker community)

Common Mistakes I See

Mistake #1: Going narrow on demographics instead of psychographics

  • Bad: “25-35 year old males in urban areas”
  • Good: “Performance-oriented individuals who track metrics obsessively”

Mistake #2: Choosing narrow segment based on size, not pain

  • Bad: “There are 10M people in this segment”
  • Good: “This segment has 10/10 pain and will pay premium today”

Mistake #3: Going narrow in positioning but broad in product

  • Bad: Say “for athletes” but build features for everyone
  • Good: Say “for athletes” and build ONLY what athletes need

Mistake #4: Expanding too early

  • Bad: 20% penetration of core segment, start targeting adjacent
  • Good: 70%+ penetration of core, THEN expand from position of strength

For @pmf_seeker and Others Searching

Your question about productivity tools for “all knowledge workers”:

Instead, ask:

  • Which knowledge workers have the MOST acute productivity pain?
  • What do they already pay for?
  • What language do they use to describe their struggles?
  • Where do they congregate?

My guess: Maybe “startup founders juggling 10 priorities” or “consultants managing 5+ clients simultaneously”

Interview 30 of them. You’ll find patterns. Those patterns become your positioning.

The Meta-Lesson

Alexandra’s Stanford talk shows: PMF isn’t found in conference rooms. It’s found in customer conversations.

Eight Sleep didn’t figure out “sleep fitness” through internal brainstorming. They heard it in conversations with their core users.

Your customers will tell you:

  • Who your ideal customer is (listen to who’s most passionate)
  • What language to use (they’ll give you your positioning)
  • What features matter (ignore the rest)
  • What price to charge (based on value they describe)

But only if you actually talk to them. Deeply. Repeatedly. Qualitatively.

That’s the Eight Sleep lesson.

5

B2B SaaS founder here. Watching Alexandra’s talk was painful because I made EVERY mistake she warned against.

My “Going Too Broad” Story

Built a project management tool. Our positioning: “Project management for teams”

That’s… everyone. That’s Asana, Monday, ClickUp, and 500 others.

Result after 18 months:

  • 2,000 signups
  • 12% activation rate (most never used it twice)
  • $8K MRR (basically nothing)
  • Churn of 8%/month (death spiral)
  • Couldn’t articulate why anyone should choose us

The Painful Pivot (Inspired by Eight Sleep’s Story)

After watching this talk, I did exactly what Alexandra suggested:

Interviewed 40 existing users who actually STAYED:

  • 30 were in construction/renovation industries
  • They used IDENTICAL language (“field coordination,” “punch lists,” “RFIs”)
  • They had SPECIFIC pain points (communication with on-site workers)
  • They were all paying $50-150/user/month (willingness to pay proven)

I’d been ignoring this pattern because “construction seems niche.”

The Repositioning

Changed everything to target construction project managers:

Before (broad):

  • “Project management made simple”
  • Generic features: tasks, calendars, comments
  • Pricing: $10/user/month
  • Marketing: Google Ads for “project management software”

After (narrow):

  • “Field coordination for construction teams”
  • Specific features: RFI tracking, punch lists, photo documentation, offline-first
  • Pricing: $79/user/month
  • Marketing: Construction industry publications, trade shows, contractor Facebook groups

The Results (6 Months After Pivot)

  • 400 signups (down from 2000 - but this is GOOD)
  • 68% activation rate (up from 12%)
  • $45K MRR (up from $8K)
  • Churn of 2%/month (down from 8%)
  • NPS of 62 (up from 18)
  • Can articulate value prop in one sentence

More importantly:

  • I know EXACTLY who my customer is
  • I know where to find them
  • I know what features to build (and what to ignore)
  • Word of mouth is working (construction managers talk to each other)

What I Learned From Alexandra’s Framework

1. “Using Your Mission to Find Your Customer”

Our mission was “make project management accessible.”

I asked Alexandra’s question: “Who needs this MOST right now?”

Answer: Construction managers coordinating field teams (not tech workers with Slack/Asana)

2. “Going Narrow” Isn’t Limiting - It’s Focusing

I thought going narrow meant smaller business. Wrong.

Reality:

  • 500K construction project managers in US (that’s our TAM now)
  • Average deal size: $3,000/year (vs $480/year before)
  • Much easier to reach (trade publications, industry events)
  • Higher willingness to pay (solving acute pain)

Our addressable revenue INCREASED by going narrow.

3. Customer Language = Marketing Copy

I stopped “creating messaging” and started “documenting conversations.”

What construction PMs said:

  • “I need to see what’s happening on-site without being there”
  • “Paper punch lists get lost, photos get buried in text threads”
  • “I need offline access because job sites have no wifi”

Those became our landing page. Verbatim. It works because it’s THEIR language.

The Expansion Playbook (Eight Sleep’s Model)

Now that we own construction project management (dominating our niche):

Phase 1 (current):

  • 100% construction focus
  • Build features ONLY for them
  • Goal: 30%+ market penetration

Phase 2 (future):

  • Expand to adjacent: Renovation companies, Property managers, Facilities management
  • Lead with: “Construction teams use this, you will too”
  • Leverage: Case studies, integrations, word of mouth

Phase 3 (later):

  • “Field coordination for any industry”
  • But we’ll have the credibility, features, and beachhead

This is exactly what Eight Sleep did: “Sleep fitness” → “Wellness optimization”

Advice for Founders Still Going Broad

If you’re targeting “everyone”:

  1. Look at your power users - Who actually gets value? What do they have in common?
  2. Interview them deeply - 30+ hour-long conversations minimum
  3. Find the pattern - Industry? Role? Use case? Pain severity?
  4. Reposition HARD - Not “also for X” but “ONLY for X” (at first)
  5. Rebuild for that segment - Features, pricing, marketing, everything

It will feel scary.

I lost 80% of signups after repositioning. But the 20% who stayed are PERFECT customers who pay 5x more and churn 75% less.

The Counterintuitive Truth

Alexandra’s talk crystallized this:

Most founders think:
“I need to appeal to everyone to maximize TAM”

Reality:
“I need to dominate someone to create a foundation for expansion”

Eight Sleep didn’t start by selling to “everyone who sleeps.”

They sold to “performance-oriented individuals treating sleep as fitness.”

THEN they expanded.

That’s the playbook.

Thank You, Alexandra

This Stanford eCorner talk literally changed my company’s trajectory.

We were burning runway with no path to PMF. Now we have:

  • Clear ICP (Ideal Customer Profile)
  • Repeatable acquisition
  • Strong retention
  • Path to $1M ARR (6 months away)

All because we had the courage to go narrow.