Selecting a winning product ideaApr 07, 2016
Tagged in project management, product, UX research, development, startup
A founder story about choosing a market to compete in.
When I first decided to go down the startup route, I had been working as a senior development manager for about 6 years.
Like any company, there were plenty of positives and a number of frustrations - enough for me to have strong opinions about all the wonderful things I would do differently in my new company. It also meant I had plenty of time to think about how to select and approach the market we took on.
I remain incredibly grateful for investing the time I did doing market research early on. It helped me identify the market that Fluid UI sells to, but - more importantly - it has helped me answer the one question I still get asked every time I describe Fluid to someone who is interested in building a successful business.
Where did you get the idea from?
I include these 8 ideas to help anyone who is thinking of ways to look at a market and choose how to create a unique offering that would attract the attention of enough customers to grow your company past its seedling stages.
Many entrepreneurs focus on problems with which they already have a degree of familiarity. Learning all the ins and outs of a market takes time and the cost of mistakes from lack of experience and the associated learning time can be fatal. We wanted to avoid this.
My experience was in efficient software development processes and facilitating inter-team communication. I looked for a way to create something that helped people create software products more efficiently, born of the many frustrations of a waterfall-centric development environment.
Use whatever expertise you have available to you. It is not important to be a domain expert, just that you are not behind a curve of other more experienced entrepreneurs who are going to move faster than you.
Companies that sell to other companies have a greater survival rate and easier paths to revenue than consumer plays. Consumer plays can get massive quickly if you get it right and scale quickly, but overall are more tricky to win market share.
B2B has a higher success rate than a consumer play. Consumer plays can get far more massive far more quickly. Take your pick.
B2B services also offer a relatively easy plan B - they offer other revenue streams such as consulting, training and development services that can be offered if growth does not materialise as hoped for. If you are working with cutting edge technologies that will be adopted for enterprise, your skills will be in demand and your product marketing efforts should put you in contact with interested potential customers.
We had no intent to create an entirely new market category, rather we looked for an existing market where there was a clear need but relatively few competitors. One way to identify this is to spot the rapid growth of a company in a space despite a relatively limited marketing expenditure. It can also be characterised by the relatively slow movement of an incumbent who doesn’t have competitive pressures.
The signs of a market being underserved can be seen in the speed and growth of the competition already there.
Very few products are entirely new. Google wasn’t the first search engine. Tesla didn’t make the first electric cars. Taxi companies existed long before Hailo or Uber. The one thing they all did however was solve a need at the right time while taking advantage of how technology was advancing either from a product development or a user adoption perspective.
In the case of Fluid UI, an interesting thing happened in 2010.
Steve Jobs had just written a famous letter to Adobe saying that Flash “would never run on the iPhone”. The fastest growing competitor in the market (Balsamiq) would no longer run on iPhone (and Android too shortly after). Tablets and on device testing (one of the core features we planned for Fluid UI) would be out of their reach until either the market shifted in their favour or they rebuilt a large part of their technology stack to adapt.
We bet against them doing that in the short term and chose to focus on HTML5 which was supported and would run equally well on web and mobile.
What’s cool in technology shifts every year. 2014 was internet of things. 2015 was curved-screen 4k TVs. 2016 is currently looking like VR. Pick a winner and commit to it.
While mobile was growing and Flash was dying, cloud computing was taking off and significantly reducing the cost of entry to global markets for startups.
Our competitors at this time were mostly desktop based - so we went cloud. We brainstormed what types of benefits this could inherently provide us as ways to differentiate from the competition. We assumed larger companies with larger budgets would be hamstrung by the shift in the market, tied to their existing technology stacks. They would be unable to compete directly with our USPs and this would make them slow to react to our entry into the market.
Pick a market where the the evolution of technology will give you a level playing field versus older, more established but larger companies. Even larger, agile companies will be slow to react and you can use this advantage to counteract their larger budgets.
Fluid UI took a bet on touchscreen mobile growth in 2010.
"Not much to see here, move along" you might say, but this was a time when Android had only been announced and Microsoft were assumed to be the main challengers to the iPhone. Nokia were still the biggest handset manufacturer in the world and people were championing Blackberry as the future of the mobile workforce.
Times change quickly and we bet on a new technology that we were relatively sure, but not completely sure would be successful.
Some bets are better than others. None are guaranteed. Even the best get it wrong.
We chose SAAS and stayed away from the app stores. The economics of building a company in a niche/professional space such as ours clearly indicated that building a sustainable company on the app store - where prices were low and a big chunk sales revenue was taken by the store provider - would be exceedingly difficult.
You need to be able to generate enough revenue to build a successful business with your chosen model given your market size.
Would we be passionate about the opportunity for years to come? We’ve almost died twice since we were founded. Both those times involved borrowing money and foregoing salary for months. During those times, even ramen noodles were a luxury.
We got our breaks at just the right time, just enough to keep us going till we passed break even. You can have the right business, but even that wont be good enough if you don’t have the character (and enough money saved up) to get through the hard times.
Never forget that someone else has another job out there that pays a nice safe salary, has plenty of benefits and has far less stress associated with it. You have to be crazy to get through the early stages of a startup.
Picking the right market is not a panacea. It’s just the first mistake you’ve avoided making. You still have to build a great product and tell people about it. All the decisions till this point are simply about deciding where you should focus your real efforts. You now must fail as quickly as possible.
Once you’ve decided on your market, your goal is now to make your startup to fail as quickly as possible.
The longer you don’t fail, the more likely you are to succeed. Get out and validate your product concept with potential users of your product. Early stage product validation tools like Fluid UI allow you to create something quickly and cheaply enough to get out and talk to real people about your idea. Using them with new approaches like design sprints are perfect for getting products in front of your users quickly and determining if you are right or wrong.
The more you validate your market early on, the more affordance you will have when you make other mistakes later.
The faster you can evolve your understanding of your market, the more quickly you can home in on the people who will ultimately be your customers. And once you have customers, you’ve gotten over the biggest hurdle for your product. Success is finally closer rather than farther away. At least, that is, until the technology shifts again and you are the incumbent.