Is Your Startup a "Nice to Have" or "Must Have"?
With the downturn in the economy, numerous people are talking about starting a new business or company. Whether it’s a technology startup or new restaurant idea, I’ve heard of more and more people meeting to brainstorm and working to bring their ideas to fruition.
Whether you’re in the idea generation stage or have already started to build your new thing, you should take a breath and reassess whether the concept still holds your initial level of enthusiasm. Can still envision 30 million visits during the first month? Are you still as enthusiastic as you were when you came up with it? Do you believe your product or service is a “must have” and not just a “nice to have”? If not, step back – being a successful entrepreneur requires high – some say insane – levels of dedication to your idea.
There’s a great scene in the movie “Something About Mary” where Ben Stiller’s character, Ted, picks up a hitchhiker who is a psychotic killer and budding entrepreneur:
Hitchhiker: You heard of this thing, the 8-Minute Abs?
Ted: Yeah, sure, 8-Minute Abs. Yeah, the exercise video.
Hitchhiker: Yeah, this is going to blow that right out of the water. Listen to this: 7... Minute... Abs.
Ted: Right. Yes. OK, all right. I see where you're going.
Hitchhiker: Think about it. You walk into a video store, you see 8-Minute Abs sittin' there, there's 7-Minute Abs right beside it. Which one are you gonna pick, man?
Ted: I would go for the 7. Hitchhiker: Bingo, man, bingo. 7-Minute Abs. And we guarantee just as good a workout as the 8-minute folk.
Comedy aside, how familiar does this pitch sound to all you entrepreneurs or intrepreneurs out there? The reality is that the hitchhiker’s idea was a “nice to have” and wouldn’t have threatened the well-marketed 8-minute Abs video even with his insane level of dedication. Of course, he’s not similar to your pitch about your product, but does it remind you of your friends’ new thing? They all hope to have the next awesome product that will change the world, or at least get crazy traffic on Facebook. The driver of sales or user adoption? It should be as obvious as a 7 minute workout being more attractive than an 8 minute workout, right?
Most entrepreneurs are too close to their topic to realize where they really are on the user adoption curve. As an entrepreneur, you’re hoping that the jump from what Geoffrey Moore describes as “innovators” and “early adopters” to the “early majority” is short, but unfortunately, in reality, sales and user adoption rates are about as easy to predict as blockbuster movies.
Must Have, Meh, or What Does It Do Again?
For entrepreneurs, one method to frame the product development process is whether your product is a “nice to have” or a “must have.” Here, “must have” is loosely defined and can be identified by answering questions like:
• Is it easy for people to recognize that your product will save them a significant amount of time?
• Or a significant amount of money?
• Do people quickly see how much better it plays their music?
• How much better it allows them to access data?
For example, back in 2005, when I was working on my startup GoingOn Networks, we identified a trend of blogging and social networking entering the corporate world. We built a private-label social media platform, thinking that companies would soon recognize this trend and purchase our software-as-service platform.
In hindsight, the first two years were painful. A long education process, working on quelling fears of “opening up” to customers, and another long sales cycle. We were hoping our market chasm would be the neighborhood creek, but we found out it was more like the Grand Canyon. Plus, by 2007, about thirty competitors were also targeting this market. I realized that our social media platform wasn’t a “must have” and maybe not even a “nice to have” during our early years because our target market first needed to be greatly educated on the benefits of social media. It felt as if more often than not, sales meetings went like this:
Me: “Open, two-way communication with your customers is more effective…”
Potential customer: “Like a walkie-talkie?”
For consumer plays where users don’t pay for the product, the “must have” bar might be set a bit lower than for paid products, but it’s still a significant hurdle for the early majority to spend their time (even if it doesn’t cost money) on something new of which the benefits aren’t obvious, easy, or quick to grasp.
So how do you figure out whether your insanely great idea is likely to find customers and become a “must have”? When you’re trying to identify “must haves” in the market, consider these techniques:
Trend Surfing. Extrapolate a current technology, trend, or “must have.” What is the next product in the evolution of an industry? Consider the evolution from the Walkman to MP3 players to the iPod. Or look at what emerging technologies will create new market opportunities. For example, Qualcomm and its CDMA technology. Or exercise trends that created a whole new market of Pilates videos and trainers. My personal favorite is the rise in popularity of specialty bacon, where I can also plug my “Ode to Bacon.”
There are numerous examples, but the reality is that it’s difficult to predict and ride such trends. I learned this from GoingOn, and my prior startup, HeyAnita, when voice recognition technology was hot. With competitors such as Tellme and BeVocal, our space raised over $300 million in 2000, but quickly faded a few years later when users didn’t widely adopt a voice-controlled interface.
Twitter seems to have hit the right wave on the trend from blogging to micro-blogging. Initially, it was just an echo chamber of Silicon Valley people tweeting to each other, but now even major media outlets such as CNN, ABC, and ESPN see communicating in 140 characters as a “must have.” Like Twitter, if you do catch a trend wave, it swells, and you execute well, then you could be golden, with a profitable tech company or the best-selling line of Pilates videos on your hands.
Identifying a Market Gap. Where in the market is there an underserved need? Is there a place in the market that a taste is not being met? Chipotle filled a desire for fast casual Mexican food. Netflix let people easily rent obscure movies and keep them as long as they wanted without late fees. Meebo met the demand for a single, unified IM platform. What element is missing in a market – one that you know and are passionate about – that you believe you can fill as an entrepreneur?
For instance, back in the old days before the majority of malware came from websites and links to them, there was an opportunity for different kinds of anti-malware products. Brian Kellner, now Newsgator’s VP of Products, gave me some interesting insights into his days at anti-spyware company Webroot in the 1990s: “Webroot was one of the first two companies to release an enterprise anti-spyware product at a time when Internet Explorer had a lot of vulnerabilities and anti-virus companies didn’t catch spyware. The product was tremendously successful because it really hit the pain avoidance and laziness needs.”
But as much as Webroot tried to make deployment and management of the solution easy, when both anti-virus offerings and browser security got better, the cost of owning and running a dedicated anti-spyware solution became unattractive. “The pain level dropped significantly as anti-virus companies added adequate anti-spyware protection and it was much easier to just run the anti-virus software alone,” says Kellner.
So, for a while, Webroot was a “must have.” But when other, possibly bigger, companies start tapping into the Market Gap you found and have been filling, you need to find other ways to remain a “must have.” For example, by trying to extrapolate to the next logical “must have” in your market (Trend Surfing), or by making sure your product keeps something attractively unique about it, or is just clearly the best of its kind.
Building a Better Mousetrap. What product category is doing well, but could be done even better? Do you have an idea for something that will clearly be the best of its kind? IKEA did it for the budget-conscious furniture retail market. Zappos.com turned shoe shopping into a very convenient, easy, low-pressure experience. What features are missing that could be implemented and allow a new player to change the market? Friendster to MySpace and Facebook. MySpace and Facebook provided more value that simply connecting with friends through music and then third-party applications.
In speaking with Brian Rakowski, former lead product manager for Google’s Gmail product and current Product Management Director for its Chrome browser, he explained how he led the launches for these two products and how to make them better than any of the competitive products already out there: “Both Google Chrome and Gmail were new entrants in existing spaces so we spent a lot of time getting to know the market-leading products in their categories and identifying the biggest user pain points. For webmail, it was small storage quotas and clunky, inefficient interfaces. For browsers, it was general instability and unresponsiveness, especially on advanced webpages.” Google succeeded nicely with both of these, with Gmail surpassing Youtube earlier this year as the second-most-visited Google property and Chrome gaining just under 3% marketshare after one year. Rakowski concludes, “In the end, the best way to test whether you have a “must have” product is to threaten to take the prototype away from your early users. If they don’t riot, start again.”
Brian has a great insight here. Would users of Microsoft’s Vista have rioted if it had been taken away? No, there probably would have been celebrations throughout office buildings all over the world. What about Segway after all its hype? Maybe only mall cops would have grumbled.
Like the story of Webroot and anti-spyware becoming part of anti-virus solutions, the Building A Better Mousetrap category also brings up the importance of sustainability. How do you maintain being a “must have” in your market? During the 1990s, my favorite search engine was Alta Vista, but it didn’t maintain its “must have” status and gave way to Inktomi, which eventually gave way to Google. Google has been maintaining its “must have” status by not only staying on top of the search algorithm game, but also by offering superior or extremely competitive complementary products and services to its users: Adsense and Adwords for advertising, and nicely integrated apps like Gmail, Google Calendar, and Google Docs that make it easy to make Google your default online place to get things done. (Yet even Google has had its share of failures or incompletes such as Google Lively, Froogle, Checkout, and Spreadsheets.)
Finally, with all three of these techniques for identifying a potential “must have” opportunity – Trend Surfing, Identifying a Market Gap, and Building a Better Mousetrap – keep regularly asking yourself “is mine a “must have” product?” questions like the ones listed earlier. And of course make sure you’re still insanely excited about your own idea most days of the week – because if you’re not excited, it’ll be hard to make others think of your product as a can’t-live-without-it “must have.” But hopefully, these techniques and examples are giving you some extra inspiration on how to get to the next step in your new great idea.