Sell First

Printer Print Email Email
The economy is regaining pace and growth; there are untapped opportunities in the market. Entrepreneurs are excited and ready to jump into the game. Investors are hungry for that next big thing to rock the Valley. But entrepreneurs are finding it increasingly difficult to woo investors or potential customers. They often wonder, "Did I not enter the market at the right time?" Here's Sell, Design, Build and Support (SDBS) approach to Business Creation. Spotting the Right Opportunity Spotting the right business opportunity at the right time is critical for entrepreneurs. Simple as it sounds, finding the right opportunity, getting the right people and executing the right fundamentals of growing a business, are all easier said than done. While opportunities lie within the industry's evolutionary S-curve (market size versus time), the phase at which you enter the market is the key. Traditionally, entrepreneurs enter a new market either in the early part or in the mature part of the industry. With an early entry, there are two advantages- market competition may not be high and it is always easy to find a few customers willing to innovate with your product. But one has to understand that if one starts too early, there might not be a market and you could end up wasting a lot of money. At the other extreme, in the maturity phase, you may not be able to change customer habits or unseat the incumbent, as it is always a challenge to change existing dynamics. In short, an entrepreneur has to identify the right phase of market entry to back up intuition and belief in their idea. Market Validation The traditional approach to business creation, recognized and practiced by entrepreneurs and especially engineers, is the engineering path flow of Designing, Building and Selling. DBS is considered a proven approach and has been popular for many years. But, it has shortcomings. When you design, build and sell - with "sell" at the end; you may rationalize the fact that customers want your product and work on validation really late in the process. Needless to say, realizing there are no buyers after you've gone to market is a sure-fire way to send your great idea to an early grave. Approaching experts for early feedback on - whether the idea is really appropriate and workable helps bring clarity to the process. Once a market is identified, it is important to get customer validation on the usefulness of the proposed idea or solution. This is one way of judging if the timing for your idea is right. It is often easier to get funding from VCs but not so easy to receive customer validation. To mitigate the frustration of building a product that nobody wants, I subscribe to the SDBS practice - an approach pioneered by some in the late 80s. SDBS stands for Sell, Design, Build and Support. The idea is to actually introduce the customer much earlier in the equation so that market validation is taken care of up front. When you sell up front, you have your proof of concept to pave the way and energize the remaining efforts. Having used this approach in many of my ventures I found that SDBS not only saved money and generated customer interest even before launching the product; it also energized the team, a crucial aspect for any new venture. How does SDBS help? SDBS establishes proof of concept and addresses market needs, as well as provides a much-needed psychological boost. How does SDBS work? You start with 3-4 product concepts that you simultaneously test by building proof of concepts and sharing them with potential customers. Then you pick the one concept these customers vote for the most and improve it based on their feedback. Proof of Concept A proof of concept is required and ideally it pays to build one for each product concept when you have multiple ideas. It is natural for entrepreneurs to fall in love with their own ideas and seek ways to rationalize their viability. Having multiple ideas helps view the relative good of one idea over another. Having proof of concept opens new channels for feedback and demonstrates your expertise and competence to customers and, therefore they are willing to give you tangible feedback. Meeting Market Needs Feedback and validation-not just from industry experts, but also customers, the final buyers-is key. Building prototypes for customer demonstrations in addition to the common practice of carrying out market surveys provides a better gauge to understand customer needs. I also encourage engineers to be the "feet on the street" and actively listen to customer pain points and needs. In my experience, such exercises always paint a better picture of market needs. Once the market has been identified, it is time to build and support the idea. Risk Management As any entrepreneur will tell you, it is imperative to think about risk management. What SDBS really changes is the risk profile for a business. Entrepreneurs and investors typically consider two kinds of risks' market risk and execution risk. Neither favor market risk due to its dynamic and unpredictable nature. VCs are much more comfortable taking execution risk as it can be controlled to a certain extent. In the SDBS process, reaching the customer up front and understanding market needs early can alleviate the risk of customers not wanting your product compared to the risk of building and delivering what they need in a timely or cost-effective manner. Execution risk can be managed but not market risk! Funding Once you have sought and obtained market validation for your product you can turn to the issue of scaling your business. This is the best time to go to VCs - you have a proven product, you've established that there is a demand for that product and you'll be in a better position to negotiate the terms of your capitalization. Ultimately, with VCs there's nothing quite as persuasive as evidence that customers are ready to spend their money on your product. And that readiness in turn energizes your engineering staff, who will delight in the ultimate compliment - market acceptance of their hard work. Remember, going out of order and moving the "sell your idea" step further up the business creation stack minimizes heartburn and helps steer product development efforts. So, just SDBS your idea! About the Author Murli Thirumale Thirumale is responsible for driving revenue growth and launching and marketing new products in the secure access gateways market. A co-founder of Net6 (now Citrix Gateways Division), Thirumale led the company from its inception in 2000 to its acquisition by Citrix in 2004. Previously, he served as executive vice president and general manager of Symmetricom, and also spent seven years as a general manager of HP. Thirumale has an MBA from the Kellogg School of Management, and a bachelor's in electrical engineering from the IIT-BHU, India.

siliconindia