Solution Creation & Marketing Challenges in a Startup Date:   Monday , July 02, 2012 Most business faces the well known "chicken and egg" situations once in a while and startups seem to encounter it more often than not. The inability to find a solution to this situation can get the startup to a standstill and if this situation lasts too long, it can burn enough cash to bring the firm to the brink of shutdown. On the other side, an established business might be able to overcome the situation by altering the existing conditions & thereby reducing crisis. In this article, I describe some similar situations that I have faced while working in my startup. INTRODUCTION I am the founder of TechInventio, a three-year old startup firm which provides end-to-end product development solutions to global end-user businesses. We are headquartered at Bangalore with a branch sales office in Netherlands. Since day-one, the biggest problem we faced is solving the sequence problem: should we first create a solutions offering with delivery capability for a particular technology and then start marketing it or should it be the other way round, or should we run it in parallel or should we market a concept and if there is enough interest shown by prospective customers turn the concept into reality? In my experience, the implementation of these strategies is filled with pitfalls. There are also judgment-calls which an entrepreneur needs to take: Which marketing strategy should be applied for the given scenario? INITIAL DAYS We faced our first situation even before we started. Should we first generate a small amount of business while working at our existing corporate jobs and then take a plunge when there was sufficient money to come in full-time, or do we just jump out of our corporate jobs and work full-time in our startup? Also, an investor would like to see some proof-of-concept of the product/solution. So the options were: creating service delivery or getting beta customers or funding or quitting our existing jobs to make all this into a reality. Even after two years of brainstorming amongst ourselves, we were still not able to come to any conclusion. With pure guts, I quit my corporate job with absolutely nothing in place; we did not even have a business plan to start with. After registering our company, we stared the process of defining our solutions, technology and product capabilities and parallely started searching for our first few talented employees. Also potential clients were contacted with the assurance of delivering promised solutions. REPOSTIONING, BOOTSTRAPPING & BUSINESS PARTNERING We started off by renting a small office with three talented resources. As we started our company in 2009, markets were tough due to economic slowdown. We were desperately looking out for projects. We built a small delivery capability & aggressively bid for projects. We got in touch with all our contacts and most of them were software companies in the bid to check if they could offload some of their client projects, but only to hear a no from them. We also aggressively responded to a lot of RFPs (Request for Proposals) from new leads but it was indeed difficult getting any business. We did have the required expertise to deliver projects, but we could only assure promises in our proposals and could deliver the project only if we won the contract. Clients wanted to see our track record before they awarded us projects & we needed client projects in order to build our track record with and additional pressure of utilization of our resources. I have been a member of the TiE (The Indus Entrepreneurs) since several years and one day, a by chance interaction with one of the chartered members helped us to reposition our delivery capability and marketing strategy. He suggested that instead of just approaching software companies to get outsourced work, we should also directly approach end user businesses and develop industry solutions expertise. He also suggested, rather than just looking out for profitable projects which were hard to come by because of our lack in track record, we should go and acquire atleast couple of clients to demonstrate our capabilities; even if it was at a loss for some period of time. This is what I call as bootstrapping. We took these suggestions seriously and re-positioned our delivery capability and marketing strategy and were able to gain some traction with a niche entertainment company. This gave us a good client reference and credible track record while talking to other prospective clients. From then on, we did "replication marketing" & were able to land two more clients who turned profitable for us. BUSINESS PARTNERING Another marketing strategy is to partner with prospective technology companies who are looking to expand their scope of solutions and services and do not want to invest into technology expansion, but like to expand by partnering with other technology companies. In the course of our three-year journey, we tried partnering with quite a few companies but there was really not much to talk about in terms of projects and cash-in flow. But since past six months, we hit upon a good business partnership with a company from Netherlands. They operated in a different technology space and wanted to expand their technology solutions and were on the lookout for companies having product development expertise in India. Both of us felt that there was certain degree of synergy if we partnered. They felt that they could better engage with their clients if they had an alliance partner who could execute their projects in the product development space. For us, it was like a win-win situation, they would help drive our technology and product development expertise and bring in overseas business to us through their customer engagements. CONCLUSIONS On encountering such situations, a startup has at minimum, the following six strategies: 1. Make a little, sell a little: In this strategy, service creation is done in tandem with service marketing. This can be used when the shape & color of the desired service delivery or desired service marketing is unknown. 2. Penetration marketing: In penetration marketing, a low price is offered in order to gain a large market share & maximize revenues. This is used when there is intense competition, undifferentiated service & demand. 3. Concept Selling: In this strategy, one approaches prospective clients & offers them services which are not yet fully developed. Once a client has been acquired, the idea is to go all-out & create the service & live up to the promise. 4. Repositioning: Offer solutions which are lower or better than the originally intended service. For the strategy to be feasible, the firm will need to have direct access to the targeted clients. 5. Bootstrapping: This strategy involves acquiring a client to demonstrate a proven service delivery & service marketing capability which provides good financial return. This gives an entry point into the market & at the same time helps you to generate capital which in turn helps run the company and allow one to internally refine the service delivery. 6. Business Partnering: This can be realized by either partnering with a relatively more established player with the same technology base but having a different target market to avoid any conflict of interest, or they are into a different technology space and look to partner with companies to expand their solutions. These strategies can be better invoked when one has a ready checklist of options and a clear framework. Business situations of startups are not very simple and clear in nature and hence do not lend themselves to a framework type solutions process.