Sell First
Murli Thirumale
CEO,
Ocarina Networks
Ocarina Networks
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.
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Posted by:green kyleisett andeson - 03 Jan, 2012
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SDBS sounds like new name for a concept already practiced in some sectors. In real estate, the product is often offered and sold even before the first brick is laid. Any business that just promises to deliver even before showing the product or service can be said to practice SDBS. All IPOs are SDBS. Applying this philosophy to absolutely new products or services, specially in IT, is the essence of Mr Thirumale's case and I thank him for excellent adapatation of an existing concept.
Posted by:Ketan Sanghvi - 28 Aug, 2009
5:
Sir, I have completed my B.E in computer
science few days ago and have a very great
idea of a business and I'm very optimistic
in terms of the success of that business
very rapidly.
But the problem is the capital required for
that and I want a VC to fund this project
and in this regard, i have some questions
following below:
1. How can i trust a VC that after seeing my
business plan, he won't invest in that
project on his own and reject my proposal
because for him, I have nothing but a great
idea and great enthusiam to be successful in
that.
2. I have seen many articles saying about
the contents of the good business plan but
no one has the detailed description of the
contents of the business plan. So, how can I
get the detailed list of the contents of a
business plan.
3. How to find which VC would be my true
business partner and on which parameters I
should choose them. Can you provide me some
references of VCs interested in investing
initially 1-2 crore in a business in IT
field.
4. Since I am not from a business family and
havn't done MBA, Would it be better to
enter in business field right now or to
first do MBA and then get some experience in
any company and then start my own company. I
don't want to wait for 5-6 years because I
have threat in my mind that if someone would
start that kind of business before me, then
I will loose the competitive edge i would
get otherwise.
science few days ago and have a very great
idea of a business and I'm very optimistic
in terms of the success of that business
very rapidly.
But the problem is the capital required for
that and I want a VC to fund this project
and in this regard, i have some questions
following below:
1. How can i trust a VC that after seeing my
business plan, he won't invest in that
project on his own and reject my proposal
because for him, I have nothing but a great
idea and great enthusiam to be successful in
that.
2. I have seen many articles saying about
the contents of the good business plan but
no one has the detailed description of the
contents of the business plan. So, how can I
get the detailed list of the contents of a
business plan.
3. How to find which VC would be my true
business partner and on which parameters I
should choose them. Can you provide me some
references of VCs interested in investing
initially 1-2 crore in a business in IT
field.
4. Since I am not from a business family and
havn't done MBA, Would it be better to
enter in business field right now or to
first do MBA and then get some experience in
any company and then start my own company. I
don't want to wait for 5-6 years because I
have threat in my mind that if someone would
start that kind of business before me, then
I will loose the competitive edge i would
get otherwise.
Posted by:Sameer Goel - 25 Jun, 2009
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