Defining Benefits They'll Pay For
At this point you may be tempted to skim through or entirely skip this section because you have "it" all figured out - DON'T. "You don't know, what you don't know." That's what a very successful founder used to say in business meetings at his $500 million computer reseller company. Tony was an accountant by background and he struck on leasing main frame computers prior to the advent of servers. It was a great business with high margins. He had to learn that business. He was certainly not technical and in the process of learning he questioned all his business assumptions - all the time. As a young manager I used to think his often used statement was nonsensical, but I've come to learn over the years that it's got a "Yogi Berra" kind of brilliance.
Often, we are so comfortable with our limited universe of knowledge that we make the great mistake of not really understanding the depth out there of what we don't know. So, "we don't know, what we don't know". How do we overcome this? Quite simply, we need to set aside our egos and ask many, many people - many and varying questions about the market we want to enter, about how to design a product, about how to sell and about how to make it. We need people and lots of them.
NOTHING can harm a startup effort more than false assumptions in our business and product planning. Absolutely, nothing. It wastes time. It wastes money. Worst still, the day of realization on those wrong assumptions when you're very far down the road of your endeavor will threaten to destroy your morale. That is an awful lot of risk and shame on us for allowing ourselves to get in a situation like that.
There are many things that we cannot control. We cannot control the price of our raw materials. We cannot control the acceptance of our market to our products. We cannot control the constraints of making tangible products. But, we can control how thorough and reasonable our affirmation of our market opportunity, our product feasibility and our business modeling.
In our due diligence we may even (and really accept this as a possibility) that our product IS NOT VIABLE in the marketplace. And although what a terrible thing it would be to realize that financially your new product doesn't have a shot - WHAT A GREAT THING if we discover this early on, in the beginning of our business and product planning - before you mortgaged your house.
I was working with a tangible entrepreneur that suffered from false assumptions. He specializes in competitive horse racing. He bred, cared for and trained horses. In his travels to Europe he'd come across a particular horse poop scooper that he'd not found in the US. He was very excited. He KNEW if he manufactured a similar (and slightly improved) product and sold it in the US he'd make a fortune. So he had general sketches translated into general R&D costs and ball park production costs. He'd have to start manufacturing in smaller volumes so the retail price had to be in the mid-$20 range. He had attorneys check for conflicting patents. There was some real effort going into figuring out the product requirements.
"Are you sure this product doesn't exist in the US?" That nagging question had to be answered. It just didn't make any sense for the product to only be sold in Europe and not the US. One detailed day of searching the Internet found the product, in the US, sold for less money than projected retail price (and included free shipping). It just wasn't sold through the distributors that supported his segment of the horse industry. That was it. Project over.
One false assumption, "the product wasn't available in the US", led to a waste of time and money that could have been easily avoided. The good news, it never moved to full R&D. Imagine if it had.
So many product efforts start with perceptual bias. I have a problem. Someone else agrees that is a problem. "Hey, someone should do something about that." This is problem - solution inventing. This highly subjective approach is tremendously flawed yet highly prevalent. The market may not see something as a problem and worse yet, they may realize it's a problem but they are not willing to pay for a solution.
Thomas Edison learned this lesson through his first invention. It was an automated voting machine. Politicians would take days in the paper process to vote on a bill. He created a machine that would cut down significantly on the time for this process. With all the investment to create the product he confidently approached the market - politicians. No sale. The politicians used the long time period to lobby to get the vote their way. Ends up it wasn't a problem for the market. Edison vowed never to invent another product without a buying market.
Luckily he learned this lesson in his early twenties using someone else's money to do the R&D.
You Must Have a High
Degree of Skepticism
Entrepreneurial inventors need to have a high degree of skepticism. If Edison, one of the most famous inventors in the world, defined market need skepticism as one of the keys to market success for a brining a new product to market then it is applicable to everyone.
Has It Been Invented Already? Are you sure your product isn't out there already? And if you can't find it in your country is it out there somewhere in the world? A casual Google search isn't good enough. You need to find the distributors that sell similar and competitive alternatives and ask at least three different companies if they have or have heard of your product.
This means you need to actually identify companies in that market, find their general main switchboard number and call in to find the right people to speak with. It's always a good start to call their sales office. The sales people are paid to talk to people. They know the products they sell and they know the products that they compete against. Secondarily, you can speak to people in the marketing group.
Hire a Teenager. Another good tip is to find a bright young Internet savvy someone (child, neighbor, etc.) and offer them $200 if they can find your product idea on the Internet. If it's out there they will find it and it will be worth every penny to you to potentially save you from a tremendous waste of time and money you might otherwise go through.
Industry Trade Groups. Industry trade groups can be an excellent source of information for markets. There are literally over 100,000 professional/trade groups in the US. They represent doctors, lawyers, farmers, manufacturers and consumer groups of every kind shape and form. Almost all of them have offices in D.C. (for lobbying) and then secondary offices in other cities. Your local public library will most likely have a reference librarian that can help you find the right trade/professional organization to speak with.
Visit the website for that group and look for any industry information and results of industry surveys and research. Sometimes the information is only free to group members. Don't be afraid to call that group and explain that you're an entrepreneur trying to help their industry and talk to whomever manages that research and information. They will usually give you 20 minutes of time. Be courteous of their time and ask if you may follow up some other time after you've done more research. Often they can give you an overview of the market, identify key companies for you to investigate and even give you a couple contact people. This kind of information is priceless since they are knowledge experts and can boil down in a few minutes what would take a very long time to figure out on your own.
Industry Trade Shows. To go along with industry groups goes the tradeshows for those industries. If you have a product that you want to sell into a particular industry you better go to at least one national tradeshow. It doesn't matter if it costs airfare, hotel stay and entry fees. You can get so much research done at a tradeshow in a couple days that would otherwise take weeks or months. It is a tremendously valuable research tool. It is also an investment so you need to be organized to get the most return out of your investment.
Sell Some Vapor. Edison the famous inventor actually was a very poor business man. He suffered from lack of focus and a tendency to sell vapor. Often he'd claim to the press that he had already invented a full solution, i.e. the phonograph, electric lighting, etc. but just needed to perfect it. The reality is often he claimed he had an invention before he'd even started inventing. There are many modern examples of selling "vaporware", i.e. software that doesn't exist yet in the modern age.
As distasteful as some may find making claims to something that isn't true, at least not true yet, there was certainly some marketing brilliance to pull from Edison and his many and myriad sales and marketing partners.
I was working as a VP of Product Management at a San Francisco dot com in the late 90s. It was a crazy sales driven company and everyone liked to have something new to sell. Our market was multi-unit small retail owners. We offered technology products to help owners track and manage many stores. In those days cloud wasn't even invented yet.
We had a restaurant point of sale system (among many other things) and the sales guys kept saying the price was too high because of the hardware costs. The tech department said no problem we'll drop the price by offering Internet based functions. Now almost 2 decades ago that was a tall technical challenge. We'd have to spend a lot of money in R&D to "lower the price" to the customers. The only way that works is if a lower price explodes demand.
I told everyone to "stop the presses" and let my team test the market.
My product management team pulled from sales and the tech teams what they were thinking and we used a graphic designer to create sales sheets and marketing materials as if that product existed. We defined what kind of restaurants were going to buy. We put together a call list and we spent a week pounding the phones. We talked to dozens of restaurant owners in that space.
We tried to get a sales appointments. We talked features, robust functions and a price at half what our normal POS would cost. The results? Everyone we talked to thought it sounded interesting but they felt they didn't need a computerized system. They had no desire to have a point of sale system regardless of price, period. That response was overwhelming.
Once those results were revealed, sales and tech immediately walked away. I figure we saved $450,000 in wasted R&D and a couple years total of wasted worker hours (tech, product dev, marketing and sales time). That savings cost 4 people, 2 weeks of time and $200 in print outs. Now that is some great bang for the buck.
Describe Your Product In Detail Like it Exists. You need to assume your buyers and your markets will hate your product. They won't want to touch it. One of the best ways to test this theory is to try to sell a product you've not invented. That's right. You should write up your whole product in very detailed terms. What it look like. How to use it, very specifically. What its options are. How much it costs individually. How much it costs in volumes. How long it lasts. Why it's so much better than competing or alternative products. You should write volumes about this.
This is a useful tool for yourself, for those that will work with you in the future and for gathering feedback. You then need to get that document in front of as many people as possible. The worst case scenario is someone says, "yeah, I want to buy some" and you don't have it yet.
Using Craigslist to Test the Waters. I'm always amazed at the things that sell on Craigslist. It seems there's a buyer for just about anything. The fact that almost anything can be posted at no charge is icing on the cake. So why not list "your product". Yeah, the one you don't have and haven't invented. Yes this strategy is part of that "sell vapor" strategy above but it gives you a venue and it's no cost. Try variations on your listing. Try different cities. If you get response you are really validating. When people respond try to get a little detail about them to get some demographic feedback.
We need a big pause at this point because many people will say "someone will steal it". My typical answer is if your idea was that huge and that easy to bring to market it probably would be in the market already. So now is the big decision. Wait and expose nothing to people why you spend time and money on filing patents or get real world feedback.
Before you decide, do yourself a favor and do a patent search of your own. Some patent attorneys will waive you off this and say you should not be aware of any prior patents because if you're aware... and if you violate that patent... and the holder sues you... and if the patent holder follows through the entire suit process... and if they win... damages will automatically be tripled.
Hog wash. It is true that some countries outside the US require you to file a patent either prior or within a set deadline once you sell a product into a market BUT most inventors in the US will not file international patents or they will only file in a few major markets like the EU (European Union). I always encourage people to hunt US patent databases. The easiest to use is a special search tool on Google.
Has It Been Patented Already?
In the US someone doesn't need to have created a product in order to file and be issued a patent.
Go to Google and search their patents engine. Find out what claims are out there. Find out if there are claims on your idea or initial product. If you still want to pursue your product on finding prior claims (that have not expired) then you'll work around the claims. Go to www.google.com and select the apps icon on the top right of the page.
Select "more apps" and then "even more apps". Scroll down to the section below and select Patent Search.
TIP: You want to read closely what the claims at the end of the patent are. Everything before it, including drawings are merely support for the claims. The claims granted are what is protected under law.
A Basic Protection Step. Want to do some basic protections? Then take your big elaborate write up document and any sketches for your product, print them out and stuff them into a big envelope. Go to the post office and pay to have a verified delivery of that envelope to your home address. When that envelope arrives DON'T OPEN IT but put it in a safe place. This will be proof of your ideas prior to anyone else filing any patent claims prior to you. It's not a patent but it's good for proving your developed ideas if there is a conflict and it verifies the date. Dates are very important in patent law.
Non-Disclosure Agreements (NDA). This is a legal contract where one or multiple people/companies agree to keep everything they learn about the other secret. People have different views on if this is necessary or not. I have read many different agreements from a basic "you promise to keep it secret" to "anything you say to me is my property". Some people don't care and will sign them and others will simple refuse.
Why would someone refuse? Often it's because they are in the position of authority, i.e. money, expertise, etc. and they feel they bring much more to the table than you do. Alternatively, these documents can be burdensome legally and they may be deemed not worth the time or expense to bother with.
I tend to advise people to be open to a point. Regardless of signing a document, if you don't know someone well or you're not sure if you can trust them then don't hand over the keys to what you believe is your "secret sauce". There are also some additional negatives to NDAs. If you've gotten me to sign an NDA then technically my entire network of people and resources is now closed to me using it on your behalf. Technically I can't say anything - not even "I met someone with a great idea for a XXX". Do you know how frustrating it is to be sitting down with a great network contact for someone's product and you can't say anything to test the waters of interest. It's happened many times.
Internet Forums. The Internet is a great way to get specific feedback on your product concepts. Find appropriate blogs and forums and post information about your product. Just tell people you're a crazy inventor and you need to find people to confirm your crazy. Tell people you want them to beat you up and not just be pleasant. Invite them to be rude even. Why? Because too many people try to be encouraging and nice even if they don't believe what they're stating. YOU NEED HARD REALITY. Nothing scares me more than constant positive feedback with a new product or business. It makes me a bit paranoid. It makes me think I am talking to the wrong people, ignorant people and apathetic people. It makes me think I did a horrible job of describing what the product does and its benefits to people.
I love negative feedback especially at very early stages of researching a market. Why? Because it is the early stages that I "don't know what I don't know yet". That is to say I know so little I don't even know the depth of my own ignorance. It's at this stage I expect to be horrible in my descriptions of the product, the features, the benefits and the details. This is the point I'm least polished in my presentation and conversations so I expect to make lots and lots of mistakes. I want those tough people who jump all over my mistakes and make them plain as day to me.
Internet forums are great for this kind of feedback because people are largely anonymous. That anonymity can make people as frank as a child. A child will look straight at you and tell you your haircut is terrible. That's what we're looking for. If your ego can't handle this then you need to question your resolve to be a tangible entrepreneur.
Using Online Surveys. Surveys are a great way to get rapid feedback especially online. You can use Survey Monkey for free at (www.surveymonkey.com) with the paid version being cheap and giving you some more features. 1) You want to ask NEUTRAL questions. A neutral question is one that doesn't bias someone to an answer. If I want your opinion on a sweater I don't hold it up and say "isn't this a great sweater"? Are you really going to say "no"? 2) Don't ask more than 10 questions. 3) Try to give yes/no or multiple choice answers. 4) Collect basic demographics (i.e. boy/girl, age range, married, etc.) that are relevant to your product. 5) Get a good sample size (at least a couple hundred). 6) Ask someone to rewrite your survey so the questions are mixed up and test two surveys at once. If you get different answers then your survey is biased.
Sprinkle your survey through all your online efforts. You'll get results quickly if you are persistent and ask nicely.
If Looks Matter Use Pinterest. Some products live or die by their aesthetics. This is especially true for consumer goods and items in the clothing and electronics space. If it's visual and especially if it's for women then you must use Pinterest (www.pinterest.com) to test design interest. You can do this in multiple phases. You can put up competing products and get feedback on what people like and don't like. You can use it repeatedly in the R&D phase when you have drawings, photorealistic designs, prototypes and material/color selections. It something jumps in response, shares, etc. then you're getting real validation on design aesthetics.