Chapter 6: Vet the Marketplace -
Tomorrow Toolkit for Entrepreneurs
At the Philadelphia Tomorrow Tour stop. ( Jeff Fusco/AP Images for Comcast )
Vet the Marketplace By Stephen Babcock
Discover and assess how others are delivering similar value. Some will be competitors but others could be potential partners.

Spending hours in the proverbial basement may be the path to a new product. But to turn that product into a business, it’s best to go toward the daylight.

“Especially for people who are product builders by nature, it’s very easy for them to sit in a hole and build,” said Len Markidan. He’s a veteran of a pair of Silicon Valley tech companies and a digital consultant who became the Head of Marketing at help desk software firm Groove in November 2013. “It’s very difficult and a little bit scary to go out and talk to people, and to go out and put your ideas in front of people.”

But that’s what you need to do.

“The very best products are the ones that are pulled out of the market based on the needs of your audience,” Markidan said.

The results could be surprising. That was the case for when the money management software startup conducted research upon launch. According to a blog post by former early employee and tech startup veteran Noah Kagan, research results found that instead of using other software tools, most people were doing nothing to manage their money. Others were using one of the most widespread programs on the planet but in a way it wasn’t exactly intended: Microsoft Excel.

In that case, “The reality is that you have to convince them to use a tool to solve this problem at all,” Markidan said.

If a product does prove to meaningfully solve a problem, however, competition is perhaps inevitable. But that doesn’t need to lead to all out war. A big marketplace could have room for a niche.

“Navigating competition is more about understanding where you can make a difference, and so it might be a small difference, it might be a big difference—but really competition is about taking fresh eyes to a problem that’s probably existed for a long time,” said Christina York, CEO of ALTality. The Detroit-area startup builds augmented reality tools, and is focused on the patient experience for children. Although healthcare tech is hot, the company is leveraging unique new technologies to stand out.

The fact that other businesses are serving your customers could also be beneficial in the form of partnerships.

When Mike McGee and Neal Sales-Griffin began The Starter League in Chicago, they didn’t see anyone offering coding bootcamps. Others emerged, but they focused on beginners, and giving students a great experience. It was a light of Chicago’s tech scene.

Eventually, more bootcamps started springing up around the country. They approached one New York-based outfit called Fullstack Academy as a partner. Last spring, Fullstack ended up acquiring The Starter League.

“Look for opportunities where both businesses can benefit, whether that’s through expanding both of your markets, sharing technology or other resources that might help you grow, or just learning from each other,” Markidan said.

Building that relationship, however, comes back to relationships with people.

“If there’s a company that you want to partner with, don’t focus on the company. Figure out who the major decision-makers are that help could make your partnership happen, and build relationships with them by creating value for them,” Markidan said.

Your competition is most often old habits you need to break in the clients you want. To get there, you need to know what your unique differentiation is, says tech startup veteran Noah Kagan.

Your Checklist:

  • Do your homework: Take the time to figure out what business you’re in, as well as the other companies that have similar products. Who are your prospective clients and customers? What category or sector would someone else use to describe what you do? Who are the others in the space, and are they potential competitors? Greg Berry of Philly-based Municibid found some geographic regions had competitors, while others didn’t. Create a spreadsheet of various products and services currently serving your potential market and contrast prices and models as closely as you can.
  • Identify the needs: In addition to research, make an effort to find people who might want to use your product or need your process. Go to an event with related programming and find someone with a need. Or ask for an introduction from a friend to someone who might be a possible client. Listen closely to what they have to say, not only about your specific idea, but about whether it is meeting their needs. Ask what potential offerings people are currently using to solve similar problems. Understand your community’s needs and how you can help fill them differently than others.
  • Ask the right questions: When getting feedback, Markidan said to make sure not to ask leading questions. “The way that you phrase the question has a profound impact on the answer you’re going to get,” he said. That’s why it’s so important to ask questions of potential customers early in your process, before you feel you need to hear a certain kind of answer. York discovered that part of the process was identifying that customers hadn’t used technology to solve a problem was important.
  • Record feedback: Prepare a survey using a tool like SurveyMonkey or Ask questions about prospective functions and features. Ask questions that require specific numbers (Choose the price point range you would pay for this service; How many hours a week do you spend on this issue) and general feedback (List features you seek; What haven’t we asked that comes to mind about this issue?).
  • Incorporate the feedback in your product: Make sure your MVP is lean enough to have room for changes. What is the absolute smallest test you could make of the product or service you want to offer? Make it easy to test and get feedback on. Could you partner with another organization to offer a short-term trial, or create a high-touch version to later automate if interest is high?
  • Build relationships with other companies: There is room for more than one company in most marketplaces. Choose a narrow portion of the market to start, and work on building relationships with other companies in the same market.
  • Right Now: Create a three to five question survey and get at least 10 potential customers to respond.

The clearest point is you must know every corner of the marketplace you want to enter but to get there, you need to know what market you’re entering. And when you find competition or others in that marketplace, don’t let it unnecessarily dissuade you. This exercise is about educating yourself to provide additional value, not about keeping you from executing on your plan.

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