subject: Startup Marketing Roadmap
posted: Thu, 21 Sep 2006 12:28:06 +0100


[for more about the Problem and the Solution try
http://cyberdelix.net/business/entrepreneurship.htm - Stu]

http://www.lightreading.com/document.asp?doc_id=76374

Startup Marketing Roadmap

JUNE 27, 2005

At the risk of costing myself business, I have decided to disclose my
roadmap for navigating an emerging product market from a marketing
standpoint. When considering any such move, we need to ask a lot of
questions. After all, since 80 to 90 percent of startups fail, we
should all need a lot of convincing that a new company or product is
a good thing.

So, letīs go through the steps of evaluating a company announcing a
new product for an emerging market.

Define the problem first

Before we go anywhere, we want a management team in place, of course.
The management team should be experienced - that means theyīve taken
a product through its entire life cycle. They need to know about
every stage from conception to manufacturing.

Once a high-quality management team is in place, the startup company
must clearly define the market and the product itīs going after. What
I usually see is 10 slides about the "Ethernet" market or the
"Optical Access" market, including the mandatory billion-dollar
market projection from research firms (see RHK: Rest in Pieces). What
I am looking for is the specific market for the specific product. Who
are the specific customer targets? What problem does the product fix?
Is it a problem that is keeping customers awake at night, or is it an
annoyance that they can work around? What products will this new
product replace? Is there budget that exists to buy this product
today, or does the customer need to find new money to buy it? What is
the customerīs motivation for spending the extra effort and money
required to buy the product from a startup instead of dealing with
its current vendors?

Ciena Corp.īs (Nasdaq: CIEN - message board) market for its first
product was a textbook example. In the 1980s and early 1990s,
companies like Sprint Wireless (NYSE: PCS - message board) and
WorldCom Inc. had deployed enough fiber in their networks to carry
all the anticipated voice traffic for decades to come. Then, the
Internet hit. These companies had installed fiber and Sonet systems
optimized for voice, and they were poorly positioned for the Internet
data boom. There was no workaround to pump more data through their
existing fiber systems. New fiber would take too long to deploy.
These customers were seeking alternatives for an intolerable problem,
the perfect preconditions for a startup to sell a new product.

Ciena saw the opportunity. Its inhouse fiber Bragg grating
technology, which allowed tighter channel spacing in DWDM systems,
was the key to its 18+ month headstart on 16-channel systems that the
customers had to have. On the operations side, Cienaīs systems
provided transponders, which allowed its customers to continue using
their existing Sonet systems on top of the DWDM systems. The product
couldnīt be easily copied, solved the customerīs critical problem,
and did so in a way that caused few operational objections.

Integration, schmintegration

The Ciena example shows how a clearly defined and original solution
to a problem can present an opportunity for a startup. Itīs always
more interesting to hear how a startup can solve a real-world
problem, rather than how itīs the first to integrate A, B, and C into
a single product (yes, I have been guilty of that one). Most of the
time the company isnīt really the first to do that, and even if it is
- so what? Integration in and of itself is not always positive,
especially if it is taken too far.

There are some other important questions to ask about a startupīs
potential:

What is the companyīs competitive advantage in terms of intellectual
property?
How does that advantage solve the customerīs specific problem in an
irresistable way?
Why canīt the product be copied in 12 months by a larger vendor?
How has the company addressed customer operational issues with the
introduction of new products?

In looking at startups and their products, the most common problem I
see is that they are not focused. Itīs hard enough for a large
company, let alone a startup, to get a few innovations integrated
into a single product right. It is extremely difficult to integrate
several products into one and get it right.

At one of my companies, we set out to integrate metro DWDM and
packet/cell switching into a single platform. The customerīs
executives and lab guys loved the product. It performed as it was
designed. The problem was that our DWDM system did not have the same
performance as that of a standalone product. In addition, our packet
and cell switching did not have all the bells and whistles of the
mature product it was intended to replace. This gave the operational
groups too many reasons to say no, and there was no urgency to
replace the existing way of doing business.

Another issue: There are usually two different groups within the
organization - transport and data. In this case, the two technologies
were purchased using different budgets. One group managed its systems
with TL-1, the other with SNMP. Even worse, the two groups didnīt
like each other. The guys in the strategy groups and labs loved the
product. But the operational groups that actually owned the budgets
saw the integration as a negative.

So why are there so many "God box" products? Usually it is because
the entire product value consists of putting together the latest
combination of off-the-shelf chips. The products are an exercise in
execution, not innovation. Execution can be easily copied. This does
not mean all forms of integration are bad. I have to be convinced,
however, that the integration is achievable, considered necessary by
the customer, and fits into the customerīs buying structure. Whatīs
more, the product needs to have more value than simply the
integration. With a few notable exceptions, the more focus and
innovation I see, the more I like the product.

Landing the customers

Okay, letīs say we have found the right combination on paper. The
company has a solid, experienced management team, along with a well
defined market and product. Now itīs time for customers - and time to
announce them.

The key, of course, is what the target customers think of the
product. If it is so great, they should be screaming about it. If the
customers havenīt seen the product yet, why is the company announcing
it? A product that hasnīt entered the first customer lab is six
months to a year away from being finished.

I know that customer references are tough. Customers donīt always
want to talk. Sales people donīt want to tell their competitors who
their customers are, even when the product has completed customer
certification and the company thinks it may have a 12- to 18-month
lead. Getting marketing references takes work and creativity.

At one company I was involved with, our customerīs internal approval
process took so long that we were uncertain when we could ever
announce, so we got the customer to talk to several credible analysts
under NDA. The analysts could then confirm to the press that
significant customers were actually going to buy the product, and for
what reason. Without external validation, all a company has done is
told a good story and, for all we know, bent some sheet metal for a
display at a tradeshow

Finally, smart marketing people know that the same things to look for
in a credible product launch also make the story credible and
interesting for the press, analysts, and customers. Editors and
analysts see dozens of announcements per week. Why should they or the
public be interested in this one? Why will this company be one of the
10 percent of successes instead of the 90 percent of failures? If all
of the requirements discussed above have been taken care of, the
story tells itself. The company has already made itself stand out
from the masses of me-too product launches that happen every week.

- Doug Green is founder and principal of the Bradam Group LLC, a
telecommunications consultancy located in Raleigh, N.C. He previously
spent 13 years at IBM, primarily in PBX and LAN R&D. He can be
reached at [email protected]

---
* Origin: [bux] entrepreneurship; wealth creation; capitalism


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