Mitjal,

A story. Greg Gianforte, the CEO of Rightnow Technologies, which had the best performing hi-tech IPO of 2004, started his firm this way. In the mid-90s, with the advent of the Web, he spent some time on the Web searching for a new product idea. After looking around, he discovered there was a need for a web-based customer support function, one where customers can get their own answers instead of calling an 800# and speaking to someone.

To define his product and determine if there was a real interest in his product, web-based customer self-support, he developed a list of the feature/functions he thought he needed for the product. He then proceeded to call his potential customers, call-center managers. And he told them he had a product which would be out in 90 days and he read told them the feature/functions he had listed. When they said no, he would ask why. And when they told him because of such-and-such feature, he would add it to his list. He called a couple of hundred call center managers.

When he finished from what he called "market research through selling," he had a good product definition and since he was a developer he did create a product within 90 days.

Greg is unusual in that he doesn't mind cold-calling at all, when most of us get in a cold-sweat at the thought. And he is unusual in that he is a technologist who is also great at sales. But regardless, his approach is the right one. Find some problem that is underserved in the market today and then test it with potential customers.

Brian

Brian Turchin CEO/Founder Cape Horn Strategies, Inc. Helping CEOs Increase The Value Of Their Businesses [url]www.capehornstrategies.com[/url]

Mitjal,

Here are several options. There are probably others.
- Have anyone you talk to sign a Non-Disclosoure Agreement.
- Build a prototype of your software product and then ask those you show it to sign a Non-Disclosure Agreement. This will limit who you show your product to--some won't want to bother getting a NDA signed--but it provides some level of protection.
- You have some network of business associates, whom you trust. Take them through the idea and get their reaction.
- In speaking to potential customers, limit the number initially to 5 or 10, so you limit your risk.
- Put a business plan together and see if you can interest early stage investors in your product idea.

Brian

Brian Turchin CEO/Founder Cape Horn Strategies, Inc. Helping CEOs Increase The Value Of Their Businesses [url]www.capehornstrategies.com[/url]

I come from the school of "measure three times and cut once".

Determining not only whether there is a market need, but essentially how you will address that need is the key part IMO. Spend the time researching and figuring things inside and out.

Some people are sometimes in the fortunate position of "being in the loop" such that they see market trends, new technologies and can get a good idea if they fly or not (I think a lot of VC players are in that position). Most of us are not, so the grunt work of market research will take longer but is very necessary.

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Robert Dubicki

What you want to do is get to know people in those companies really well. That's how we build our products. We build it to specs of a subset of our market and they help us solve their problems. Then, we know that it is built around their business process and by using multiple companies we are sure that it is flexible for the marketplace.

You will want to learn how they do business, what details are important to them to track, what the software MUST do, what it would be nice to have it do and what is shouldn't do. For example, if they already use an accounting solution in the marketplace, then it might not be feasible to add the accounting side to your product, but an interface to their accounting system would be nice, etc. You also use them to learn what the market will bear for pricing.

Then, as you build your solution, you continue to work with them and ask for feedback. Obviously, they get a drastic discount on your first release and they become your first customers and they are compensated for helping you. They also become your biggest referral sources and promoters.

Meeting a vertical niche is a great plan and it is a lot easier to build a successful and viable solution using this strategy.

I don't know if you're like me or not, but I pick my ideas up as I go about my day. I'll be engaging in some type of interaction and it will be obvious to me that there is a product or method that would work better than the way it is being done. It's where my six successful ideas have originated from and I have several more, sitting in my head ;). I'm really excited for your venture and to hear the details as you progress.

Lisa

There was a paper a few months ago in a strategy magazine, not the typical ones you see at B&N or Borders. The article explained Christenson's results in a different way, but was not written by him.

The article discussed the difference between customer intimacy and customer heterogenity. The former were good at continuous innovation, the latter discontinuous innovation.

The article points to a way to resolve your market research problem and that is to contact many diverse businesses. While you are doing this, you need to avoid accidental segmentation caused by self selecting offers. The more random the companies seem the better. The point here is to increase your customer heterogenity.

It is much easier to talk with an existing customer base. But, if you do, you are looking at continuous innovation and lower returns.

David Locke

Dave,

I'm confused.

You say "Don't do any market research" (which I totally disagree with... unless you're talking about something else), and then you say "Who best to define this than the customers themselves?" Um... isn't that the goal of market research?

Cheers!

Mark

The typical means of doing market research is picking an existing category and trying to figure out how much of it you can get.

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Robert Dubicki

Most version 1.0 software gets written with not a single customer in sight. No, it is a productized technology that is faster, better, ..., comparative, comparative, comparative. And, that is what gets sold. Later, they hire a product manager and listen to the customer.

That said, a disruptive technology doesn't have customer. A disruptive technology can still have contributors, the more diverse the better. They may become customers later. But, given their diverse nature, you probably will sell only a small group of them, because you are going to want to focus.

It seems like the sales person has to change with each technology adoption lifecycle phase.

David Locke

We started our company litte more than one year ago with a product idea in mind and we went through the same set of questions you have posted. We did the thing that makes the most commonsense to us, i.e. ask the people whom we think are potential customers / prospects. But, in implementing this idea we took a slightly different approach - decided to do a Primary market research.

People think it is difficult, time consuming and costly. I beg to differ it is not. It is hard to get an external agency who can understand your idea and do this successfully for you. You have to be sitting in front of your subject to make sense out of the research. We prepared a questionnaire and kept in our mind, instead of paper. Senior people don't like to fill out a form. We setup a appointment with our likely prospects and told them and we are doing research (and not trying to sell anything) and we would need their input. We put the questions across like a conversation and we audio recorded where were possible.

During the interview we (I went on these calls personally) worked hard to resist our anxiety to sell. Most CxOs / VPs in large global companies gave us appointments. This is was surprising, as we thought they are typically inaccessible. While it is not very easy, it is not difficult at all. Myth broken. We meet around 30 people in total. This gave us enough input for us to see the needs from the customer angle.

Also this gave a good list of prospects that we could use 6 months later once our product is ready. In fact, when went to one of old prospect who participated in the research, he recognized us and it made things little easier for us to move to the next level. Hope this helps.

Suresh Sambandam - OrangeScape W: www.orangescape.com

Suresh,

Excellent post. The process you laid out is great for gathering customers' insights. Well done! If other companies followed this, they would be far better off!


Regards,

Mark

PS: The only comment I would make is - there are people out there that can also perform this type of research AND understand your product. To think otherwsie is an assumption. Also, statistical analysis of the open-ended responses could provide further insights. (There are ways to do this, which can yield some pretty incredible results. Do some web search on the term "affinity diagram.")

On the other hand, during the early stages of your idea how else you could spend your time in a best way instead of talking to potential prospects to understand their view point. Also there are lot of things you stand to gain like developing a face-to-face relationship, understanding their body language, etc. The advantages of doing it yourself far out weigh hiring someone externally, IMHO.

Suresh Sambandam w:www.orangescape.com

Hello everyone..

Am working in a small start up software company as a business analyst. i have to improve my business and i have to develop unique software or website or blog. so that people can easily recognize my company. but am not getting anything in my mind. so anyone of you please help which is the better thing to develope...?