Heads up for new entrepreneurs – 3 perspectives of Technology Value vs Market Pain
Larry Cole, Cybersecurity Consultant at CyberSecExec, shares his knowledge in solving difficult strategic and tactical challenges for companies in the cybersecurity field.
Often, young tech firms suffer from an over abundance of lovin for their widgets and not enough focus on the Who Cares aspects of their business plan. Yet, its the Who Cares folks that will ultimately determine success or failure of your company. It’s natural to be proud of a product and want to talk about all the wonderful things it can do, but it is essential to spend time understanding and elaborate on the market problem your product is solving.
Since its early in 2017, I thought I would share from three different perspectives the value propositions of new technologies vs market pain. This is about founder allocation of time.
1) Investors – These folks can be tough and the really sharp ones think nothing of hurting your feelings by spending little time discussing your baby. Investors love to know how they get their money back…. plus, a whole bunch more for taking the early investment risk. Investors want to understand market pain right from the get go. Followed closely by size of market, to measure the blue-sky opportunity. Then equally important, the quality of team that is going to execute on the business plan, and finally; why is your tech different, how does it solve the problem, what is your IP protection plan etc. Not saying all investors are this way, the order of importance may shift from one to the next but to be clear, it is all about the problem you are solving ultimately.
*The take away here, if you want to impress investors, learn to articulate in great detail how your innovation is solving a real and substantial market pain. I call it the 75/25 rule……75% of your time spent on market pain / opportunity size, 25% on how your innovation is the solution to the pain and what is the revenue model to capitalize on it.
2) Partners/OEM’s/Strategic Relationships – The majority of new innovations I see coming into the cyber security markets are in fact niche products. They fill a hole and solve specific problems but do not stand alone as cyber security platform solutions. Therefore it makes sense to develop strong industry relationships to partner your innovation with. In these situations, more often than not you start the conversation at the C or high VP level. This is typically where decisions are made to choose market product solution partners. The risk for these potential partners is understanding the value of your innovation, will it meet customer needs and lastly, how can the partner make money. With limited time they want to know why the two of you are talking, what’s in it for them (read $) and will their customer base “Care”?
*The take away here, if you want to make an impact spend time before the first call understanding the full market value proposition of the company you are approaching. I use a 25/50/25 rule in these situations. 25% of my time is spent on why the two companies have a potential conversation for working together, where is the fit between customers and technologies. The next 50% of the time is spent articulating the mutual market pain our relationship can solve and the revenue potential. This is all high-level conjecture but it goes back to the cycles required to make a decision. Get to the point about why “they” as your partner should care. Lastly, spend 25% of the time explaining why your partner’s customers will care, what problem are you solving for their customer and the cost of solution.
3) Customer – When I deal direct with customers its almost a given I will lead with my understanding of the market they are in. I try and get to the heart of the matter quickly. If customers can understand in simple ways, the tech fit and the way they can implement, it will almost always lead to a technical conversation. Then you have an opportunity to show off. Last important point for the customer to know, are you displacing a current solution he is using? This has potential to be a revenue neutral or indeed a savings so know that ahead of time as well.
*My take away – Once again I did not lead with all the wonderful things my technology can do, but rather, what was the market pain, understanding their company and how they fit into a sector. For clients I have a 75/25 rule. I spend 75% of my time discussing their company, the market sector they are in and how a fit between our firms will be solve a problem. If this has been successful during a call then its natural to get into the nitty gritty of your new technology with the remaining 25% of time.
*The last take away, if you are in stealth or a new tech companies looking at the cyber security market place to do your business, do yourself a favor. Have a devils advocate day to test your market understanding. Get in a room with people who really get the market pain of a sector but don’t really know what your tech is all about. Test your ability to articulate the pain solution. Really go after the who cares and why they should care. Do this enough times and eventually the 50/50 rule starts to take effect. You are able to naturally flip between the exciting new innovation you have invented and the market pain it solves.