More than 3000 product companies generating revenue of $2 Billion – that may sound miniscule compared to $100 Billion IT services industry. It is pertinent to look at how the eco-system needs to be developed to create $100 Billion Software product industry from India over the next decade. Ambitious ? Yes, but not impossible. There are few fundamental building blocks which needs to be laid to make this as a reality.
Over the years as an entrepreneur and as a mentor, I have interacted with a number of product startups on how they view their startup and more often than not, conversation revolves around one of these questions especially when the startup is in their early/idea stages. I am beginning to sense few recurring themes during my interactions with product startups ;
- Problem definition
- Business Model
- Competitive landscape
- Product positioning
Problem definition: What problem we are trying to solve?
As a startup, in my mind entrepreneurs tend to focus too much on solving the problem versus spending adequate time and effort in defining the problem they are trying to solve.
In most cases, for a services company, the customers discover the problem and provide it to a services company. Half the battle is won ; the remaining challenge is to find a best-fit solution.
But the product company has to identify a problem that is large enough to solve with their product while at the same time looking for a space which is solveable as a startup…
As product companies we make a few common mistakes in this aspect –
- We think there is a problem and look around for confirmation ; differing opinions are quickly discarded – a classic confirmation bias problem
- We spend a very small portion of the time defining the problem and eager to jump to the solution ;
It is key to pullback and spend the effort in defining the problem clearly. It is all the more difficult if it is a new / different area than the entrepreneur’s core expertise. It is essential to observe the domain landscape, network extensively and validate the problem with practitioners before trying to solve the problem. While it is said that newcomers have an innate ability to look at an existing industry problem very differently, but, it is quite critical to understand what is going on before relooking at the problem with some fresh set of eyes and ears.
Business model : What business we are in?
Business model is the guiding light , will always be in the back of our mind. Granted it gets ignored for certain short term gains at times. As product startups/entrepreneurs, we get caught between the million dollar question : short term survival mode and long term vision.
I am guilty of this dilemma in my startup as well. We end up choosing a path “for now” over what we will “eventually” do. As we all know, the “eventually” never happens! An example could be B2B vs going Direct to the consumer or an e-commerce company finding themselves in an identity crisis : Am I in a consumer experience business or a in a logistics business?.
If this cannot be explained in simple English with clarity, it is better to go back to basics and start refining the business model;
Keep asking the questions; Mentors and other startups play a very crucial role in unraveling and validating the business model. As entrepreneurs we either take it for granted or don’t see it all.
Competitive landscape: Who else is working on this problem already?
Ths is one of my pet peeves – Entrepreneurs tend to have a tunnel vision and do not look around for existing players in their own problem domain. Time and again, I find the entrepreneurs with no knowledge of other startups or product companies who may be doing exactly the same thing or something complimentary in their respective areas be it in India or outside. Going back to my first comment on problem definition, they would either have a cognitive dissonance or try to portray it as we do this as well as that but that company is not focusing on what we do.
While we as entrepreneurs need to be obsessive and passionate about what we do, we also have to be equally paranoid about what else is happening in our own domain. There is nothing called “Blue ocean” in our times I guess! Someone in the team must be thinking 24×7 about what else is happening in their area and at times it is perfectly normal to be cynical I guess! J
Production positioning: How does our product fit in the marketplace?
As startups, we focus on the here-and-now when building our products, we miss out on how we can be part of an eco-system of connected products / apps.
It means intense research, trying out different apps, looking at product features of others more closely etc. It is worth the effort to look at the landscape and eco-system , understand the product fitment holistically.
It is better to ask (or get asked) some real tough questions around where do we add value to the eco-system, how does our product fit in the existing scheme of things, why would customers pay to buy our product and what is one thing which makes them use our product etc.. during the initial stages of the product development stage.
There is a huge opportunity to look at product positioning and marketing (similar to how Lean Startup approach evangelizes) along with the product development and engineering.
Revenue model and product marketing are two areas I have still not touched upon in this article. Hope to cover it sometime later!