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The Entrepreneur’s Guide To Estimating Market Size For It’s Startup

Note: Before I begin, I would like to clarify the difference between market potential and revenue estimate. I have often seen entrepreneurs use the two terms interchangeably.

Market Potential

Market Potential is about estimating the size of the overall market opportunity. It is a sum total of the potential revenues of all players who are addressing that opportunity, if all the potential customers were to buy. I.e. If you were selling ‘affordable’ golf kits for first-time golfers, then you could estimate market potential as follows (all numbers are indicative for illustration and do not represent actual market) :

  • There are about 20 millon golfers across the top 10 golfing markets in the world. Additionally, about 100,000 new people take up golf every year across the top 10 golfing markets in the world.
  • About 25% of these find the cost of golf kits expensive. If you take this as the addressable market at USD 400 a kit for 5 million buyers, we are addressing a USD 2 bn market opportunity, even if you look at only those who find the price of current golf kits too high.
  • Additionally, the ‘high-quality at lower price’ value proposition is likely to attract regular and casual golfers too i.e. 20 million golfers. This opens up a USD 8 billion market among existing golfers. And that’s a market growing at 15% pa.
  • However, given that most people who want to play golf do not take it up because the current kits cost upwards of USD 1500, we believe that a USD 400 kit will explode the market and we would be able to encourage 10 times the number of people to start playing golf. I.e. by redefining the price-point, we can create an additional market potential worth over USD 500 mn.
  • i.e. with an ‘affordable and high-quality golf kit’, we will be playing into a market that’s roughly USD 8 – 10 billion in the top 10 golfing markets of the world.

Revenue Estimate

Revenue estimate is about how much of this market potential do you plan to target. Here’s how you could think about it:

  • We intend to launch this product in Japan, the world’s largest and fastest-growing golfing market. There are 3 million active golfers in Japan and over 50,000 new golfers are added every year.
  • We believe that with an affordable golf kit, we could double the size of the golf market in Japan.
  • In year one, we intend to attract 5000 customers, going to 20,000 customers in year 2 and selling to 100,000 new and existing golfers in year 3. These will be in the top 5 golfing markets in Japan. In year 4, we intend to take the concept to US and Europe, with a target to sell over 500,000 kits in year 4, across all markets we are present in.
  • Thus, our revenue estimate (at current prices) is USD 2 mn in year 1, USD 8 mn in year 2, USD 40 mn in year 3 and USD 200mn in year 4. (In comparison, the leading golf kits brand is doing USD 2 bn in revenues currently)

Estimating the size of the market, and then predicting how much revenue the startup can achieve and at what growth rate is indeed a tricky exercise. But going wrong on this could either kill your company, or if in a rare case you have underestimated your revenues, you may end up raising more capital than necessary and thus diluting more equity at an early stage of the venture.

It is therefore very, very critical that entrepreneurs focus on working and reworking on the market size and revenue potential based on sound assumptions and with minute detailing.

Many startups make the mistake of taking broad brush reports from large consulting or research firms, and estimate the size of their market on the basis of those reports. Often we hear entrepreneurs mention “According to Gartner, healthcare is a $80Bn industry with a 23% growth rate”. Now, while this could be broadly true, for an investor, and even for the startup, these figures have little relevance. Here’s why…

In most market segments, the investors would be broadly aware of the scale potential. At a startup stage, investors will most likely invite a startup for a meeting only after they have assessed that the concept does address a large market. Hence, stating the obvious, especially in segments that are very obviously large does not add any value. E.g. For a startup in the education sector, highlighting in minute details the number of schools, number of students and growth rate in India is wasting precious time in the first meeting with investors. Assume that investors who are meeting a startup in the education space know the potential of the opportunities in the domain.

Investors don’t get any comfort from market estimated from industry research data. They want entrepreneurs to build up their estimates based on their insights and conviction – on how their concept will alter the dynamics of the market they wish to operate in.

How then do you estimate the market potential? Simply by being specific about your segment and making some assumptions on the specific segments and the revenues per customer/consumer. E.g. If your concept is about premium home tuition, instead of saying education in India is a $18 Bn market, it will be prudent to state “With over 250,000 students in the top 10 cities in schools with fees above INR 10,000 a month, at INR 2500 per student, the market potential is roughly over INR.500 – INR.600Cr per annum. At an all-India level, the same translates to a market potential of well over INR.1000 Cr.”

Some Points To Consider When Estimating Market Potential

  • Clearly define what problem you are solving… and for whom – this will give you a good idea of the number of customers with that problem in the geographies that you plan to be available in.
  • Estimate the practical reach e.g. while there may be a 100,000 people in your target audience spread across 50 cities, you may want to take the top 5 or top 10 cities and see how many people you have within your target audience. This of course gives you the total market potential, if 100% of potential customers were to buy.
  • Now, apply some filters i.e. ability to pay, ability to reach via media, etc. E.g. while there may be 60,000 potential customers in the top 10 cities you identified, and you may be planning to use a combination of media, if the total reach of these media vehicles is 50%, the total potential of the market is really 30,000 customers.

You could also apply some price filters to test the elasticity of the demand in comparison to price. I.e. work up alternate scenarios to reflect the increase / decrease in demand in case the price were to be moved up or down; and then evaluate which scenario makes a better business case. [Note: For different situations you may have very different parameters for a good business case. In some cases, rapidly acquiring customers, even if margins are lower, would be a key criteria (often relevant in categories; it is important to achieve scale to be relevant – e.g. e-commerce – lock in potential customers on whom profitability can be increased later)].

Now, if the product is of a repeat purchase nature, you would need to make some assumptions on the number of times the customers would buy the product / service in a year. In doing this, it is critical to map the reality or in case of new product categories, to do some qualitative and/or qualitative research to validate your assumptions on the number of repeat purchases within a year.

All the above will need to be worked and reworked at different levels of assumptions often to arrive at what seems like a practical market estimation.

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If you want to do something, don’t over-analyze it! We do mostly Series A Funding! Helion Ventures #ThinkInvestor

ThinkInvestor is iSPIRT and ProductNation’s new initiative to serve as a catalyst between Venture Capital firms, Angels, Angel Networks and Entrepreneurs. It is to go beyond brochure ware and dig deeper into the whole life cycle of a typical investment; from introductions, funding, styles of on-going engagement, to exits. And in the process, capture their views on global and local trends, and the entrepreneurial ecosystem in India. This interview is done with inputs from Shashi Bhagnari.

think-investor-helionHelion Venture Partners is a $600 million venture fund focused on India with offices in Bangalore and Delhi. The company is an early to mid-stage investor in Indian startups in sectors such as Enterprise software, Internet, Mobile, Outsourcing, Retail, Education and Financial Services. In a conversation with iSPIRT, Helion’s Alok Goyal, Partner, talks about the company’s funding strategy, evaluating projects and making the right investments.

Tell us about the company’s background. What is its focus? What is your current fund? What is it looking at?

We formed the firm in 2006 with four founders that included Ashish Gupta, Sanjeev Aggarwal, Kanwaljit Singh and Rahul Chandra. Besides our team of analysts, our CFO doubles up as an operating partner for finance. We also have an HR advisor who works closely with our portfolio companies. We recently got someone in Product Management from Google to help portfolio companies. We are now a group of 15 people and have our offices in Gurgaon and Bangalore in India.

We focus our investments on early to mid-stage ventures, investing in technology-powered and consumer service businesses in sectors like Outsourcing, Internet, Mobile, Technology Products, Retail Services, Healthcare, Education and Financial Services. We have done about 60 investments so far.

In our current fund, we have raised about $250 million. The focus of this new fund will be divided between technology side and tech-enabled consumer investments. We will continue to look at Internet services like Makemytrip where we invested earlier, taxi services like TaxiForSure etc.

What’s your strategy on verticals? How do you characterize them?

Within e-commerce, we are bullish on Internet-only brands and marketplaces. For example, YepMe–a Web only brand focused on tier two and tier three markets. We have also invested in a venture called ShopClues which is an eCommerce marketplace.

Within consumer services, we have invested in consumer facing travel ventures like TaxiForSure. We have also made an investment in a company that makes planning travel experiences much easier. We have also funded a housing and real estate venture, Housing.com.

What stage of investment are you most interested in? Seed funding or later stage investments?

We are mostly the first or one of the first institutional investors in the company. Our sweet spot would be Series A or Series B funding. I would imagine 70 to 80 percent of our investments are in Series A. We invest between $10 to 20 million over the lifetime of an asset.

Any interesting investments you have made recently?

We had been looking at investments in the healthcare sector for a while now. We have recently invested in Denty’s, a chain of dental care units. This Hyderabad based company focuses on dentures, jaw replacement and other high end dental care treatments.  We have also invested in the area of enterprise mobility, in a company called Rapid Value that provides services in the area of mobilization of enterprise applications. Another recent investment is Linguanext, which has created a unique technology for language translation. It allows Independent Software Vendors (ISVs) and enterprises to translate any application from one language to another without any changes in the application itself.

How do entrepreneurs get in touch with you? Is there a defined process they need to follow?

Entrepreneurs are at the heart of the venture capital eco-system. It is as much or more of our job to find entrepreneurs than they reaching out to us. In fact, we use a lot of our bandwidth to get to reach out to entrepreneurs.

Entrepreneurs are most welcome to reach out to us directly. There are two ways entrepreneurs typically get in touch. First is through our personal network. Second way is through bankers. We also like to make ourselves visible in forums and events so that entrepreneurs can reach out to us and we can reach out to them.

We also have a strong outbound program through a team of analysts.

What is your due diligence process? Is it specific to all?

We view around 1500+ business plans each year. The process is similar for most. Usually the first meeting takes place with one of our analysts, unless it comes from personal contacts. Different analysts focus on different areas and they all gain a good idea after the first meeting, which is then followed up with another meeting with one of the partner(s), to understand the business better.

Due diligence for us is more Market Diligence. We also do primary research, secondary research and make reference checks. After we are through with the entire due diligence, we invite the entrepreneurs to present their business plan to the whole team.  If the partnership is positive, we issue a term sheet after which financial/legal due diligence cycle along with documentation is completed.

The entire end-to-end process is completed within a month and a half typically.

How do you interact with your entrepreneurs? Is there a process outlined for this?

Investment is not only about money. We have developed reasonably strong relationships with our entrepreneurs which begins when we start the process of due diligence. We have both formal and informal interactions on a periodic basis.

In the early stages, face-to-face meetings are held every quarter, in addition to monthly calls. But outside of that, we do not interfere in their work at an operational level. But entrepreneurs reach out to us whenever they need help. For instance, if they need clarity on product direction or to connect with other prospects, they contact us. Those interactions are in fact, quite regular. However, I personally find myself being in touch with them on a very regular basis.

Do you have any avenues where you meet your portfolio company CEOs informally during the year?

Yes, we are doing this once a year. We have also started to form groups now. For instance one group that focuses on product management can share tips with portfolio companies in that area.  We also reach out to our portfolio companies through webinars.

Tell us about your recent exits? What do you think of the climate for exits in India like?

We are just an eight years old entity, so there have not been too many exits. Our first was an IPO exit from MakeMyTrip when they went public. We also exited redBus when it was acquired by Naspers. Then we got out of Amba Research. We are hopeful that the market climate in the next few years will get a lot better for favorable exits.

What excites you about entrepreneurs these days, and what is it that you like to see in them?

In all my discussions there is a general belief that the quality of entrepreneurs has gone up significantly. We are also seeing a whole class of entrepreneurs moving back from the US. We are seeing a generation of entrepreneurs starting their second ventures now. Their scale and thinking is different, very bold.

What we’d like to see is stronger talent in Product Management. It is relatively more difficult in India compared to a place like the Bay Area. We are also not seeing as many deep technology assets. What we are seeing are more applications based and light IP based businesses from India. Over a period of time, I have no doubt that India will create more deeper technology companies as well.

What advice would you like to give young guys who want to start a new venture?

You should ask yourselves if you have the entrepreneur inside you or not. If you are over analyzing, you are probably not. An entrepreneur has to be “foolish” enough to purse the dream besides being passionate about it. If you want to do something, don’t over-analyze it. The important thing is the ability to take the plunge.

Entrepreneurship is not a solo sport; but a team sport. You need to find complementary capabilities in others. The bottom-line is that you should be able to pull together a team that has complimentary skills and the same passion to do it.

A startup is successful because it is focused. Defining that focus is important. Startups succeed because they choose a specific market segment or a specific problem or a specific customer set etc. and serve that market better than anyone else.

Lastly, it is important to be close to the market. You need to continuously listen, learn and act with agility. It is important to be able to iterate quickly. 

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Why More Indian Software Product Companies will Emerge

Any discussion about building products from India is lost in the hype and din about India as an IT services powerhouse. However, the mostly unnoticed surge in product start-ups marks the beginning of a new movement, with potential to re-invent the Indian software industry. Emergence of globally recognized Indian product companies will represent the final step in the software value chain. If India can become the hub of the world’s most successful IT services as well as product companies, it can truly lay claim to being a knowledge superpower.

Building products requires a mindset, capabilities and an environment, which is very different from delivering services. Achieving this final frontier won’t be easy and Indian entrepreneurs face major challenges. There are very few role models who have built successful product companies, which limits access to mentors, who can provide guidance. Access to market requirements is difficult, since major consumers of software products are in Western markets. IT spend- ing in India is growing but still limited and global vendors are preferred. Finally, early stage funding is a major problem, and getting engineers to work in start- ups is a big challenge.

An increasing number of motivated entrepreneurs are working to overcome these handicaps, just as founders of services companies did in the early 1990s. A convergence of factors is ensuring the emergence of successful Indian product companies:

  • A large pool of talented engineers and managers who have worked at global companies in India and US
  • The rapid growth of local market and increasing adoption of IT with India-specific requirements especially for consumer facing apps
  • Technology disruptions including the emergence of cloud computing, which make national boundaries irrelevant, and reduce cost of global sales
  • Flair for innovation and risk-taking amongst a generation that has grown up in post-liberalized India
  • Self-confidence that comes from an economy that is the second fastest growing in the world
  • Weakening US economy that is motivating an increasing number of experienced software professionals to return to India

Since services culture dominates Indian IT, the book will continue to high- light how software product companies differ from their services counterparts, and the specific challenges that they must overcome.

Reprinted from From Entrepreneurs to Leaders by permission of Tata McGraw-Hill Education Private Limited.

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7 Critical Things to Understand about Venture Capital for Product Start-ups

If I had a Rupee every time I heard the words “If only Venture Capitalists were more active in building the Indian Product Eco-system….”, I would be a rich man!

I am guessing that this is because of a lot of mis-conceptions about Venture Capital and how they play in the product space, in India as well as elsewhere. As a Software Product entrepreneur, you owe it to yourself to understand VC money in all its complexity to make wise decisions about whether it is even suitable for you, and if it is,  how to get it, and if you get it, what are you in for?

It is impossible to capture all of the complexity of Venture Capital in a single article but here are seven basics every software product company in India should be aware of:

  1. Understanding exactly what business Venture Capitalists are in – They are not in the technology advancement business, not in the entrepreneur eco-system business but in the money multiplying business! They have bosses too – people who have given them money to invest expecting at least 10 to 20 times back! Unlike a bank that loans money to low-risk, low-reward businesses, VCs are expected to invest in high risk, high reward businesses. They can afford to take losses on 5 to 10 startups to make a 100 times return on that one big block buster – an Instagram, a facebook or Google!. Many startups return them 5 to 10 times the money and across all startups with other failures, they will be successful if they return 20% per annum over 10 years.  After the Dot com bust, many VC firms returned less money than was invested and Of course, they are out of business also! You get an idea of why VCs are looking for that big block buster company! So you will be wasting your time and theirs, if your startup does not promise that kind of growth quickly!
  2. Understanding Exit Strategies for you and them –  If you are planning to build a software product company, grow slowly over 10 to 20 years and have a leisurely IPO, Venture Capital may not be suitable for you. VCs need to return the money their investors have given them – usually in a 10 year time frame. So they really have a clock they are working against. Exits through acquisition by a larger company or through an Initial Public Offering (IPO) is how they get the money they have invested out. So if this does not suit your plans, VC money is not for you.
  3. Understanding what can increase your valuation periodically– VCs like to bring on other VCs to share the risks in the companies they invest in. They also would like to see the valuation of their investments rise rapidly so that the acquisition price or the IPO price is justified when that event is reached. Valuation is a notional concept (just what someone else is willing to invest their money for) till it hits the acquisition event or IPO when it becomes validated by the general marketplace (till then it is done by the private VC marketplace). Growth metrics usually provide the justification for the increase in valuations.
  4. Understanding how Market Adoption Rates and Penetration Help you get there – If your startup is dependent upon the 4% smartphone adoption rate in India as opposed to the 56% adoption rate in the US, you can get an idea of how fast your key metrics will grow to make your case for the first or the next round of VC money. It does not mean you are in a bad business. It just means that your business may not be a good candidate for VC money! If your business is already making money, then that needs to reflect this rapid growth or at least the promise. If you are following a freemium model or you are postponing the question of monetization for a later date but are focused on building membership, visitors and engagement, your metrics need to show this hockey stick growth. It is not because VCs have an illogical liking for hockey stick growth rates – those are the ones they can show the next group of VCs or others that want to invest in subsequent rounds and ask for a higher valuation! I wrote about this topic in my previous article – Develop and Pray is Bad Planning in Product Startups!
  5. Understanding what Riding the Tiger means –  When you watch Flipkart raise more money and doing all kinds of acquisitions, what you are seeing is catching the tiger by the tail, getting on it, and riding it! You don’t have an option of getting off, since the tiger will eat you if you do! Once you raise venture money, you need to plan for rapid growth and riding the tiger. Don’t even look for venture money if this kind of company building is not for you.
  6. Understanding that Venture Money is not the only way to build a Software Product Company – If you have a secret sauce in your product that no one else can copy in their product easily and you have a five to ten year advantage, you can afford to build your company at a slower pace, taking one or two rounds of angel investor money, keeping expenses low and ploughing back initial profits into building the company organically! Unfortunately it is less likely in the consumer space that you have Intellectual Property that cannot be copied easily than in the enterprise space. Also if you are successful in the consumer space, just for building out your infrastructure you may need to raise large amounts of money – usually that’s venture capital. You might have seen this portrayed in the movie The Social Network with what happened to facebook in its initial years.
  7. Go Big or Go Home if you plan on taking Venture Money – Unlike Services Companies, software product companies depend upon rapidly establishing a large market share in an emerging space. In almost every market, consumer or enterprise, you will see one or two large players splitting almost 70% of the market between them and a couple of other players splitting the rest.  The bright side of this is that there is so much innovation possible in the software product space that you can always define a new marketplace and become a leader in it! But for that you need to show rapid growth in revenue, members, visitors and active engagement. So it’s Go Big or Go Home!

Venture Capital is a vast subject with nuanced differences with every VC company, country or company they typically invest in. For the software product entrepreneur there are some common basics that can help them understand how they all operate in general, whether you are a good candidate for VC money and if you are, what is expected once you take it! At worst, if VC money is not for you, it will force you to do better planning. How will you sustain your company and grow, even if it is at a slower place that you are comfortable with? Have you thought about all of this?

An Investment in knowledge pays the best interest – Benjamin Franklin
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Announcing the angel investor office hours in Bangalore (soon in Mumbai and Delhi as well)

How to hack your seed round in India, got 63 emails, comments and twitter messages asking me to take the post to its next logical step.

The 3 biggest issues entrepreneurs raised were:

1. They dont have the email addresses of these angel investors. Even if they did send them an email, responses were slow or went into a “black hole”.

2. The angel networks in particular have a fairly arduous process to filter, select and decide on new companies.

3. Many angel investors were not proactive in telling them what areas (sectors) they were interested in funding, so entrepreneurs could tailor their pitch to be more specific and target the right person.

I am extremely pleased to announce that in Bangalore (soon in Mumbai and Delhi as well), we will have a few of the top angel investors from IAN (working on Mumbai Angels and others as well, stay tuned) who are committing to office hours each week to meet entrepreneurs and provide them quick feedback on their funding options.

From January 2013, five of the most prolific IAN investors, Venkat Raju, Manav Garg, Nagaraj Prakasam, Sharad Sharma and Sundi Natrajan will hold monthly office hours in 2 locations – the Microsoft office at Lavelle Road and Eka Software offices in Outer Ring Road.

Update: Anil Joshi of Mumbai Angels has also agreed to host office hours in both Bangalore and Mumbai once a month.

Each session will be for 30 minutes per entrepreneur and a max of 4 entrepreneurs will be given time on a first-come-first-serve basis every month. Only one session per entrepreneur per year will be allowed.

Second, after each investment led by these investors they will write a quick note to tell us more about why they decided to invest. This will tell us more about what their thesis was, the trends they were betting on and other relevant details.

Finally each of these investors will share their investment thesis for 2013 and the sectors or areas they have expertise in or are passionate about. For example, Sharad’s an expert in Internet and advertising, whereas Sundi is passionate about education.

I am very excited that they are committing to these office hours. As entrepreneurs we will get a chance to interact with them and get their initial feedback so we can fine tune our plans and strategies to maximize our funding chances.

I do have one request: We’d like a volunteer to help program manage this effort. You should be willing to commit about 1-2 hours per week. If you are interested, please send an email to: mukund at thrisha dot com.

If you are a seed investor and you’d love to join this program, do send me an email as well.

P.S. A few folks have been asking me about other cities, such as Chennai, Hyderabad, Pune, etc. I wont be able to commit to these investors coming to those cities, but will try and get a few more local investors from those cities to hold office hours.

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Software Products: Funding and Opportunities, Shoaib Ahmed, Tally Solutions (Part 3 of 3)

Read the Part 1 and Part 2 of the series.

Shoaib Ahmed, President of Tally Solutions, began his career as a retail
software developer in the early 90s. Formerly the Founder-Director of Vedha
Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a
market-leading retail business solution — and the first of its kind in India to
bring in barcoding to the retail space. The company was acquired by Tally
Solutions in 2005, where Shoper merged with the Tally platform to offer a
complete enterprise retail software suite. In the last of a three-part series,
Mr. Ahmed gives entrepreneurs some advice from the product development
trenches.

In your opinion how important is the concept of funding? Do you think
people can bootstrap easily without funding?

Unfortunately, I come from a bootstrap background so I have to admit that I haven’t
watched the successfully funded companies very closely! Looking at the components,
you need money for development and marketing. I also feel one key component is
requiring enough money to bring on board people with enough leadership qualities and
understanding to pre-empt issues on all fronts. You have to have the working capital to
confidently bring on board people with these qualities. In this kind of context come the
questions: who should fund and at what period of time. There are the elements of the
seed and angel fund — in my mind the concept of angel fund hasn’t matured completely
because there is the expectation is that there isn’t complete clarity but there
is an element of being able to patch the company through so that they experiment through
the formative periods, and the VC comes in when the company is ready to scale, like for
marketing to get big numbers.

The sharpness, unfortunately, is not yet there because the maturity hasn’t been
established. For example, once a product company has been funded, there is an
expectation that the trend set by early adopters is what the remaining set of customers are
going to adopt as eagerly. However, this set may not have bought into the idea yet — but
there now is an expectation that based on the reaction of the first set, the next set will get
automatically attracted and it’s just a matter of reaching out to them. However, the method
and timing of reach out will be different. What it takes and what can kind of expectation
to set is dependent on the fund, but it also largely depends on getting the right kind of
mentoring and product mindset so that the entrepreneur is geared in a sensible manner.

What opportunities should entrepreneurs in the SMB space be
focussing on, other than in the accounting space?

Typically, the mid or large market gets most of the attention. For small businesses,
however, the pain-point is bringing hygiene into working systems like managing books,
inventories and people. At this point, there are options for the small business owner

to opt for enterprise integrated business solutions or specialised applications. The
opportunity lies in recognizing that different segments with different nuances exist —
and your focus is to design in such a way that their respective problems are solved. For
example, keeping in mind what a pharmacy needs both from a software and form factor,
I would say that billing is not the problem but replenishment is. Therefore, a large PC
may not be the solution — maybe an iPad or a mobile app makes more sense. So I would
say that you would need to wear the hat. To find a customer is the first element, and
giving a suggestion which works and bringing new technology in place are areas which
entrepreneurs in the SMB space should be focussing on.

What advice would you give to people who are getting into the product
development space?

First, they should understand the product mindset, which is to be able to identify if they
are building a value proposition. The whole process of product development shouldn’t
confuse them – there is the whole question of what the customer is asking for and what
the product will provide them. This is important, but product development shouldn’t just be
about reacting to market opportunities – arriving at a product design is also critical.

Secondly, there’s also a tendency to concentrate on providing too many features,
understanding customer requirements and being in a perpetual development mode. This is
why the development team has to have a strong business and marketing background.

Thirdly, having a face in the Indian market is a huge opportunity, but technology adoption
continues to be an issue so that needs to be kept in mind. This has a bearing on how you
design the product and experience. How much of that product you’re designing needs a
deep engagement, as well as elements like value and price. There’s a catch-22 situation
here because these elements of the product will still be in infancy – I don’t see a method
which a product company can use to address a market across the entire country. This is
where a lot of product companies fall into a gap because they might move to a partnership
model to sell to more people and this may not always be logical because a partner will
be interested in someone who has already created a market! A product company falls
into this gap where it sells to a few people, finds that it cannot reach out to more, gets
into a deeper engagement with the few customers it has and then loses the shape of the
product. Over the past 25 years, many product companies have morphed into service
companies because of this reason. Yes, environments have changed today: there’s
internet penetration, elements of communication have evolved and so product companies
should leverage this.

Read the Part 1 and Part 2 of the series.