Voice of the Market?
You have a young company. You’re desperate for orders. And then you get an order.
Stop celebrating.
Congratulations on actually having revenue. But one order doesn’t tell you that you’re right about what your market is. And when you get your second order, looking for commonalities and deciding that you’re hearing the voice of the market may be wishful thinking.
A Real-World Example
I worked with a startup years ago. It was a great company; the firm was started by two very good ex-IBM salespeople. They really knew sales processes: the important information to track, the way to organize a sales funnel, and so on. I learned a lot from them.
They had found a really first-class developer who was also a good development manager. He had built an excellent sales and marketing automation system for them; this was in the days when laptops were new, and theirs was a really good system for salespeople and sales managers to use.
Someone they knew who was in the tire business asked if they could build a system for him around inventory management. He paid them to develop it.
Then a real estate company asked them to build a system for them.
A Tempting Distraction
They decided they were in the software development business and were beginning to brand themselves that way.
I had a long conversation with them and pointed out that their expertise was sales; their most sophisticated system was a brilliant and (at the time) unique sales and marketing management system. The market for the sales system was immense, and the market for custom software development was chancy and ugly.
I convinced them to focus on selling their sales and marketing software. They sold it very well, constantly improved the system to meet customer needs, raised venture capital funding, and were sold—very profitably—to a large firm a few years later.
The Takeaway
The point of this anecdote is that it’s easy to get fooled about whether or not you’re hearing the voice of the market.
You need to think about the match between your expertise and the market, and about the quality of the market itself.
Quality of market can mean:
How easy it is to sell into it
How big it is
The size of sale you can expect
The likelihood of follow-on sales
Your ability to deliver first-class work that will make your customers happy
Things of that sort.
It’s possible that your first sales will be to people you’ve known in the past, not to strangers who better represent the market you should be pursuing. Selling to your friends is not really a fair test of whether or not you’ve found your market.
As I’ve mentioned in many places: startups search; big companies execute. In the early days, you’re searching for your market, and it’s easy to get it wrong if you’re not thoughtful about it.
Don’t let the excitement of the first sale or two confuse you.
Want more real-world startup advice like this?
Explore the blog or check out the book: Build Your High-tech Startup.