In B2B, nothing beats deep industry knowledge. If you’re an expert or have one on your team, you’ll gain ground faster than any startups founded by people who are outsiders to the market they’re trying to capture. However, even outsiders can find ways to gain insight.
As a founder, you should always ask yourself: Who in the industry already has the knowledge we seek? Who can we recruit as partner, advisor or employee to help speed up Product-Market validation?
No one wants to give equity away. Unless your company is well-funded, seek only people who have expertise, contacts and credibility that will be hard to acquire by your founding team.
Put all your energy in finding the right people — the right partners, advisors or employees — that will help you save an incredible amount of time. It’s crazy how, sometimes, the right advisors can help you save as much as three months. – Alain Paquin, WhatsNexx Founder and CEO
Your ultimate goal is to be perceived as part of the business and technical community. If your company is well-rounded with staff and advisors from the industry, you will be perceived as an insider.
Being an outsider is only acceptable in the early days. To truly be successful and go fast, you have to be part of the community.
Visit VCs for fun, to find the influencers. These guys always know guys who compete in that space. VCs love giving their opinions. – Steve Smith, CakeMail Co-Founder
Investors, industry bloggers, journalists and market analysts often get contacted by startups and established companies trying to get funding or boost their visibility. These people are on the lookout for the next big thing. They have a wide perspective on the industry and can usually help you understand the market history and the competitive landscape. Have other companies attempted to bring similar innovation to market? How did it play out?
Investors and third-party analysts have a horizontal view of the industry. They can share info about the trends, the players, the influencers, the opportunities and their assessment of the market potential.
Although investors are extremely busy, they’ll often meet with young entrepreneurs who are exploring spaces they’re interested in.
Investors often like to mentor; with enough relationship, it’s possible to ask for introductions, networking opportunities and recommended reading to further your understanding of the market space.
Questions and misunderstandings will give you a sense of the gaps and issues with your market assessment to refine your pitch and business model.
It’s always a good idea to gather intelligence in the early days of your startup. Chances are, challenges flagged early by investors will make it hard to raise funding if you don’t find a good solution.
One of the ideas that came out of The Lean Startup by Eric Ries is to engage customers as consultants to solve their problems before creating a commercial version of the solution.
The founders of enterprise search startup Coveo are seasoned entrepreneurs with a lot of experience selling to large businesses (part of their team built Taleo). With Coveo, they decided to take the Lean Startup techniques a step further by moving into their clients’ offices. Small development teams would stay on site at clients’ offices until they were able to solve the customers’ problems.
In B2B, proximity to customers is key. By having multiple development teams stationed at client offices, Coveo was able to build custom integrations, take note of commonalities and, eventually, build a standardized product.
On-site teams can report on customer pains, the context of use of the product, stakeholders, underlying needs and enterprise reality. All of this information feeds back into the sales process and product positioning.
Moving in with customers allows you to multiply your reach when doing customer development. You can build different installations, evaluate different business types and map out all the stakeholders your sales team will need comes time to scale the sales efforts.
How can this technique be applied in your startup?
One of the big challenges for first-time entrepreneurs targeting a new industry is getting enough credibility and visibility to have true business discussions with stakeholders.
Prospects look for client referrals to purchase, but it’s impossible to get referrals without actual purchases. Many entrepreneurs fall prey to this chicken and egg situation. For prospects, it can feel like a waste of time and resources meeting with unproven entrepreneurs (here’s how to motivate them).
Early on, there are five things that entrepreneurs need to demonstrate to be perceived as credible:
- Personal Credibility – Do you know what you’re talking about?
- Commitment – Are you in it for the long haul?
- Reliability – Are you doing what you say you’re going to do?
- Passion – Do you really care about solving our problem?
- References – Who can vouch for you?
In a typical North American market, it usually takes over a year to build relationships and get mid to large business customers.
You can’t expect businesses to share their true internal needs and problems with just about anyone they meet. The credibility of your startup and your personal credibility must be established from the first interactions forward.
Why should they trust you? Who can tell me that I can trust you?
After the success of YouSendIt (now Hightail), Ranjith Kumaran and Mehdi Ait Oufkir co-founded PunchTab, a loyalty and engagement platform for brands, agencies, blogs and businesses.
When it came time to validate PunchTab, Ranjith and Mehdi decided to focus on distribution before monetization. Although they could have easily launched with a paid model, the co-founders decided to test whether they could attract users by launching with just a free tool.
The decision paid off. Hundreds of website owners started using PunchTab and talking about the platform. Ranjith and Mehdi were able to capture loads of valuable feedback on product usage, feature requests, unmet needs and perceived value.
By starting free, the PunchTab founders were able to gain visibility, prove product usefulness and, ultimately, scale into a working business model. Managing a high-trafficked application also helped them establish credibility with business users. The service was fast and reliable; it could handle their business needs.
Although starting free may not be possible for all B2B companies, PunchTab was able to get a lot of valuable feedback by simply opening the gates.