Posts Tagged ‘meta-idea’

Meta-idea: Creative Ways To Talk Someone Else’s Customers Without Permission

Tuesday, January 3rd, 2012

The following is a post for ideas of things to build, but this one in particular could be also be a useful way to gather competitive intelligence on someone else’s business. This is a continuation of my series of meta-ideas.

Back story: A few months back I discovered a tech startup that was building an intriguing product (a bit of a technology risk – not as trivial as implementing a mobile or web app), that I thought was a brilliant idea. They’re well funded, great team, been at it for a while. I loved the idea but wasn’t sure how actual prospective customers would react to it (it was also a bit of a market risk).

So I slapped together a Craigslist ad (or choose whatever $0 or nominal way to advertise), listing the benefits of the product, and listed my phone and email as the contact info.

I researched the product and company’s literature so that I could also all the questions a sales person could, and when people contacted me, I would spring into action – putting myself into the mindset as if I was a sales rep working at that company. In case you’re wondering, I make it clear I’m not working for the company, so I’m not “misrepresenting”. I think of myself volunteering to do some free lead-gen. I’m just interested in learning how the market would react to their product.

As I answer the prospective customers questions, I also ask them questions to qualify them as a customer, and open-ended customer development questions to discover any reservations they have, what they like about it, what they wish it could do .. basically gleaning information to do a rough SWOT analysis on the product and what the company’s missing in their whole product.

With this specific product I was curious about, even though I thought the idea was great, I found out that the product wasn’t as useful to a certain segment of their target market, that prospects were not receptive to the pricing plan, and discovered some use-cases that the company could tout as their value prop that they didn’t. I didn’t actually get a single person who was interested in buying, but if I did, I would just call up a sales person at the company and send them that lead (maybe ask for a free lunch).

In summary, you can do customer development on any product – even one that’s not yours, and possibly discover business opportunities for yourself! Say hi to me on Twitter @jaysern

Learn more about Customer Development – especially for tech startups here (e-book & paperback) http://www.custdev.com/

“Whole product” is important if you’re going to cross into the mainstream market. This book by Geoffrey Moore is the definitive guide!

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Ways to monetize your startup + a business meta-idea

Friday, December 30th, 2011

This post is a combination of 2 things:

  1. Ways to “monetize” (extract value for yourself) other than directly charging your users
  2. A meta-idea for a type of business to start

I’ll start with #2 and jump into #1 right away.

Need an idea for a business to build? Look around, find an existing profitable business, find out how the business is extracting value for itself, and figure out an alternate way to extract value.

E.g. Dating sites Match.com and eHarmony.com extracts value for themselves by charging their users a fee for using their site. Dating site Plenty of Fish (pof.com) has an alternate way to extract value for itself: instead of charging their users a fee, they make it free, which in turns fuels growth, and with the sheer number of users, they now have enough eyeballs to charge advertisers who want to reach those users. It’s no secret that Plenty Of Fish is raking in the dough to the tune of millions in profit per year.

Phrased another way, look around for a profitable business, the pricier the product/service the better (because the bigger the incentive for the user to switch to a free solution), and build up a product that you can give away for free, if you can extract value for yourself via a different way. Clearly this is a more appropriate meta-idea for software / internet products where the cost of replication and distribution is almost zero.

Aside from straight up charging people for money, what else can you monetize from all these free users?

  • Labor. Your users could perform an action that’s worth something to you. Example: Spammers need lots of throw-away email accounts from free webmail providers like Yahoo, Hotmail, etc. but CAPTCHA prevents them from automating signups. Their solution is to operate a premium porn site that can be free to a user if they solve a CAPTCHA. What can your user do that would be of value to you?
  • Attention. If you had a product where someone sits in front of for long cumulative periods of time, you can monetize their attention. Most obviously, with advertising. E.g. Facebook
  • Intent. Unlike Facebook where you spend hours on per day, you don’t hang out leisurely on www.google.com per se. You go to google.com to find something – and click away from Google the moment you find a result. Sometimes, what you search for has purchasing intent (“computer repair mountain view california”), sometimes it does not (“Charles Darwin birthday”). Purchasing intent is obviously monetizable. Can you invoke an intent from your users and harvest it? Related: Preempting Search by Alex Rampell of TrialPay
  • Product improvement. Free users can improve your product’s value. Examples:
    • BillGuard users flagging scammy credit card charges improves BillGuard’s alert system for other users
    • The more of your friends join and friend you on Facebook, the more valuable it is to you. Ditto with Skype, and network-effect based social-networks and communication tools, usually. Metcalfe’s law
    • Even if you never ever click an ad on Google, all your searches are valuable data used to further fine-tune their search algorithm, making Google even better
    • Some % of Yelp users leave reviews, which makes Yelp a little better for everybody else.

    • (more…)

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Meta-idea: Fast follower

Wednesday, December 28th, 2011

Update 1/15/12: Need more proof this works?

Continuing with the meta-idea series, here’s another meta-idea for a business: building a me-too product! That’s a tongue-in-cheek way of saying it, but rest-assured, I’m not exactly joking.

Look around, find a business that is profitable, the larger the company the better (because they slower they will be in reacting to startups). Clearly they’ve figured out a business model that works.

When starting a business 100% from scratch, you have to figure out what’s the right product to build. You have to figure out who your customers are. You have to figure out how to reach them, how to monetize, how to grow, fine-tune the few words that will fit on a Google text ad to make sure people will actually click on it and convert (fine-tuning costs money!)

Well, the existing business has already figured all of that out. You could just watch them from the outset and learn. And iterate your way to being even better. You know Mint.com invested a lot in their UI/UX/design. You could check them out and learn a thing or two that you could use for yourself, without having to invest the same amount of money.

Google wasn’t the first search engine, iPod wasn’t the first MP3 player, and Facebook was not the first social-networking site. Is that enough proof?

Why do fast followers win more often?  It’s pretty simple. First Movers tend to launch without really fully understanding customer problems or the product features that solve those problems. They guess at their business model and then do premature, loud and aggressive Public Relations hype and early company launches and quickly burn through their cash.. This is a great strategy if there’s a bubble occuring in your market or you are going to bet it all on flipping your company for a sale. Otherwise the jury is in. There’s no advantage.

- Why Pioneers Have Arrows In Their Backs, Steve Blank

An even better explanation by the guru Steve Blank: http://steveblank.com/2010/10/04/why-pioneers-are-the-ones-with-the-arrows-in-their-backs/ and over at A Smart Bear by Jason Cohen: http://blog.asmartbear.com/first-competitive-advantage.html

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Meta-idea: Indispensable Piece In Someone’s Whole Product

Tuesday, December 27th, 2011

Here’s a startup meta idea: Find a company that is attempting to cross the chasm into the mainstream market, and be an indispensable piece in their whole product.

As a recap from the Crossing The Chasm‘s Technology Adoption Lifecycle (chart), the first group of people that gets excited over your product are the innovators / the uber-techies. They seek technology for the sake of cool new technology.

The second group are the early adopters. They seek the benefits of the technology and not for the sake of the technology itself. To satisfy them, focus on building a product that delivers an ROI.

Then one has to cross the “chasm” to get to the third group, the pragmatist buyer / early majority who are more conservative than the previous 2 groups. They’ll wait for a real market to actually develop (as opposed to a passing fad) and then seek the market leader. They want to see a market with a healthy ecosystem of competition / 3rd party support / products / services in the market. To satisfy them, focus developing the market.

So the question is, what companies are crossing the chasm now and need to develop their market? Can you build something indispensable so that they look good to their pragmatists buyers? Microsoft Windows Phone comes to mind – they have the OS but their market of 3rd party app developers is way behind Android’s and iOS’s.

This meta-idea is a bit like looking for someone on the way to more (post-chasm) success and then figuring out how to be an indispensable part of their ecosystem – because they can’t do it all by themselves.

Examples from the book: Oracle’s database to ERP vendors, Rambus’s memory interface to next-gen PCs.

Note: Looks like the book example is a tad out-dated, and I can’t think of any modern examples where the “+1″ piece is indispensable. Presumably, Oracle and Rambus had some kind of vendor lock-in at time of the book’s writing. Nevertheless, the meta-idea still stands. 

Plug: If you’re in a startup, all the more reason why you owe it to yourself to read this book!
Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers
Geoffrey A. Moore

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