Last week I was inspired; I couldn’t sleep because I felt the business idea and opportunity were so good. I woke up in the middle of the night and sent emails to my close friends to get their feedback and asked for referrals to engineers so that I could start building the product right away.
I looked through my contact list and highlighted investors who I’ve worked with in the past to schedule a lunch with them and get them prepped to fund my startup when I was ready. I also readied my PR list, as I also planned out my entire press strategy to make sure I would get a lot of users from the get-go.
As you can tell, I was excited.
But I’ve been in the startup game for the past 5 years, and I know that you can’t just jump in head first without taking a step back and really analyzing the market. My experience with a previous startup taught me that a great idea and a great product aren’t enough – it’s even more important that you check out the landscape and answer these questions:
- Is there a need in the market for my product?
- Does the market know that they want my product/are they ready for my product or is it ahead of its time?
- Do I have competitors in the market?
- If so, are there any market leaders or are they all startups?
- If not, is it because I’m ahead of the curve or is there a graveyard of startups that tried but failed with my idea?
The idea was simple, straight forward, and utilitarian, which I absolutely loved. The idea was an email analytics extension for Gmail that tracks if an email is opened, if it’s forwarded, and if the recipient clicks a link in the email. Lets take a look at how I analyzed the market to decide if I would pursue this startup idea.
Is there a need in the market for my product?
Yes. Sales people need a tool that will help them close deals faster and more effectively. A tool that tracks emails has endless possibilities:
- Know exactly when a prospect has opened your email so that you can call them at that exact moment
- Know which types of email subject lines have the highest open ratio so you can A/B test subject lines and optimize
- Know which prospects to focus on and which ones to ignore
If your product directly helps a person or company make more money, then there is a definite need for your product and a clear business model.
Is the market ready for my product?
Yes. With the small success of gmail extensions such as Rapportive, it’s clear that tech-savvy professionals are looking for easy-to-install tools that will increase their productivity. The freemium model is also a proven success online: try the basic version for free, and then pay for the premium version when you’re ready.
Do I have competitors in the market
Yes. My initial check of the market showed that there are big enterprise-level email-analytics companies that have created my product for large corporations. Though they are big leaders in the industry, it didn’t bother me at all. To install their product, it took a sign-up form and a scheduled phone call with a sales rep – my vision was a simple 1-click install through a Chrome extension.
A market leader does not necessarily mean that your product can’t win. You can win by carving out a niche with a different target market. Think of how saturated the email-marketing industry is; yet, Mail Chimp has carved out a great niche with tech-savvy professionals and companies.
Upon further investigation, I did find two companies that have built the exact product that I envisioned: Yesware and Tout. Research showed that Yesware recently raised a Series A round of $4 million from reputable investors.
To enter or not to enter?
I have chosen not to enter the market.
Yesware and Tout are by no means leaders in the market, but they do have a 2-year head-start. They have a great product (I’m now using Yesware), funding, and a team of engineers and designers.
To enter the market and compete now would be foolish. It would be as foolish as trying to enter the brick-and-mortar customer loyalty space now when companies such as RewardMe and Five Stars have been working on their solution since 2010. There’s just no way to compete with a me-too product when others have a 2-year head-start, funding, and solid product.
Don’t get lazy as an entrepreneur. Do your research, analyze the market, answer the critical questions I laid out on this post, and then make the decision to enter the market or not.
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