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.
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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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{ 7 comments… read them below or add one }
Good post, but how do you even do research. I have an idea for a start-up but I don’t even know how to get started doing research. Do you mean I should use the Google Keyword Tool to do research? Please explain
Great post. It’s great to have passion and get excited about an idea you have late at night. The worst thing you can do is take that passion and launch your idea and raise cash (because they believed in your concept) only to realize that one of these questions wasn’t answered by doing basic due diligence. I learned this lesson early on. Research!! It’s not an afterthought.
Jun,
Long time no hear from you man! What’s up? How’s SF treating you?
I started a 5,000 words a week Yakezie Challenge if you want to join. We will publish at least 5K words a week until New Year to fight laziness, and take our sites further.
Want to join? Here it is! http://yakezie.com/forums/bloggers-lair/
Sam
this has already been done.
Hi Jun… Well written article! I would like to read more information in your blog like this so keep on posting.
Very informative…Will be in mind for my business.
Quite educative. keep posting please . How should i do a market research for a small lawn care company