Nail It Then Scale It

Similar to The Lean Startup and Running Lean, this book will teach you how to create your own startup, nail the problem it solves, and scale it (hence the name).

Author: Nathan Furr, Paul Ahlstrom.

Date Finished: 20/08/2013

Here’s a link to the Amazon page.

Understanding the customers

The key difference in this early stage of innovation is not to just ask customers what they want but to deeply understand the customers—their motivations, their needs, and most important, the job they are trying to get done.

Looking deeply at what your customer is trying to accomplish—or the purpose for which they purchase a product—can yield surprising results. Market insights come from actually interacting with customers and deeply understanding the problems they are trying to solve. However, it is usually not something that customers will just up and tell you; it comes from deep observation of customer pain.

The key then is to remember that customers don’t innovate. Entrepreneurs innovate and customers validate. Ultimately it is the job of the entrepreneur to do the hard work of innovation. If you rely on your customers to innovate, they will most likely suggest solutions that are only incrementally better than what is already in the market or that are simply an amalgamation of features that competitors already have.

Developing a Learning Attitude

At the core, entrepreneurs must develop an attitude of learning—brutally honest learning. By this we mean you need to learn how to seek and really receive feedback, because ultimately feedback opens the door to developing a product or solution that customers really need rather than just what the entrepreneur imagines that customers need. Furthermore, down the road, as the founder, you will set the culture of your organization, and creating a learning culture leads to a great organization rather than a one-hit wonder. But how do you develop this attitude of honest learning? The first step, which we have already described, is to recognize the learning traps discussed above. The second step is to develop an attitude of learning that has four basic components: 1) becoming an expert novice, 2) reframing the learning purpose, 3) real-time feedback, and 4) data-driven perspectives.

An expert novice. That is, someone who has knowledge and confidence but always maintains a seed of doubt that they may be wrong. Tom Kelley, founder of the revolutionary design firm IDEO, describes it as a healthy balance between confidence in what you know and distrusting what you know just enough that keeps you thirsty for more knowledge

Another technique to develop intellectually-honest learning is to reframe the purpose of your venture to be learning itself.

Perhaps the most important fundamental in the entire NISI process, aside from getting into the field, is developing an attitude of learning that will enable you to successfully discover a real opportunity. To do so, you need to recognize the key learning traps and then apply the techniques we have described: becoming an expert novice, reframing the purpose, seeking real-time feedback, and gathering the data. If you are always intellectually honest in your learning, you will succeed at applying the NISI process in your business.

Developing Experiments

Another fundamental that applies throughout the NISI process is to conduct rapid, inexpensive, simple experiments in the field to test your hypotheses rather than building products. This fundamental depends on the recognition that whatever you believe about your product, customers, or market is a hypothesis that needs to be proven. In other words, whatever you believe is an educated guess and nothing more.

A fundamental of the NISI process is to avoid building your product until you have validated your hypothesis through a succession of customer conversations using a virtual prototype, alpha, and then beta products. Turn your hypotheses into customer-validated facts. Then with the facts in hand, start building the product, all the while continuing to iteratively test your product and your hypotheses with the customer.

The NISI process relies on first identifying your assumptions, turning them into hypotheses, and then validating your hypotheses through rapid experimentation using virtual prototypes (PowerPoints, drawings, mock-ups, and so forth) during structured customer buying panel conversations as well as detailed information gathering by the key members of your team.

Simplyfing

Somewhat counter-intuitively, simplifying increases customer adoption and reduces costs. Customers are attracted by simplicity and confused by complexity. Simplifying the product offering doesn’t mean that you are taking away the customer’s choice; rather it sends the message that you know the customers so well that you are delivering the exact solution they are looking for. Simplifying also saves the startup time and money because they can develop something simple instead of something complex. Often an engineering-driven company thinks they have to deliver every feature to every customer, whereas a market-driven company has the luxury of choosing its customer and building the right product that nails the customer’s pain.

Entrepreneur’s Big Ideas

Entrepreneur’s big ideas fall into two major categories one we call brave new world or breakthrough ideas that turn conventional wisdom on its head and the second category are the better faster cheaper ideas that provide incremental improvements on an existing theme.

The Big Idea Hypothesis

This Big Idea Hypothesis represents your idea about the solution to the pain you observed and is where you create the future by inventing it. The Big Idea Hypothesis can be a breakthrough hypothesis or a better faster cheaper hypothesis.

Formulating your Big Idea Hypothesis

  1. For (target customer [remember, what is the title on the business card and which industry are they in?])
  2. Who (statement of the monetizeable pain)
  3. The (product name) is a (product category)
  4. That (statement of key benefit—that is, the compelling reason to buy
  5. Unlike (primary competitive alternative)
  6. Our solution (describe the big idea and statement of primary differentiation.

Testing the Monetizable Pain and Big Idea Hypotheses

To test your Monetizable Pain and Big Idea Hypotheses, you need to 1) find a sample of customers, 2) cold call or email them, and 3) capture and measure the results.

To begin, identify which markets the potential customers operate in and generate lists to cold call or email them to validate that the problem you identified in fact causes significant pain for customers. We suggest you consider which customers you would like to have and then recognize that there are tiers of customers—starting at the low end will be easier, but you should still select some high-end customers in the sample. As you reach out to customers, cold calls often work well for getting the attention of businesses, whereas emails often work better when you try to initiate contact with consumers.

How to Measure the Customer’s Pain

The value of the problem is the time they are willing to give you. How fast do they get back with you and the percentage response rate are important indicators of how significant the problem is for your customers. If 70% of CIOs return your cold call in twenty-four hours, you have clearly identified a monetizeble pain. Although these numbers may seem high, we’ve had many startups achieve these kinds of response rates, and so as a general rule of thumb we use a 50% rule: if 50% of customers return your call, you have found the monetizable pain and a potential beachhead for your product. Of course the 50% rule represents more of a guideline; depending on the context or the customer segment, the cutoff may vary. Furthermore, if you get below a 50% response rate, don’t be discouraged just yet: the low response rate may mean that you just haven’t found the right customer niche or the right words to describe the pain to the customer. The good news is that even if the response rate to your initial request falls below the 50% cut off, by talking to those customers who do respond, you can find clues about where to find the real monetizable pain. However, you will need to repeat your monetizable pain test again with a new group of customers before you move on.

Once you have customers on the phone, what should you say? It is important to understand that at this stage of the process you are not selling anything or even showing anything. However, the objective is to validate a pain that customers are willing to pay to solve. To do this, we have found it works best to structure your conversation around three key questions:

  1. “Do you have this problem?” Describe the problem to your customer in words like, “We see this problem. Does that match your experience?”
  2. “Tell me about it.” Ask your customers to share their concerns, their experience, and their current solutions. Again, focus on listening, not selling.
  3. “Does something like this solve the problem?” Describe the outline or framework of your problem. Again, don’t get into the specific details but do give something customers something they can respond to, and ask for their feedback on whether it solves the problem.

Using these three questions, guide the conversation to test your Monetizable Pain Statement and Big Idea Hypothesis.

The Different Types of Customers

As you conduct your customer research, keep in mind that there are different types of customers with whom you should talk. For many solutions to a pain, there may be up to three different customer stakeholders within the company: an end-user customer (the person who uses the product or manages people who use the product), a technical customer (the technical, often IT, person who installs or maintains the product), and an economic customer (the person who makes the ultimate purchase decision for the product.

Taking Notes

You should try to record or take extensive notes on conversations so that later you and other team members can return to your notes and reflect on what you really heard. Often what you think you hear in the moment and what an audio recording reveals are much different. If you aren’t able to record the conversation, one trick used by professional researchers is to sit down immediately after a conversation and take extensive notes—often notes immediately after a conversation are nearly as good as a transcript.

The 30.000 Feet Test

Finally, as you continue testing your Monetizable Pain and Solution hypotheses, don’t overlook the 30,000 feet test. The 30,000-feet test simply asks you to back way off the nitty-gritty of talking to customers and ask yourself, “How big is the problem I’m trying to solve, and is it worth it?” While you might find a monetizable pain, you should also determine how many customers have this problem, who else is trying to solve it, and if you can assemble the right people to solve it.

The next step on drilling down on the market dynamics is understanding if the market you have chosen is big enough to care about and is growing or declining. If you succeed in this market, will the size of your success pass the who cares? test to make it worth your time. By using secondary research, you can determine if your market is growing, stagnant, or shrinking.

Minimum-feature Set

After completing the first phase of the NISI process (Nail the Pain), you should have some facts about the monetizable pain and a Big Idea Hypothesis about the product. The next step is to get more detailed about the solution by creating a hypothesis about the minimum-feature set (MFS) that will solve the customer pain.

Think of the minimum-feature set as the bull’s-eye in a target—each concentric ring represents the features customers would like to have, but the bull’s-eye represents the must-have features that drive the product purchase.

So how do you know if you have the minimum-feature set? This can be challenging, because your customers will ask for dozens if not hundreds of features. There are three general rules of thumb to follow. First, look for the key themes in the conversations you have had so far. Focus on the areas that customers repeatedly discuss and try to avoid the temptation to develop something cool but tangential. Second, ask your customers! You can assess or even rate the degree to which a feature is central to solving the core customer pain, but you can also ask customers which one feature matters the most to them. (We will provide you some specific tools to do this later in the chapter.) Third, simplify, simplify, simplify. Despite your desire to add features, strip out these features and focus on the absolutely core features.

If you are having a hard time keeping it simple, use this simple trick to convince yourself and your customers: simply assign those extra features to the next release, and you will be mentally freed up to focus.

The path to success begins with a minimum-feature set that strips the product down to the absolute core value exchange that drives purchase. By simplifying the product, you can uncover this core exchange and features, and once these features are discovered, the product can be perfected through a series of iterations in partnership with customers until you reach the whole-product solution.

To develop a minimum-feature set, rely on your observations of customer pain and hypothesize a solution. Once you observe a customer pain, it is your job to come up with a solution to that problem. If you make the mistake of relying entirely on your customers to create a solution for you, you will likely find unsurprising and unimaginative responses that don’t actually solve the pain.

The Entrepreneur’s Responsibility

As the entrepreneur, you are responsible for defining a solution to the problem. You might begin by brainstorming, sketching, or writing down potential solutions. At this stage, you should be focused on getting your best guess written down on paper—paper being the key word. You don’t want to build anything yet. The reason is that if you earnestly start to build the product, you will more likely get locked in to the solution you are developing. The goal is to have something you can discuss with customers but which won’t commit you to a particular path.

Test 1: The Virtual Prototype Test

The objectives of the first test are to develop a profile of relevant customers, refine your initial hypotheses about the minimum-feature-set solution, outline a customer-defined solution that adds value to all the relevant stakeholders, and determine which is the best market to attack first.

The Customer Profile begins with the recognition that there are multiple types of customers. In particular there are three especially relevant customers to understand: the economic, the technical, and the end users. Economic users are the ones who hold the purse strings and buy the product. Technical users are the ones responsible for implementing, integrating, or maintaining the product. End users are the individuals who actually use the product in their day-to-day lives. Sometimes these users are all the same person, but if the users are different people and you fail to address each of them, it can mean losing the sale and failing.

Another way to think about this problem is to consider the customer buying panel. In other words, who are all the customer stakeholders that will be involved or have influence in buying this product or service, and what are their opinions.

To develop a profile of your customers, create a matrix of target markets and organizations within those markets. Then do some searching to see if you can find some of the relevant buyers in each organization within each market.

Once you identify a key influencer within an organization, task that person to help you organize a meeting with other key decision makers within that organization. If the pain is significant enough, they will be glad to bring together their internal buying panel to discuss with you potential solutions to the pain they are feeling.

Another important question to consider is which customers would you like to have? Customers often fall into different groups or segments. How do your customers differ in terms of their needs, their willingness to pay, and their openness to working with a new venture.

As you build customer profiles, keep two things in mind. If you have really hit on a monetizable pain, even large customers, like a Microsoft, might be willing to work with you. On the other hand, because these large customers are often early-majority customers (rather than innovators or early adopters), they will most likely be reticent to work with you.

However, most likely you will need to focus on innovators or the lower tiers of the market who will be more open to working with a new venture. You will find you are able to get your foot in the door with the innovators, and then over time you can work your way up to the top-tier players.

During the first test, your objective is to develop a virtual prototype to test the minimum-feature set with as little cash as possible. To do this, begin by developing a prototype of your eventual product solution.

A virtual prototype allows you to get out in the field rather than wait to build a physical actual prototype; and a virtual prototype represents the ultimate tool in keeping your mental flexibility high and your commitment to sunk costs low. To do this you should choose a prototyping technology or approach that costs a fraction of what the actual development technology costs. You might consider using PowerPoint/Keynote, Flash, HTML, Visio, Creately or any number of other technologies, including pen and paper, to create a prototype. The key is that your prototype or virtual prototype should be inexpensive and quick to develop relative to the traditional approach.

Next you should engage your customers in a dialogue about the potential solution to the problem you observed.

1) Show solution. Does this solution solve your problem? (Share your virtual prototype and ask them for advice on the solution. The more specific your prototype, the better your feedback.)

2) Test customer demand. What would this solution need to have, for you to purchase it? (Push your customer as to whether they would actually purchase.

Remember that in general, avoid questions that will produce a yes or no answer (you get no information), and steer clear of questions that are too complex or require the customer to fully solve the problem.

Test 2: The Prototype Test

“I Built Something Customers Wanted.” That message is the goal of what you are trying to accomplish in this phase of the NISI process. Paradoxically, the way to get there is not to start building something right away, but to build it iteratively and incrementally with your customers. In the second test, you finally start to build something, but not all at once. Instead, you will transform your virtual prototype into an inexpensive physical prototype that you can use to test your solution face-to-face with customers.

At this point in the process you want to find an inexpensive way to turn your insights from the virtual prototype test into a prototype that includes only the core minimum-feature set. Avoid building out the full product and instead employ rapid prototyping technology, such as is available at justinmind.com or jmockups.com, to create something your customers can use. Alternatively, hire offshore developers at Elance or oDesk to build out a bare minimum product. Or if you need to build something, find a way to create a prototype quickly.

At the end of the day, your prototype should be inexpensive while giving customers a picture of the solution you are proposing. You can use the opportunity to test your most critical features—the minimum feature set. But don’t get caught in the trap of slowing down or trying to develop a “better” prototype. The point of the prototype is that it is a quick and minimal representation of what you plan to do. If customers are interested in the bare version, you are on to something.

Now that you have a prototype in hand, the next step is to go out on the road and test that prototype in front of the full buying panel of customers. The prototype road show is a secret tool used by many of the most successful companies. Not surprisingly, the prototype road show is one of the most important steps in the entire NISI process; nothing can substitute for the firsthand experience of having customers yawn in boredom or sit on the edge of their seat in excitement when you show them your prototype.

Begin by arranging on-site meetings with the full customer buying panel. Ideally, you should try to arrange a new sample of customers (who will have a fresh perspective on the solution) and at the same time try to have meetings with the end, technical, and economic users for a particular organization. The customer-buying panel represents all the influencers in the purchase decision—your jury, in a sense—and bringing them together at the same time can create powerful buy-in. As before, you should prepare an interview guide and be ready to record and transcribe the conversation. When requesting a meeting, you should highlight the pain you are addressing, emphasize that you are not selling, and explain that you would like feedback as you create the solution. As before, your hit rate will give you some insight into whether you have correctly identified or verbalized the pain. You might consider using language such as this to request a meeting:

We are going to be in your area. We are talking to so and so (one of your competitors, partners or another individual at the organization). We would like to talk to one of your team members about this big problem (talk about the pain). We are developing this next-generation product that solves this pain. We aren’t selling anything, but are in the development stage, and before we lock this product down, we’d like to get your feedback, because you are a thought leader in the space. Can we come and talk with you and your team next Thursday?

Whatever language you use, the key communication strategies are to 1) communicate the pain, 2) highlight you are not selling, 3) reinforce that they are an important voice and thought leader 4) identify the members of the peer group or competitors you will also be talking to and 5) solicit feedback.

When arranging meetings, try to get as many of the relevant customer stakeholders (from a single organization) as possible into one room at the same time. When you have the full buying panel in one room you will get richer comments and feedback, because the comments of one type of stakeholder will elicit a reaction from other team members. You should bring your entire team and then spend as much time as possible listening.

Tools to Find What Customers Really Want

Three tools we have used to find out what customers really want are the $100 game, feature testing, and rating systems.

$100 Game: If you show a prototype to customers and their response seems inconclusive, or they give you a laundry list of features they want, try the $100 game to focus the conversation. To do this, ask your customer, If you had $100 to invest in any features of this product, what features would you invest your money in? Customers will often vote for the features they most care about.

Feature Testing: Another way to determine where to focus when showing a prototype to customers is through feature testing. This approach includes tactics such as A/B testing, surveys, and feature tracking.

Rating System: Another method to help focus the conversation is to use a rating system. You may consider asking your customers to rate which features are of most value; but more important, as a team you should rate which features connect most with the pain point so that you can focus your efforts on the minimum feature set. When having customers rate features and products, it is important to keep focused on a single market and keep customer comments within the context of 1) the market they are in and 2) the problem they are trying to solve within that market.

In closing as you decide on the minimum feature set, you might also consider two additional tactics. First, depending on your context, you may need to weight the responses of one particular customer type (economic, technical, or end users) more heavily than others—in most cases the end user. Additionally, if you look at your customer’s responses and they don’t seem to group in any reasonable way, see if you can subdivide your customers into segments. You will notice that different segments have different requirements, and so you may need to pick which segment you will focus on.

Test 3: The Solution Test

The third test is simple but challenging. In the third test, you partner with your customers to develop a solution, usually through a pilot program, to take your solution through a final round of iteration to refine it into the solution customers want.

The objectives of the third test are to refine your product to an exact match with customer needs. At this stage the validation of your product, or definition of success, is paid pilots, validation on the price point, and breakthrough questions.

Validating the Solution

In the final phase of nailing the solution, you will return to your customers while actually building the solution to validate that you were listening correctly and have solved their problem. Rather than repeat what we discussed in the second test, it is easier to say that the tactical steps resemble test two: contact your customers, get the buying panel around the table, show them the solution, record the conversation, and spend your time listening. If you have nailed the solution, your customers should be excited and willing to pay if they haven’t already. They will be asking you when they can get the product, or how they can be in a pilot. If you are already in a pilot, these customers should be helping you make the final refinements to commit over the long-term. Their excitement should be visible and tangible. If not, you need to change the solution based on their feedback.

During the third test you should be closing paid pilot customers if you are developing a B2B solution. If your customers are unwilling to pay or the price point is too low to build a business, you haven’t identified a big pain point or a big opportunity.

Nailing the “Go-to-Market” Strategy

The purpose of the “nailing the go-to-market strategy” phase is to develop a deep understanding of the process by which your customers find out about and decide to purchase your product or solution. This involves understanding the job your customers are trying to get done, ascertaining their buying process (the information chain from the moment they find out about your product, through the purchase, to when they dispose of it), mapping the market infrastructure, and closing paid pilot customers. Really understanding this information provides you a heat map of how to target your customers and the facts on which you can build a sales and marketing strategy unique to your business. It requires more than just understanding the “what” of your customers; more important is the “why”.

The Customer-Buying Process

The customer-buying process is defined by the job your customer is trying to get done and all the relevant activities that surround that job. To discover the buying process, you need to specifically ask customers about how they accomplish or try to complete that “job” with any relevant solutions, from beginning to end. For example, key points in the process include how your customers become aware of the product, where they gather information, how they use that information to make purchases, and so forth.

A simple way to start would be to ask your customers questions about each of these steps, such as how they solve the problem currently, how they decide which solution to purchase, and so forth. Simply take a stage and phrase a question around it. For example, you might ask questions such as “How do you find out about new products?” If your customers respond that they read magazines, you’ll want to drill deeper. Perhaps ask, “Which magazines do you like to read?” and “What part of the magazine do you find most informative?” When we work with new ventures, we literally ask customers these four categories of questions and drill down until we feel comfortable.

Market Infraestructure Discovery

During the second test, you should continue to validate the customer-buying process, but you should also begin mapping both the market communication and the distribution infrastructures. With these maps in hand, you can then develop a strategy to leverage these infrastructures to your benefit. The objectives of market communication and distribution infrastructure discovery are to map the market infrastructure and develop a strategy to influence key leverage points, with the goal of making early customers comfortable with their purchase decision.

The market infrastructure consists of all the players between you and your customer who ultimately influence the customer’s purchasing decision. Therefore, at its heart, the process of understanding the market infrastructure is closely linked to your eventual sales, branding, and business-development efforts

Define a Market Infrastructure Strategy

Once you understand the market infrastructure and the motivations for each group of stakeholders, you can begin to shape a strategy to leverage the infrastructure to your benefit. Your strategy, and the resulting tactical plan, should include both the activities you will undertake and the order in which you will tackle the stakeholders.

The actual tactics you use will vary by market, but the guiding principles are 1) map the key categories of the market infrastructure, 2) identify the top three partnerships in each category 3) understand the motivations and needs of each player, 4) create measurable and time-bound objectives for each potential partner and a strategy to leverage the infrastructure based on your interactions with customers, and 5) assign an owner to each partner. (At Knowlix we made this process very visual by drawing a large inverted pyramid on our war room wall and pinning 3×5 cards for each partner with objectives and the owner’s name on the card for the different levels of the pyramid.

Channels

One of the rules of the channel is that the channel doesn’t create demand, it fulfills demand.

Pre selling

As you continue to nail the solution, your customers should begin to ask when they can get it, without your having to sell them on it. Furthermore, in the next test, unless customers are willing to pay to be pilot customers (or some comparable metric of engagement), something isn’t right. At this stage, you don’t have to close deals, but you should be planting the seeds of early customers by understanding their needs to the point that they want your solution soon … and they would even pay for it.

The Pilot Customer Development

The objective at this stage is to validate your go-to-market strategy assumptions by closing paid (or other relevant proxy of commitment) pilot-customer relationships and then using these relationships to finish the solution with your customers.

During the third test, you should close and launch pilot-customer relationships, preferably paid pilot-customer relationships. The pilot customers are the sandbox in which you can put the final touches on the solution and refine your go-to-market strategy. In a pilot project you can get deep into your customers’ workflow and optimize the solution to meet their pains. You can also get a deeper understanding of their buying process and how they interact with and gather information from the market infrastructure. Most important, pilot customers can become reference customers.

But reference customers don’t just happen; they are chosen and nurtured. To begin the process, you should actually select reference customers who would be good partners and strong references. It is crucial that your reference customers be credible, committed, and good to work with. Once you have selected potential goodeference customers and have them committed to work with your company, in the words of Donna Novitsky, founder of Clarify (a public company that sold to Nortel in 1999 for $2 billion in stock.), “You do absolutely everything you can to make those reference customers happy.” If you properly nurture these reference customers, at the end of the pilot you will have a robust solution, a deep understanding of your go-to-market strategy, and a reference customer for future sales.

At this point, you should understand what your customers are willing to pay, or at least a range of what they might be willing to pay. You should also answer the crucial breakthrough questions that are relevant to your business. Breakthrough questions are the big questions on which everything hangs. For example, will customers replace their existing database with your database? Will they sign up for an account today? Will they pay for the account? Remember, the ultimate measure of nailing the solution and go-to-market strategy is whether your customers will pay you.

Nailing the Business Model

The first step in nailing your business model is to think carefully about the different components, or assumptions, that underlie your business model.

The question then becomes, how do you decide which business model components to choose, and which work the best for your business? By this point you will likely have had many customer conversations in which you tested the customer pain, solution, and go-to-market strategy. Not surprisingly, one of the best resources in nailing the rest of your business model is these conversations.

You can leverage your customer conversations to predict and then validate your business model.

For example, in trying to decipher the right distribution channel, you might ask customers questions such as “how would you want to buy something like this?” Drill down on their answer to define your business model: would they buy it directly from you, from a distributor, from a partner, or from a large company? What would they need to feel comfortable making the purchase? What would a potential deal look like (specifically, what sort of terms or follow-on service would they expect, such as hosting or service calls)? When you are on the customers’ side of the table in exploratory mode, they will literally give you incredible information for your business model. You can even explore, in a round-about way, questions such as customer acquisition costs or lifetime customer value. When you asked earlier about how customers evaluate a purchase decision, what did they say? Who was involved in the decision-making process? What will be the cost of reaching those individuals and convincing them of your product (for example, the cost of advertising in the magazines they read or hiring a direct sales person)?

Launching the Product and the Go-to Strategy

During the third test of nailing the solution, you should have developed and refined your initial product; and with the lessons learned from pilot customers, you should take all you have learned and focus on selling your product.

As you launch the product, your goal is to develop a repeatable business model. Such a model means quite simply that you put money or effort in, you get money out—predictably. As you settle on this repeatable model, you should continue to iterate with your customers, evolving the product to fit their needs. Do not stop talking to customers. At the same time, you should also slowly be transitioning to the point where your product is becoming a complete solution; and as sales continue, you change it less and less until the sales and business models become truly scalable. Rather than repeat what we have discussed in earlier chapters, it may be simpler to say—just go do it. Act on the facts you have. But as a word of caution, stay focused on your core-value proposition.

As you begin to scale the business model, remember to stay focused on the core opportunity and remind yourself that after you conquer one kingdom, you can go on to conquer the next. But you can’t conquer the world all at once.

Scaling the Business

As a company grows, a shift occurs from facing an unknown problem/solution at the outset, which required radical exploration, to facing a known problem/solution that requires execution. As a result, new ventures actually go through one or more phase changes on the way to becoming a big company, and during these transitions the way they operate has to fundamentally change to reach the next level. As the company gets bigger, the nature of what it has to do to be successful changes.

Branding

When it comes to the image you create as a startup, once you start selling, go big or stay home within the niche you have targeted. This doesn’t mean you have to burn all your capital, but you do want to communicate that you are established and reliable when you start trying to capture the early majority. For my time at Knowlix, this meant spending the money to obtain a moderately central space at the tradeshow their customers attended, creating a professional booth, and then pulling out all the stops to establish buzz around the booth.

Understanding the Market

How do you know whether you are tackling a new or established market? It all depends, but it doesn’t actually depend on your technology or product. Most people, when trying to decide whether they are tackling a new or established market, focus on the technology or product itself. But what determines whether you are in a new or established market is how you apply the technology or solution. Any single solution can often be applied in either new or established markets, and you need to decide which market you are tackling.