One of the most difficult things to do in a startup is to correctly define and position the company’s first product/service. Done properly, your company gets off to an incredible start. Done improperly and you are in for at least a six month to a year delay – a delay that can spell the company’s death as you run out of money and competitors get to market faster.
Design Partners Are the Key
The way to make sure you are on the right track early is to work with design partners. A design partner is far more than a focus group of people/companies that give you product/marketing feedback. In fact, I found focus groups to be a huge waste of time for startups. Design partners are companies/business units/individuals who would buy your product/service if it were available today. These are not people who answer questionnaires or who comment on your latest Powerpoint deck. These are people who work with you on an ongoing basis to define, refine, position, and then price your product or service.
Who Are The Best Design Partners?
Take a look at who you think would buy your product today. If your product has appeal to more than one vertical market, find a partner in as many markets as you think you can sell into initially. I find that 5 companies is a good number, picking one company in each relevant vertical market. If you are selling a product/service designed for a specific vertical market, find some other variance that lets you gauge the breadth of your offering (e.g. company size, type of specialty, etc.). Interview as many companies as you can before you select your design partners. The ideal design partner is one who fulfills the following criteria:
- Has the business problem/need you are trying to solve. You definitely don’t want “tire kickers” who will waste your time with lots of technical discussions.
- Represents a sizable segment of your target market
- Is an early adopter who “gets it” without requiring too much explanation
- Is technically and market savvy (there is a bit of art in picking the right folks for this)
- Has some business authority and can be at least the key influencer in any business decision to buy your product
- Will commit to one meeting a month and to rapid response of email/phone questions
Even if you plan to focus on one vertical market first, you should have input across several verticals before you get started. You definitely want to know how to correctly build the product so it can be rapidly adapted to additional markets when the time is right.
Before you get started, make sure your partner commits to the “Design Partner Program” you put in front of them.
What Is a Design Partner Program?
When you first meet your potential design partners and are satisfied they meet your criteria (and that they are sufficiently interested), get them to commit to your “Design Partner Program.” The program typically consists of the following steps:
- One monthly meeting where you present your progress. Monthly meetings can cover technical, marketing, positioning, pricing, and other topics. I find it best to present a status update and then focus each meeting on a different topic; for example:
· Problem definition
· Product concept and scope
· User experience review
· Testing marketing messages and participation meetings with industry analysts
· Pricing models and sizing
· Review of relevant partners (and introductions!)
· Alpha review
· Beta testing/review
· Early adopter program
- Ongoing email/phone contact – don’t be a pest, but keep in contact so the program doesn’t fall off your partner’s radar screen.
- Alpha/beta testing review
- Early adopter program – be the first to install and use your product
- Reference for prospects, investors, analysts (and possibly press)
You will hit a home run if several of your design partners become your first paying customers. It is a serious red flag if you are not able to convert any of them to customers.
Why Do Companies/People Agree to Become Design Partners?
Here are some of the right reasons for people to agree to become design partners:
- They have the business problem you are solving to a sufficient enough degree where they are willing to work with you to get a good solution. If you see the same problem in diverse companies, you are well on your way to developing the right product/service.
- They are naturally-innovative people who think outside the box and are open to new solutions.
- They believe in what you are trying to create.
- They are interested in buying your product/service and are willing to trade their time and expertise for a consideration in price and professional services.
Here are some of the wrong reasons for people to agree o become design partners:
- They love technology and like to look at anything new
- They do not have defined business goals but they have lots of time to look at new technology
- They are trying to get a job at your new company
- They like to feel important
If you see any of these signs, RUN, don’t walk from these folks. They will waste your time and at the end of the process, you will find yourself with something you can’t sell.
Your program will be successful if you can achieve most of the following goals:
- Get a sellable product/service in the market within a reasonable amount of time – I suggest setting no more than 1 year as a goal for version 1.0 of your offering.
- Get at least two of your design partners to become paying customers.
- Have your partners promote you to other prospects, analysts, press, and investors
- Receive rapid validation of the problem/solution and messaging from other prospects across multiple markets.
- Secure funding with the help of your partners, who validate the need, the solution, and the team
- Build the right development/deployment team to solve a real business problem
- Get out the door with good marketing messages the first time
- Recruit “friendly” analysts who like what you are doing and the approach you are taking