I have often wondered how inventors/entrepreneurs stumble on a new product or new service that takes off. It's always been a similar question to what comes first, the chicken or the egg? But now I think I am coming close to what it is, it's a little of both, or a lot of luck.
For those without luck, let me explain how I think you come to the right product or service. You start with observation. You need to observe what potential customers find painful in their day-to-day activities. How do you do this? Well coming from a corporate I had a different type of pain I was observing, it was in-efficiency, pains of bureaucracy, pains of ineptitude, but it was missing something. People in corporate just accepted these things and worse off, it was difficult to found a business around these pains because people had little recourse to pay for solutions to these pains.
So as I build technology after technology solving perceived problems I have finally arrived at what works and of course, what comes first, the market.
The market comes first because at it's core, the market represents the customer, the customer with a problem that some product or service will minimize or eliminate. It comes with a deep understanding of the customer and their ability to use your product or service to solve it, so you can't just create a technology to solve a problem, you must understand your customer well enough to convince them to use your product to solve their problem, you must know them well enough so it's easy, and most importantly, you must know your customer well enough to pay for it.
So how do you define a market? There are two ways I think:
- The Hardest Way) You do research, either by calling customers, consulting with them, working with them to understand them, doing research to find out what other potential customers have similar problems your product or service can solve.
- The Hard Way) You copy someone with customers, and serve those customers better, then after working with those customers find something unique you can do that they do not that differentiates you from your competitor.
But before you decide on a market to go after I think you need to take one final factor into account, addressability. The ability for you to go after this market, convince them your product or service will work, and finally, to get them to pay for your product or service is HUGE. B2B markets, Consumer Markets, Network Markets, they all have cost. It will cost X dollars per sale assuming that time=money. Then you have the typical supply funnel. Market Size, Reachable Market, Prospects, Qualified Prospects, Sales.