The Science of Marketing

In a recent blog post, Paul Dunay discusses the relationship of contemporary innovation and the high tech start-up. He asserts that at some point (for Paul, it was with Cisco’s acquisition of Stratcom), innovation moved from within the walls of established companies to niche start-ups ("that can form around discrete aspects of a very narrowly defined segment"). Paul then asks "What’s a marketer to do?" and answers "Well, there is money to be made in being niche. So if you are in a small technology firm, try owning as defined a niche as you can.."

I agree, and I believe that the owning a given niche means focusing all sales, product and communications actions around it. From my experience (both good and bad), I can say that without focus, a high tech start-up is doomed.

High tech start-ups, by definition, are born out of, well, high technology. A smart guy has a vision – a better way of doing something, he has a buddy who’s good with tools, so they start a company. What usually goes along with this is the common high tech belief is that a new innovation has a lot of different applications and can be sold into many markets. This thinking is probably right, but also deadly. Out of the gate, it is almost impossible for a start-up to support multiple, diverse markets for three main reasons.

1. Sales

Sales processes, support and talent needed can vary substantially from market to market. A sale to the government looks very different than a sale to a small business. Attempting to sell into multiple markets at the same time can distract the sales force, resulting in poor performance. Focus on the one market that lo likely to yield early success; then expand into new markets that are closely related in terms of sales process, support and talent.

2. Product

Typically, different markets have different needs which lead to different product and feature requirements. Supporting multiple markets, early on in the life of a start-up, often overwhelms and frustrates the engineering team with diverse feature requests. Focus on the product and feature requirements that address the urgent needs of the niche and then have a well-reasoned plan for enhancements.

3. Communications

The first chapter of a start-up story that includes multiple simultaneous markets and products, will almost certainly sound too aggressive and unrealistic to partners, boards, investors (maybe even media and analysts). By overreaching, a start-up runs the risk of losing credibility with these critical audiences. A better approach is to develop a story that shows initial market and product focus with a well thought out and logical progression into new markets with product and feature extensions.

There is, indeed, money to be made as a niche technology play, but it takes focus to succeed.

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