Identifying the right marketing person is not enough. The timing also needs to be right so this rare individual has the latitude to look at the startup's innovative technology.
Since the first publication of Geoffrey Moore’s book, ”Crossing The Chasm,” the most popular marketing strategy for technology startups offering disruptive technology has been to first seek a beachhead. The rationale is simple: Find early adopters willing to deal with an incomplete product to benefit from the new technology. These users should be members of one or multiple market segments that share the same product requirements. They will help define the complete product that can then be sold to the early- and late-majority customers. The startup will have crossed the chasm by offering a solution that can be embraced at low risk by these majority groups.
This strategy has a few conceptual challenges. After all, the “Crossing The Chasm” book has been commonly referred to as the bible of marketing for innovative technology. The implementation difficulties of this strategy are more pragmatic.
A key one is its impact on cash management. For a startup, the pressure is often intense: Cash is a precious resource. Investors are demanding progress measured in new customer logos. The competition is making progress. The temptation to stray from the beachhead and chase all interested prospects is difficult to resist. It is a battle between the discipline of keeping a strategic focus that limits customer engagements to specific targets versus the instant gratification of more prospects entering the sales funnel and a false sense of security they bring.
All too often, startups and even larger companies take a tactical approach to growing the business. That is, chase every opportunity. Sure, 20 evaluations will be scheduled and each will have a slightly different type of requirement. That’s a recipe for disaster for a small company. They don’t have the resources or the money to chase every opportunity.
Instead, the better strategy is to focus on one market segment and produce a viable solution to fit the needs and beat the competition. It will enable the startup to focus, build awareness and generate cash. Various tactical components will fall out of a detailed market analysis and will depend on the characteristics of the targeted segment.
Once the company’s had some success, then it’s time to visit a venture capitalist. The executives will be able to prove they are able to execute on a plan, understand their product’s key differentiators and established a beachhead. It’s also about the right time to consider moving into another market segment to build a second beachhead.
Finding the early adopters is a key obstacle that needs to be overcome to implement the beachhead strategy. This is not an easy task, especially in shrinking markets like semiconductor and EDA/IP. Potential early adopters are increasingly under intense schedule pressure to complete their own projects. Even the “risk takers” have limited time and resources to look beyond their next project milestone. Their margin of error is low when using company resources to investigate new technology.
This means that identifying the right person is not enough. The timing also needs to be right so this rare individual has the latitude to look at the startup’s innovative technology. The sales and marketing team might have to reach the prospect multiple times before a window opens to proceed with the evaluation. It can be tedious process that increases the appeal of the customer who takes the company away from its strategic focus.
A free online dictionary describes beachhead as a first achievement that opens the way for further developments. That seems like an ideal business strategy for any small technology company.
—Michel Courtoy is a former design engineer and EDA executive who sits on the board of directors at Breker Verification Systems.