Time to Market

Time to Market S01 E04 – How Can B2B Startups Play a Fast Game

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Étienne Garbugli: Since our last recording we have a name for the podcast: “Time to Market.”.
Sean K. Murphy: I like it. Of course, I liked the “Sean and Étienne show” but this is okay too.
Étienne Garbugli: This feels like it would offer more scope. We got started quickly and now we are iterating and refining. So what does “Time to Market” mean to you?
Sean K. Murphy: From a B2B startup perspective, it's how quickly you can offer people a result or outcome they're willing to pay for. How much time will it take to show a prospect a result you can deliver, and they say, "Yes, I'd like to pay for that? That will have a positive impact on my business."
Étienne Garbugli: So it's more than announcing that something is available? It’s more about some proof that you have met the expectations of the market?
Sean K. Murphy: Yes! I would distinguish between a launch, which is a marketing announcement of your product, and a conversation with prospects. Markets are conversations: if you are in a market, you are speaking with and listening to customers. You are making offers and judging their reactions
Étienne Garbugli: So, just putting together a website is not the same thing as success?!
Sean K. Murphy: No. I call that veterinary marketing. A veterinarian can’t ask an animal how they feel. They have to judge by indirect signs what's going on. At least in B2B markets, if you are not having conversations, you are doing it wrong.
Étienne Garbugli: So, we wanted to do an episode about why we chose “time to market.” What do you want to talk about in this episode?
Sean K. Murphy: I'd like to talk about how startups can play a fast game. How they can get in front of prospects with compelling offers as quickly as possible. It's complicated by two challenges that startups face competing against incumbents.
First, incumbents have more resources and existing relationships with customers. They have trusted relationships they can leverage--startups usually have fewer.
Second, they have debugged capabilities that can act as grooves or channels but give them more confidence in their ability to execute.
These disadvantages mean startups must identify new opportunities where the incumbents' advantages don't weigh as heavily in their favor. They must learn faster than the incumbents are to make up for these deficits. I want to discuss how to spot opportunities earlier, learn more quickly, and execute faster.
I have observed successful entrepreneurs use three techniques to play a fast game.
First, look into what customers are already using and see if you can add a missing piece. Instead of trying to convince prospects to do what we used to call a forklift upgrade that replaces existing infrastructure, you add a small piece that plugs in and allows you to get in the market faster.
Second, shrink the scope of what you're trying to do but maintain focus on providing value. A smaller initial product is easier to refine--it's faster to iterate a simple product than a complex one. A smaller initial scope doesn't mean you have to shrink your vision for the total product. But it forces you to focus on the "thin edge of the wedge," or the first few critical capabilities customers will pay for.
Third, look for solutions that already work in other industries or disciplines. Use these to balance incumbents' ability to leverage existing proven processes they've debugged internally. Take solutions that already work in other industries, other verticals, or other domains, and repurpose and remix them so that you are offering a product that is already 70%, 80%, or even 90% proven and adding a piece.
Étienne Garbugli: Okay. So, you can cut time to market by finding the right thing to work on, focusing on basic features first, and learning faster than larger firms. How do you find the best model or framework for your product so that you can put it together as quickly as possible?
Sean K. Murphy: A couple of things can happen when you are telling a prospect what you can do for them.
The first is MEGO–My Eyes Glaze Over. That means your presentation or demo is not working. You should learn to detect that very quickly in your interactions so that you don't keep going on when they're not interested. MEGO is data. It does not feel like data–it feels painful–but it's data.
The second is surprise. If you feel surprise it means you have learned something. The same is true for the prospect.
The third is they become more engaged, asking clarifying or what-if questions. Once they start to add constraints or suggest ways to improve your solution–if you do this it would be compelling–then you're starting to get uptake.
Étienne Garbugli: I have some concerns with the idea that all learning is good. You can spend your life learning things about different types of customers. It can feel very exciting because you're always discovering new things.
But you can get caught up in learning without making progress. Starting a business is often an exploratory process initially. It can feel like there are a lot of possibilities you need to examine, but six months later, you realize we talked to all of these people who told us all of these different cool things, but you have not picked a direction or agreed on an initial product.
Exploration can steal a lot of the founding team's attention without yielding any progress. How do you ensure you are making progress?
Sean K. Murphy: Well, that's a fair criticism and one that hadn't occurred to me. I have ADD, and one of the side effects of ADD is hyper-focus on novelty. So I have definitely fallen into the trap of constantly learning new things. That’s definitely a risk.
I have two tests for progress: a crisper definition of your customer and a specialization on a particular problem you will solve for them. If you are refining your customer selection criteria and becoming more specific about the problem or need you address, then you are making progress.
One of the symptoms of “always learning but not making any progress” is that you are talking to new people and reading about a wide range of possible problems but you never narrow your selection criteria. You never focus.
Some entrepreneurs are afraid to narrow their focus; they think that they're shrinking the market. They are, but only initially to gain a foothold in a niche and start to get traction.
Étienne Garbugli: Well, to make progress, you need to know where you're going. One of the fallacies of exploration is that you don't need a guiding light that tells you what direction you should be going in. You wanted to talk specifically about the speed of iteration, but if you don't know what goal you're trying to iterate toward, speed is just speed.
You're pedaling really quickly. You're on your bike, you're going really fast, but you're not necessarily going anywhere.
Sean K. Murphy: if you're constantly accelerating, you may be traveling in a circle. I think you have to worry about coming back to where you started. Narrower criteria rule out possibilities and indicate a crisper focus. One place I worked had this running joke. When someone would ask, “What is our strategy for X?” The answer was “We have a strategy for X. We are not doing it.”
One way you can tell that you're starting to get a little traction is you're saying no to many of the things you're seeing because you know where your focus is, and you're hunting for where you know you can provide value.
Saying no helps you get established in a first niche that you know who you can serve. The second benefit is that the narrower your focus on a particular kind of customer with a specific type of problem, the better you can predict the results you can deliver.
Customers don't want your product. They want the results that your product delivers, and the better you can predict how quickly and what level of result you can provide, the more likely you are to close a deal and move forward.
Étienne Garbugli: That’s why I really liked your point about creating milestone products that deliver value before you have the complete solution or your total vision. You can layer these milestone products on what the customer already has or is doing so you can make consistent progress.
Sean K. Murphy: I like your layering-on metaphor: look for customers with specific types of preexisting infrastructure, procedures, or capabilities so that you're only adding one piece to it. You can shrink the initial product if you find a customer who already has two-thirds of the solution assembled, and your piece helps them go faster, save money, reduce errors, or get a much better result in an aspect they care about.
Étienne Garbugli: Okay. So you're looking for people who are a little more solution aware or have a better idea of the gap that they're looking for?
Sean K. Murphy: Yes, and you have to specialize in closing that gap. If you narrow your focus and specialize, you can bring a smaller product to market. You can iterate more rapidly on a simpler product that has to meet fewer requirements but still provide a lot of value to the customers you want to serve.
It's like selling liver transplants: you don't have a lot of prospects, but when you find one, they are in a lot of pain and very motivated.
Étienne Garbugli: I mentioned that my girlfriend is looking for a new job–if anyone is recruiting. We discussed how she could position herself in the market, and I suggested she create a category of one to be a unique supplier or service provider. Instead of aiming at a larger market where she might position herself in multiple ways, she should focus as narrowly as possible with one positioning. This makes the path clearer, so it's easier to find the companies she should work with. This approach also works for startups; it gives you more clarity around the value you provide and narrows the prospects you should try to convince to buy your product.
Sean K. Murphy: Good point: customers must understand your offer, but it's okay if it’s like a dog whistle. You blow a dog whistle, and none of the cats look up, but a few dogs come running. If the offer seems tailored to their needs, it’s more compelling, and you spend less time on inquiries from firms that are a poor fit.
Étienne Garbugli: In addition to narrowing your focus to a specific set of problems and acting as an extension to existing infrastructure,
what else should startups do to cut time to market?
Sean K. Murphy: You can get too hung up on the product and lose sight of the result the customer is paying for. We were working with a team developing new instrumentation, trying to map out the installation process at the customer site to enable an evaluation. And we realized this would be expensive because this was not a software download or a login for a SaaS offering. We had to ship and install hardware and, depending on the evaluation results, ship it back.
So we brainstormed how we could only ship hardware to labs that were likely to buy and how to minimize the chance that we would fail their evaluation. At the same time, some prospects were asking about renting a machine for a month or two to satisfy a short-term requirement. We realized that we could start by selling test results or experiment results. We would take in samples and sell test results. That would be phase 1 evaluation and satisfy the firms that wanted to rent. If a team needed the sample to stay in their possession, we could set up a private evaluation area in our shop they could visit.
This test lab model forced us to sharpen our focus on results we could achieve that other systems could not, and we started to hunt for particular kinds of experiments or analyses. After you have run multiple batches for a prospect and they see the value, they want to expand use. They start getting serious about a purchase, but you are over the evaluation step because they have already verified the results.
In the same way this hardware startup team put their box behind their back, software startups should first determine what results they can deliver that the customer will pay for. If you start with a service you manage inside your firm, you can refine your offering more rapidly. You skip having to manage upgrades and training on a product that, at least initially, does not work very well and is mutating rapidly. When your software that supports a service fails, you can fix it without telling the customer--most of the time.
The classic counter-argument is that this does not scale, and it doesn't. But you are not looking for scale. You are looking for proof you have something of value that a customer will pay for.
Étienne Garbugli: I would argue that initially, you are looking for proximity. You are looking for a way to have discussions with target customers about their problems and needs to make sure they are willing to talk. If you can have these exchanges about value where you propose specific solutions or results and get their feedback on the value, then you have the proximity you need to figure out your first product.
This reminds me of a startup I did a few years ago, HireVoice. We were trying to create a product that would have been a great consulting company. We were developing software to create reports analyzing a company's employer brand positioning. If we had done consulting, we could have been high-touch. But because we were trying to sell it in a less involved way and avoid doing consulting, the software created a mismatch in expectations
When you take a low-touch approach too early, it becomes a yes/no discussion with a prospect. You miss out on ongoing exchanges where you can iterate on the value and make sure you can find the right fit for the model you're getting at. You're missing out on many of these insights and conversations that can help you progress at this stage.
Sean K. Murphy: Some technical entrepreneurs can view negotiations over value as a negative and lose out on gathering valuable information about customer needs and product features.
If they won’t pay for the service that provides the same result that the product does, they are not going to pay for the product.
Étienne Garbugli: When you try to sell a bigger solution first, your mindset and the way you build are different. It creates more distance in how you interact with customers. You think, "I will throw it over the wall and see what they think."
I got excellent insights into this when I wrote a case study on Brendan Dunn at RightMessage. He has focused on website personalization for years and has basically done it all. He started a consultant, charging $10,000 to install personalization on the website. He built plugins; then, he built courses. Next, he went back to consulting and then back to software. All these different phases helped shed more light on the right solution for his target customers. That proximity to customers gives you a faster feedback loop that cuts the time needed to refine your solution and business model.
Sean K. Murphy: Sometimes you wander the landscape a little bit and then you look back and connect the dots. Oh, that was my strategy. .
Étienne Garbugli: But to be fair, I'm the one that wrote the case study. He is not the one that wrote the story that way. So maybe I'm the one that did the issue there.
Sean K. Murphy: There's a Kierkegaard quote, “Life can only be understood backwards; but it must be lived forwards.” I think that argues for a periodic retrospective and reevaluation just to integrate what you've learned. That’s another test for progress: over the three months, what have I learned? What patterns am I seeing. What am I going to stop doing?
Étienne Garbugli: Let me squeeze in another strategy that cuts time to market: the team needs to be honest in retrospectives. We are borrowing from Agile and Lean Startup with this idea of periodic reassessments of whether we've made progress. Have we worked on things that were genuinely bringing us forward or making us progress through this journey?
Being clear about that and being honest about the things that we've worked on that turned out to be distractions or that were not based on the most solid assumptions, solid information is critical. I do this with my business.
It's an excellent way to ensure that, over time, you're reducing your useless task percentage and working on the tasks that make your company advance towards your goals.
Sean K. Murphy: To the extent that you're saying no to more things, I think you're learning more about establishing a beachhead in a market and finding your niche. Rita Mae Brown observed that, "Insanity is doing the same thing over and over again but expecting different results." You have to keep making new mistakes.
Étienne Garbugli: Yeah. I agree with your point at the start. It's about getting more clarity on why your customers are facing particular challenges and why they're in the specific situations they are in. Once you understand that, you can use those insights to have more discussions and get more customers. As you gain perspective, things get clearer, and you can feel this sense of acceleration. You can ask better questions, make better predictions and anticipate needs and potential pitfalls.
Sean K. Murphy: I work with a lot of engineers and scientists. I think they have a natural tendency to look at an existing solution and say, "I can do better." So another thing you have to say no to is excessive invention. Instead, ask yourself, can I use what's already in the market and add the smaller piece which provides unique or differentiated value?
We support a team of mechanical engineers who offer professional design services. One phrase they use is "Frankensteining." They will frequently build a proof of concept out of pieces of existing solutions to iterate rapidly. Software teams can use no code or low code applications or even wireframe mockups to Frankenstein software solutions.
Invention is like cayenne pepper; you only need a little in the elephant stew to give it some flavor. It's powerful and enables differentiation but comes with risk. It's better to build a new product primarily as an integrator with a spark of invention.
Étienne Garbugli: Right. It's more about assembling a solution, especially early on, than being a true inventor. One thing I've learned in the last 20 years is the more you invent in a new product, the less likely it is to work.
There is a chance that you stumble on the right thing, and a new invention works. But if you ask successful serial entrepreneurs, they will tell you they were often wrong about what they built in early iterations. There was no Eureka! moment. Their early ideas were off, but a useful start they could refine. They did not start from scratch but added to an existing solution and iterated until they created something better.
As a learning exercise, I encourage entrepreneurs to use Wayback Machine and go back and look at successful companies and the evolution of their pitches. Look at how they changed their positioning over the years. Often, it's what you mentioned before: they started with something very narrow. They do this specific little thing, and then gradually, they take on more: more niches and more functionality, and their positioning adjusts over time.
It is very, very educational to see how even some companies that are worth billions of dollars today started as very, very, very simple things. Or they began as things that were not related at all to the things that they are doing today. Even companies like ServiceNow that I looked at a while back, like it started as a tiny thing and then went, and now it's, it's this massive organization that it's, it is very, very fascinating.
Sean K. Murphy: Great points! I think the idea of starting small and building trusted relationships gives you some of the advantages of an incumbent. You have to remain wary of an incumbent’s ability to pull things off the shelf that they know work.
The more new things you load into an offering, the more likely it is that one of them won’t work. If they all have to work to deliver the result you promised, your odds of success plummet as you go from one to three to five new things.
Étienne Garbugli: You see that when you talk to organizations who are shopping for solutions. Often, they're looking for something that does that specific thing. They say, "We just want to add this. We don't need a new complete solution for HR; we just need an applicant tracking system. We don't want the other things you offer and certainly won't pay for them."
To your point, one of the opportunities for founders is to be that little thing people need. Can you reach the point where you have something that allows you to interact with customers as quickly as possible? Then you can explore becoming something bigger.
Sean K. Murphy: I think the reverse is a red flag: if somebody comes to you and says, "We'd like to scrap everything we're doing and regain our virginity by starting from scratch," the odds that the project will happen are very low. I am not saying it won't happen; people get hit by meteorites from time to time. But it's more likely you will be struck by lightning than close that deal.
It's much more common that you have to figure out how to interoperate with existing solutions in their infrastructure. Startup teams will encounter people who want to start with a blank sheet of paper and get excited they can implement their full vision the right way. But it's unlikely they are talking to someone inside the company who will be able to orchestrate real change.
Étienne Garbugli: Trying to sell a complete replacement is a challenging proposition. It's hard to find someone who wants to start with a blank slate, and when you do, they can rarely convince anyone else inside the company.
Sometimes you meet with a newly hired VP who says, "We are going to burn everything. I am a genius selected to reinvent everything we do." It does happen. But if your business success is predicated on finding these geniuses, it's unlikely to prosper.
Like finding someone that actually has a specific need for a specific thing like that upgrade will be faster and more predictable. Both of which are good for you.
Sean K. Murphy: I would also say that the number of self-declared visionaries who succeed as new arrivals is very low.
If you talk to somebody that's been at the company for several years and they are treated with respect by their peers it’s a different situation. If they say, “We realize we've reached the end of the road with how we're doing this, we need to change,” it’s much more likely that significant changes are in the offing. But even there, they will want a transition or migration strategy that preserves as much of their legacy know-how and relationships as possible. They will not say, “We are going to fire all the customers we are serving with our current systems.” It’s important to remember that the word “legacy system” is often a synonym for “integral to a significant revenue stream.” They may bet a leading research project on a tiny startup that no one’s heard of, or a small incremental addition to an existing system, but it’s rare they will rely on you for mission critical infrastructure supporting a substantial revenue stream.
Étienne Garbugli: I think that's definitely a bigger topic that we should definitely cover in a future episode. But for now, if we were to sum it up, how would you frame it as the most actionable ideas that people should be focusing on?
Sean K. Murphy: I would narrow my focus to the smallest or simplest result that people are willing to pay for, and figure how to deliver that.
When you define your product, incorporate things that are already available to your customer in their environment, or already available off the shelf as proven solutions. This reduces your risk of failure.
In short: focus on the exact thing they want and require as few changes as possible to existing workflows, practices, and infrastructure.
Étienne Garbugli: Thanks for summarizing. Where can our listeners go to give us feedback on the podcast, suggest topics or questions they would like to see us address, or find out more about us?
Sean K. Murphy: Well, there's Lean B2B and SKMurphy. Yes.
Étienne Garbugli: Otherwise on Twitter. And we're actually gonna be continuing this discussion in the next episode where we talk about the flip side of the coin. So, what happens when your time is running out and what's the impact on startups?

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https://www.etiennegarbugli.com/getting-out-of-recruitment-a-hirevoice-post-mortem/