Most start-up teams have the product, market and customer knowledge to perform market research themselves. However they often lack self-confidence and waste a lot of time, effort and money relying upon a perceived “higher authority” to give them divine answers.
Any market research has a “confidence interval” associated with it. One starts by making a hypothesis and then tests the hypothesis by analyzing a sample universe. In theory the greater the sample size the greater the confidence interval. Therefore, for example, “if I spend $200K on this study I can be 90% confident that the results are true.” This field is littered with landmines…
1) It assumes you are making the correct hypothesis
- You are likely spending a lot of money proving something is wrong
2) All of the time and money you spent on analysts could have been spent on actually acquiring customers
3) Any practical “tribal knowledge” to be gained from the research is lost to a third party
- That will likely use it on the next team suffering from a lack of confidence
If you are a member of a startup team and you want to perform market research just do the following:
1) Go into a conference room with your team and start arguing
2) Argue about what different verticals make sense: weigh the plusses and minuses of each
3) Argue about what company size makes sense: weigh the plusses and minuses of each
4) Argue about who in each scenario would make the technical decision: weigh the plusses and minuses of each
5) Argue about who is actually going to make the financial decision: weigh the plusses and minuses of each
6) Argue about how they would actually process a purchase order if they wanted to buy
7) Create a matrix of what you find
8) LOOK AT THE RESULTS
9) Pick two that look most promising based upon your analysis
10) Identify 10 SPECIFIC companies in each category
11) Find out the contact information for the financial decision maker in each of the target companies
12) OK, here’s the good part: GO MEET WITH THEM. It isn’t as hard as you think (at least in Silicon Valley)
What is perhaps unusual in the SF Bay area is that people are ready and enthusiastically willing to meet with entrepreneurs and offer sage advice. When you contact these people, tell them that you are an entrepreneur and are seeking their advice after doing your own research. Tell them you are not trying to sell them something but are looking for painfully honest feedback.
There are only a few possible end results of this effort.
- They blow you off
- You meet and get painfully honest feedback and it’s bad
- You meet and get painfully honest feedback and it’s good
- You end up getting a customer or a referral to someone that will be a customer
Don’t underestimate what you know. If you want help facilitating this process email or phone me at:
But whatever you do don’t waste a lot of money on 3rd-party market research. The money you spend on it may only raise your confidence interval by a few points. And that certainly won’t be worth what you will lose by doing it yourself.
Click here for an example of how to get through to the right person.