This is a guest post by Erik Severinghaus, founder & CEO of SimpleRelevance.
Being an entrepreneur is a weird profession.
As technology entrepreneurs, we’re often seen as visionaries who can see further than others, a reputation for which there’s at least some truth. This is what puts us ahead of the curve and at the doorstep of opportunity.
But for bootstrapped (read: undercapitalized) entrepreneurs, this vision can also be a curse. It may actually prove dangerous (and can certainly more tempting) to be too early to a market if you do not understand the ecosystem and dynamics at play.
Unfortunately, this is a mistake I have made myself – more than once.
What happens when you’re too early
Being too early to a market is seductive.
The greenfield opportunity is obvious. You can visualize how things should be if you execute well enough – you will certainly break it wide open. The challenges, however, are difficult to impossible to overcome. Being in a market prematurely can lead to the death of a company as you scuffle for partners, resources and clients but aren’t quite able to make it click. Perhaps even worse, it can lead to the early entrepreneur investing in defining the market from which others reap the rewards.
Case in point: 13 years ago I started a company that offered a software-as-a-service for schools called MainBrain. It allowed parents and teachers to talk online, see student’s homework history, and receive updates. It was functioning somewhat like today’s Blackboard.
But in 2000, Google was less than two years old, the first mobile device got connected to the Internet only a year before, and being digitally connected wasn’t nearly as ingrained in our daily lives. The product was too early for people to realize there was a need for it. Worse, there was also a very long sales cycle with schools. It was a nice to have, but not a need to have — so it failed.
I made the same mistake in 2006, when I founded a company with some friends called FacTrivia, which sold a game called Chapel Hill Trivia that had facts about Chapel Hill and the University of North Carolina. It was similar to Trivial Pursuit, but hyper-local. It was marketed to university alumni and college students using alumni listservs and targeted Facebook campaigns. In the review process, it scored highly with everyone who played it — at 9.8 out of 10 — and was profitable when sold online.
But in retail stores, there was no profit. It was attempting to gamify questions and answers. Plus, Google Adwords and Facebook ads and social marketing did not drive the traffic they do today, and were insufficient to drive online sales.
A few short years later, social gaming dominated our newsfeeds.
Clearly, there were a lot of hurdles between these ideas and our fortune, but the biggest one was timing.
How to know if you’re too early
No entrepreneur creates a successful organization in a vacuum. Ask these questions:
- When you talk to clients or partners, are you finding that your solution is a “must have” or a “nice to have?”
- Is there a real burning desire, an acute need, for your solution?
- Do the complementary technologies exist in a form that’s sufficiently mature to enable your user experience to be seamless?
- Can you point to others who are talking about similar themes at conferences or in trade publications to help educate and create your market?
What to do if you’re too early
If your ambitious vision, that world-changing innovation with numerous dependencies and external interfaces, isn’t quite catching, your best bet is to redouble your efforts to do what good entrepreneurs should always be thinking about: simplifying your value proposition.
What is the absolute simplest nugget of value? What is the piece that requires the fewest interface points, has the easiest pricing model, and is the most concise to communicate? How can you whittle the innovation down to its most facile component — the element that’s not quite as sexy or “out there” but remains compelling and won’t get you bogged down in the intricacies of the broader vision?
I very rarely talk with early or growth-stage entrepreneurs who are struggling to add more complexity to their features set as a primary challenge. Almost all of us are trying to take what we’ve built, simplify and scale.
That goes doubly if your vision is still ahead of the market.
The bottom line
As an entrepreneur, you’re going to make lots of mistakes – hopefully they are more tactical and fixable rather than strategic. But even important strategic mistakes don’t have to be fatal to the business. My biggest mistake is often being too early to a market as a result of over-thinking. It’s challenging, but the best solution is to continually refine your value proposition to the simplest possible terms, and build from there.
Erik Severinghaus is the founder & CEO of SimpleRelevance, a Chicago-based company leading the way in developing next generation tools to help companies personalize digital communication. Prior to that he received a patent while in IBM‘s IT Optimization organization, and helped co-found iContact – a leading Email Service Provider. Connect with SimpleRelevance on Twitter @simplerelevance and on Google+.
He is a member of the Young Entrepreneur Council (YEC), an invite-only organization comprised of young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.