In the old days, entrepreneurs often spent years creating a product and then presented it to the world. Unfortunately, this approach means you have to create a market for your product. No matter how revolutionary your product might be, it might take years for anyone to notice, let alone to switch to your product. The problem with introducing new products is that people are often reluctant to change their old ways, even when the new product offers a clearly superior alternative.
Back in 1843, a Scottish inventor named Alexander Bain patented a revolutionary new communication medium capable of transmitting images across distances. Nobody bought the product. In 1851, Frederick Bakewell made several improvements to Bain’s invention, and still nobody bought the product, despite its clear application and obvious convenience.
In 1861, Giovlanni Caselli sold the first machine based on this new communication medium, years before Alexander Graham Bell invented the telephone – yet, sales failed to take off.
In 1924, Richard H. Ranger demonstrated the usefulness of this 80-year old invention by sending a photograph of President Calvin Coolidge from New York to London. Sales of this invention finally began, although they were often restricted to transmitting weather charts. In an effort to improve the usefulness of this invention, Herbert E. Ives modified this device to transmit colors as well as black-and-white images.
It wasn’t until the mid-1980s, nearly 140 years later, that the world finally embraced this new communication medium, originally known as a wireless photoradiogram, but now referred to as the fax machine.
The point is that if you start up a company to introduce a new invention, or even a major improvement on an existing product, there’s no guarantee that your product will ever capture any market share whatsoever. When you create a product and then try to find a market for it, you’re placing the success of your company in the hands of fate and relying on hope. Unfortunately, hope can never substitute for a viable business plan. As you can see from the example of the fax machine, you may have a great idea, but you may have to wait over 100 years until the rest of the world recognizes it.
Here’s a better solution: Rather than inventing a new product and spending all your time and resources trying to find a market for it, just go straight into finding a problem that needs to be solved in the first place.
Ultimately, all products and services are about solving a problem. Starbucks solves the problem of wanting to enjoy an exotic blend of coffee. Southwest Airlines solves the problem of traveling at a low cost. Google solves the problem of finding information on the Internet.
As a startup, you can’t afford to waste time creating a product and then trying to find a specific problem that it can solve. As the fax machine invention shows, sometimes your solution doesn’t solve an immediate problem that anyone has.
Instead, you must find a specific problem that needs a solution right now, and then create a product specifically designed to eliminate that problem.
This may not sound as sexy as creating a revolutionary new invention, but it does insure customers and cash flow when you need it the most during your initial startup and growth phase.
Jon B. Fisher served as Bharosa, Inc.’s CEO until its successful acquisition by Oracle Corporation in July 2007. Jon became Oracle’s Vice President Product Management assisting with the release of Oracle Adaptive Access Manager 10g. Jon now serves as an adjunct faculty member at the University of San Francisco’s school of business. Jon’s unconventional 15-year software career, described in detail in Strategic Entrepreneurism. The book, which centers on the idea of designing a company specifically to be acquired by a larger one (rather than to become the next big IPO), offers a guide for ambitious entrepreneurs to help them complete their own successful acquisitions.