Digitera was founded on the premise that many organisations are strong on technology but would benefit from assistance on the marketing and business front. As such, we have the opportunity from time to time to work with entrepreneurs looking to take their products to market, to secure investment funding, etc.
So while we see some interesting product ideas, business models, and investor presentations, we also see a lot of mistakes—common mistakes—that hurt an entrepreneur’s chances of success in securing funding or successfully launching a product. These are real world examples, though names have been changed to protect the innocent.
Big Mistake #1 — We have NO competitors
One of the most frequent mistakes we have seen, both at Digitera and in past experience, is when an entrepreneur claims that there are no competitors for a given technology or a proposed product / solution. This is actually one of the worst claims you can make, and will immediately cost you the credibility you dearly need if you are looking to raise funds.
First point: There are always competitors, either partially or completely, for any market pain that you propose to solve. The most prominent among these competitors is the one that you know already, and which probably led the entrepreneur to imagine something better. It is called the status quo. It is the way things were, are, and always will be if no one proposes something better. But it is a competitor nonetheless. You need to know this competitor just as well as you would any formal, branded competitor. Failure to understand what causes the status quo to remain the status quo will condemn you to never displacing it.
From a technology perspective, the greatest competitor to many solutions has historically been Microsoft Excel. Yes, the status quo solution—the “good enough / if it ain’t broke, don’t fix it”— is a 20+-year-old spreadsheet application. Status quo, thy name is Excel. Before Salesforce.com, before SAP, before so many other leading lights of tech, there was Excel.
And before Excel—before Visicalc to be honest—there was the word processor, and before that, the paper ledger, and the abacus, etc. Each invention displaced the previous status quo. But you can be sure that the inventor of the abacus had to communicate why counting on one’s fingers and toes was no longer good enough. (Big Idea™ at the time: I predict that someday you will need—not just want—to count to 21 !)
Then there are the numerous real competitors from whom customers are purchasing already. They may be competitors with a partial solution to the problem or they may be companies selling solutions that customers are repurposing—unbeknownst to their vendors—to address the market pain you are proposing to solve. You need to be aware of these types of competitors. You will find out about them by talking with your target market BEFORE you talk to investors (or the company’s leadership team if you are developing a new product internally).
Second point: Unless you have the ability to predict the future or have perfect knowledge about the present as it relates to the activities of everyone on the planet Earth, you cannot be sure that no one has launched (maybe in a different language for test purposes), is currently working on, or plans to work on, a competitor to your product.
Once you put up your website, once you make a presentation at a conference or a prospective customer about your offering, the cat is out of the bag. The idea behind your product—if not the details—are now in the public domain. There are no products that can’t be replicated if you throw enough capital or manpower at them. And when you can hire 10 engineers in Vietnam for the price of 1 in Silicon Valley to fill in the details between the product idea and a shipping product, you can be sure that your product can and will be replicated at some point, probably for cheaper than it took you to do originally.
Even if you can afford to patent an idea, and to defend that patent in the court system (which may or not be in the jurisdiction you are based in), the damage will be done. You are better off to accept that you have or will shortly have competitors and to instead focus your efforts on capturing and locking in market share for the long term. (This is where the sales and marketing folks come in.)
Third point: If you are looking to raise investment capital, the most important reason that you want to show that you have competitors is because you want to demonstrate that there is a market with people actually willing to pay to make the pain go away.
If a market pain can’t be monetized, there is no market. It’s a charity case and probably not something that you are looking to build a business on.