What aisle/what shelf?

I met with an entrepreneur this week who had a fantastic background and great technology. However, it was a technology in search of a problem to solve. Why? Because he could not readily answer some fundamental questions like what problem are you solving, who is the buyer of the product, and what is the amount of pain the buyer has without your product or solution. This is a problem that I see time and time again. Additionally, many entrepreneurs cannot answer the question, "what aisle, what shelf?" When you go to a supermarket you know that you go to the condiment section to find ketchup, mustard or BBQ sauce. On those shelves, you will find different types of condiments and different brands organized in a way that makes sense. While on any given visit you may see new products on those shelves, they are still condiments. Similarly, your sales prospects need to know where your product fits to determine where you come out of the budget and who is responsible for evaluating new solutions. If you try to create a brand new market category that no one understands simply that will not work. Similarly you do not want to sound like everyone else.

Going back to our earlier analogy, while you want to find a large enough aisle to put yourself into, the struggle is expressing your uniqueness in the 30 second elevator pitch. You do not want to be a "me-too" product lumped in with 30 other companies. If not done correctly, you could end up being thrown into the general data integration, security, or performance management pile. 2 approaches I have seen include defining your own category (aisle) or your own sub-category (shelf). Doing the former is riskier and more expensive (defining a new market is not cheap), while offering the opportunity for outsized returns. More often than not, entrepreneurs with great technology feel like they have to create a distinct new category, and many times they end up creating a market that no one understands or cares about and one in which their dollars come out of the experimental IT budget-not a large bucket or great place to be. It takes time for a new category to become a budget line item. In my opinion, creating a subcategory is easier, gives a company the opportunity to express its uniqueness, allows the sales prospect to understand generally where your product fits in the budget, and still does not prevent you from creating your own category (aisle) in the future. While this may all sound very basic, I would not go pitch a customer or VC without having this nailed down.

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This post was written by who has written 358 posts on BeyondVC.

One Response to “What aisle/what shelf?”

  1. Tom Krieglstein Feb 18, 2011 at 9:30 pm #

    Yup this just about sums up our experience with Red Rover thus far. Because we’ve been in the EDU market longer than the corporate market, I’ll share that story.

    The known tech budget in the edu space we were in was “group management software.” But it was a red ocean where everyone competed on features. We didn’t want to compete on features, AND we fundamentally disagreed that making groups function better was going to solve student apathy and increase engagement.

    So we tried to branch out and say everyone else is selling you a shinier horse and buggy, we’re selling you a car. And they would always say, “What’s a car?” And we’d try and explain and they’d be like, we don’t have a budget for that.

    So we then went backwards and tried to plant our ice pick as “orientation software” or “a better campus directory” both of which are known things, but budgets vary greatly between institutions.

    We’re are trying to find that balance between creating a new aisle that they don’t understand so we have to spend resources on educating them vs another shelf in which they can more easily spin to.

    It’s a fun process and we are heading in the right direction.

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