Wednesday, September 15, 2004

What's left for the little guy?

Here's a bedtime story that is bound to give me nightmares tonight. I've changed the names to protect my now possibly worthless secrets.

A moderate sized company, let's call them company Alpha has been selling an enterprise class version of Sydney (with a price tag to match) for a number of years now. I'll call their product New York. I wasn't previously aware of Alpha or New York although I was aware of other companies and products like them.

This moderate sized company has just been swallowed by an enormous company, let's call them company Beta. Company Beta sells software to just about every other decent sized company in the world and the products of company Beta and company Alpha compliment each other nicely.

So now company Beta can sell New York to its millions of customers worldwide. Over the next few years this new market which both Sydney and New York are part of will expand rapidly as company Beta aggressively pushes New York, its new product.

So where will that leave Sydney? A vapourware product that won't be ready until at least early next year up against New York, a mature enterprise product now with the backing of one of the largest software companies in the world.

I honestly don't know. Ever since I read company Beta's press release late this afternoon I've had knots in my stomach. When I got home from visiting clients I just couldn't face an evening of reading more about a deal that could very well signify the end of Sydney before it really even gets started. I tried to find some friends who live nearby but none of them were home. The anxiety and frustration levels were climbing fast so I went to the gym to try and work out some of the tension.

It's amazing what you can do with little fear induced adrenaline. I must have been there for more than two hours and I lifted an extra 10 to 20 pounds on just about every exercise. Finally I ran for 20 minutes on my not quite recovered sprained ankle to satisfy my self-destructive urges. I tried to think what I would do instead if I cancelled Sydney and questioned how I could be so arrogant as to think that I could simply quit my job and produce a world-class product that people would want to buy. I didn't find an answer to either question, instead just increasing the swelling around my ankle.

I'm back home now and the anxiety has been largely replaced by exhaustion. I'm sure in the morning it won't be as bad as it seems right now. I need to sit down and properly analyse the situation with a cool head. Maybe there are opportunities here I can't see right now or perhaps it will simply force me to cut my losses sooner rather than later. I'll just have to wait and see how the situation develops.

12 Comments:

At 1:35 AM, Blogger Brian said...

I think the key is to find a smaller segment of the business population that would be more inclined to purchase software from you instead of Alpha/Beta. Small to mid size companies probably won't need all the features of a full enterprise solution...or the price tag that goes with it.

 
At 4:05 AM, Anonymous Anonymous said...

Regardless of Company Beta's announcement, Brian's idea should be a big part of your plan. Narrow in on an area where you have an advantage.

Since we don't know any specifics of Sydney, all I can say beyond this is that you should keep your head up and keep working on your product. If you produce something great, it won't be lost under the shaddow of New York.

-Adam DuVander

 
At 5:15 AM, Anonymous Anonymous said...

This is actually very good for you. The increased exposure of the market will heat up interest in all options available. Most people will at least do a cursory review of other options before buying something. Just make sure that yours is an obvious choice over the other. Use your speed and flexibility as an advantage. The typical processes and red tape involved with a big company make it easy to beat them at customer service, ease of buying, etc. This is a good thing, not a bad thing.

--Josh

P.S. Your rss feeds keep pulling the Together, FDD, and one other post I can't remember. You might want to look into that.

 
At 9:18 AM, Anonymous Anonymous said...

I've been looking for an opportunity to develop a commercial software product. What happened to you, today, keeps happening to me. I find what I think is a cool niche. A week later I discover the $10+ million/year company (with offices in five countries) that *owns* that niche. And I ask myself, How can I compete with that?

Depressing.

Unfortunately, I don't have a solution, yet.

But there are two books you may want to read to help clarify your thinking. One is Positioning by Al Ries and Jack Trout. The other is Crossing the Chasm by Geoffrey Moore. I read the latter and hope to read the former, soon.

 
At 11:09 AM, Anonymous Anonymous said...

Hmm .. quite depressing eh ?!!.

Well, as a product manager, I had faced this situation quite frequently in last few years.

Find out where you want to place your product. If you want to clich your fist with the big giants, then you won't be anywhere. Place it just below the big brothers, in terms of features and price.

If it helps, Eric Sink went through a same scenario

 
At 10:48 PM, Anonymous Anonymous said...

The company I work for has a similar problem-every 2-3 months we put together funding proposals for the government on some topics of interest. Our first task is to figure out who we're competing against, and inevitably we find that they're somehow better qualified / positioned than we are.

The trick, I have found, is to differentiate yourself. The best way to do that is a "trade table." Gather together all the characteristics of your proposed solution, and any and all competition. Start fleshing out your table-put each competitor and yourself in columns, and the characteristics you can compare in rows (e.g. price, platform compatibility, support, etc.). Fill in the table, and try to make it as quantifiable as possible.

Now, find something that you can use to separate yourself from the competition. Often it's a gap in the trade table-there's a characteristic you've been planning for your product (or it already has), for which there's a blank in the competition's entry. Even if it's not obvious at first, there's always something you can use. That's your "in," that's your marketing angle as to why somebody would pick you over the competition.

Anyway, apologies for the long response, and best of luck.

--Chris Coughlin

 
At 1:20 AM, Anonymous Anonymous said...

> If it helps, Eric Sink went through a same scenario.

Yes. It would be easy to end up Whining by a Barrel of Rocks. But that's not what we're doing, so far.

We know we are surrounded by opportunities, we just haven't learned to see them. Hopefully the "trade table" suggestion and books will help.

 
At 2:39 AM, Anonymous Anonymous said...

If your analysis/description is accurate, I'd say that this is a net benefit for you, BUT -- it's a good time to back and sanity check your analysis.

The reason I think it's a net benefit is that you already had the huge vs tiny problem with the "moderate" size company, so you had to have plans to differentiate yourself in product features, channel, etc (just price is not a good differentiating strategy in my opinion).

The huge company is going to be much better able to grow the market and increase awareness, increasing the size of the available market, making your sales job easier. Rather than saying, "Imagine a program which does . I call that program Sydney and here's why you need it." you can just ask "Wouldn't you like something like New York which also whitens teeth?" Since everyone knows New York, this is much simpler!

Like I said up top though, I'd go back and take a renewed critical look at your market analysis and think through whether your situation has improved, worsened, or stayed the same.

Tom

 
At 3:59 PM, Blogger Tejas Patel said...

Good luck m8. Keep us posted.

 
At 2:25 PM, Anonymous Anonymous said...

I wouldn't worry too much. If it is a M$, you may need to adapt your strategy. You have a powerful position in being a single developer in that your return on investment doesn't need to be as high as a corporate, so you can compete at a price point. You also have more flexability in what you develop and how you develop it. Just because it is a bigger company doesn't make it better. Look at ways that you can differentiate yourself. Ask yourself how does it really affect things. Does it have a market now? You should do interviews with potential clients to see if it is actually a big a deal as you think.

You should read the Innovators Dillema to get some tips on what you need to do. It is just as important to have a market strategy as a software development strategy.

-Glenn Stephens

 
At 3:08 AM, Anonymous Anonymous said...

Nearly every marketplace has multiple competitors who find success. As others have noted, ride the market-awareness coattails of the well-funded company using their ability to inform the market of the product value and then attack their flanks. All big software companies I have worked with and for cannot outperform a smaller, hungrier, more customer-focused competitor.

You can be more efficient, you can be less expensive (and still as profitable, if not more, after break-even), you can be FAR more customer-friendly and flexible, you can deliver a product that has less feature-bloat, you can deliver a product that is FAR easier to implement, use, and support, you can deliver better documentation, you can craft simpler contracts, you can make doing business far easier, you can avoid outrageous maintenance fees, you can use a simple pricing model, you can (and should) go out of your way to make sure your customers are happy, you can occasionally work for free, you can avoid making the customer traverse multiple layers of bureaucracy to get something done, you can focus on the problem-space better than the behemoth with a catalog of products, and you can develop better relationships with customers.

All the large companies have over you is more market awareness and more capital. That’s a lot, but it isn’t enough. If, however, you are primarily focused on product features as your main selling point, you stand a good chance of losing (unless your product is so revolutionary and amazing that it sells itself). You need well-rounded excellence – you need to create a strong product and deliver it well.

David Andersen
dandersen@mchsi.com

 
At 3:12 AM, Anonymous Anonymous said...

oracle peoplesoft etc. etc. ????!?

 

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