It’s a big dilemma in innovation: can you educate the market before you run out of money?
Mopinion from Rotterdam encountered just that, when they launched in 2011 as a self-service SaaS solution for reporting and analytics for online customer feedback. But at that time, the market was not educated enough to understand the solution – there simply was no one looking for it on the web.
Guestblog by Florian Kandler
Udesh Jadnanansing and his co-founders Kees Wolters and Floris Snuif had a tough decision to make: invest time and money to try to pioneer and educate the market; or to pivot into a B2B direct-sales model. Udesh shared their journey, the mistakes they made and what they learned on episode 021 of Startup Milestones – here are the key points.
The self-service platform was not taking off as expected. Customers were not searching for their innovative offering, let alone sign up to a self-service solution. “The market was not there yet”, recalls Udesh.
“We shifted to B2B sales towards enterprise customers, and it worked”, says Udesh. The Mopinion team set up direct sales, went ‘door to door’ and sold their solution to businesses who they knew had the highest demand and benefit from it.
Sounds like a successful pivot of the sales model? Well, Mopinion actually pivoted back to self-service a couple of years later, as the market got more educated and looking for self-service solutions. And Udesh shares two key learnings he and his team took out of their journey:
– the main focus early on was on ‘how to sell’, i.e. setting up a self-service platform and figuring out pricing, managing retention, etc. What Udesh and his team learned was that they had better focused more on ‘who to sell to’, and only once this would have been clear, decide on what the best way of selling to this target audience is.
– Mopinion switched to the more traditional direct sales model. They reduced efforts in educating the market to create a “pull demand”. This secured them revenues they needed to sustain the company. They had direct influence on who they reached out to, the number of potential clients they reached out to, and the conversion of those leads into customers.
But at the same time, they gave up their reputation as being the pioneer in the market. As the market matured and customers were ready to use a self-service solution, new players entered the market. They immediately had the reputation of being the new, innovative players. Mopinion ended up in the defensive position.
Udesh attests that this put them in a much tougher competitive position when the market picked up speed and got educated. Mopinion had to work hard, to re-ignite that brand awareness. “Don’t immediately change your complete sales strategy”, Udesh summarizes his learnings. Try to educate the market. Or you lose the pioneer reputation.
Mopinion has raised 500.000 euro from Capital Mills in July 2016 and is back in attack mode.
Mopinion’s journey is an interesting example of the dilemma many innovative companies face. The earlier you are to the market, the higher the risk that you will run out of money before the market is mature to enough to adopt your product. Some larger companies even run an active strategy to try to be “second to the market”. They let innovators struggle and fail until the first one succeeds and the market opens up. Then they step in – often with a lot more resources than the innovator. This is just one of the reasons why many tech investors want to see exponential growth: as an innovative startup, we need to get big fast, or we get squashed by the incumbents.
The whole interview with Udesh, where he also talks about bootstrapping and scaling the business with venture capital, is available on Startup Milestones.
Image: DariuszSankowski @ Pixabay
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