Go to Market (by Eduard Míka)

Reflex CapitalBlogGo to Market (by Eduard Míka)

19. 12. 2018

Founders often focus their company presentations on product and detailed elaborations on why is their product superior to that of their competitors. However it is not so important to have the best product on the market, what is critical, is the ability to persuade the market to buy it. Sometimes the market falls for the best product, but that’s almost an exception. Otherwise we would not use Microsoft Windows, successor of MS DOS, which was far from being the best product on the market. And McDonald’s products are also far from any culinary experience.

It is therefore quite surprising, that only a small number of company founders can clearly articulate, how they plan to launch their product on the market and sell a reasonable volume of it. Everyone knows that business is – like it or hate it – about making money, and it is not a beauty contest. So the plan must not be focused on how to make the best product, but how to persuade enough customers to spend money on it, and by doing that, how to secure sufficient funding for the company operations (so called “business model”). The model must not be immediately profitable, because short term the funding can be provided by investors, but even they will want a return on their investment eventually and business, that is not sustainable, will hardly find a buyer.

Long ago even door-to-door groceries were profitable. But a lot changed and labor costs are now the most expensive technology of ’em all. 25 years ago the average salary of a coder was $2,000 per month and a big disk storage costed $8,000. Nowadays it is exactly the opposite. The market has divided into B2C, where each product must be sold with minimum portion of labor costs, and B2B, where it still can pay to send a sales person to a client. And even in B2B the lower limit of a contract goes up. A $100,000 contract is no longer attractive if is negotiated over three iterations with complete technical team in Kuala Lumpur. So even B2B delivery is shifting to B2C automated model. Specifically how to get the product on the market with reasonable costs and reasonable margins, is the go-to-market Strategy. It is much more important, than having a product with a few more features over your competitors. It is an art … and even the best product on the market will fail, if the go-to-market strategy is wrong.