Developing Products for The Fortune 1000 vs. The Fortune 1,000,000
When brainstorming new product ideas to build businesses around it is important to consider what kinds of customers you’ll be servicing. They tend to fall into two categories: the enterprise and the small business. Both are good but each has a tremendous influence in how you develop your product and grow your business. In both scenarios you must undertake customer development and be agile.
If the goal is to build a product for the enterprise customer development will include reaching out to the decision makers and CIOs. In this scenario the couple of enterprise customers you are working with will have a tremendous influence over your product and may influence your platform decisions. Example, most IT departments do not want their data in the cloud and would like to host their own information. As a result your development team maybe larger. As a result of having a larger team you may have to implement a more formal agile methodology such as Scrum. You will eventually need to bring in sales and account managers to grow and maintain accounts. Pricing for such products tends to be higher as it reflects the overhead involved servicing an enterprise client. Overall, it’s a larger scale operation with more management overhead. It is also very likely that you will need financing to scale and grow the operation.
If the goal is to build a product for the small businesses you may be reaching out via social networks, community sites, etc. to undertake your initial research. You will also probably meet with many people face to face to gauge interest in your idea and ultimately have them evaluate your product demo. The application will most likely have a smaller footprint as small businesses are more likely to use cloud services (aka software as a service). With hosted solutions you are able to choose the technology platform, Ruby on Rails, Django, or any other rapid application development framework. As a result your team size will be smaller. The smaller team size allows for agility. With the smaller team size you most likely will not need additional management overhead. You are aiming to service a larger client base that most likely will not need professional services. Which in turn allows you to charge for the service at a lower price point. There is no need for sales and account managers for products of this scale. If you are developing a product for this segment it can easily be turned into a lifestyle business.
In speaking with entrepreneurs I find that they dismiss opportunities that are possible when attempting to build products for the small business segment. Their idea of success is go big and get funded, get an office, hire lots of staff because that’s what successful businesses do. It is very possible to build a lifestyle business that earns enough revenue for you and your team to continue working on the product full time. It allows you to grow the business and product organically without significant pressure from a large client or investor with minimal risk. At a fundamental level I think it’s people’s belief on what constitutes a successful product. It all depends on your definition of success. Will you build something that millions of people will use? Probably not. Is it possible to develop a product that 5000 people might find useful and wouldn’t mind paying $20.00 per month for? Possibly.
