4 ms·

you have the aforementioned domain expertise shortcoming This seems a little harsh or judgemental. Big Co's don't care about your 10pc better product, because

by 001sky 13y ago

you have the aforementioned domain expertise shortcoming This seems a little harsh or judgemental. Big Co's don't care about your 10pc better product, because it may be 10% of a cost center that is maybe 15% of revenues. That makes it a 1.5% margin business for them, which is literally not material. Given the politics of BigCos, the top guys have limited bandwidth. They typically don't want the brain damage associated with taking on operational risk for non-material benefits on the upside. Its a distraction, and a fundamental conflict of interest for them. The quality of your sales guy, is only so good as he helps develope a product with lowe operationa implementation risk and has the already-in-place-relationships with a BigCo to de-risk their adoption. even in the best case, its a tough sell. The better bet is to show up with a 10x solution. That turns a 15% cost into a 1.5% cost, and creates a 13.5% increase in profitability. Now that you are moving the needle, you will get people's attention. Even at sr. levels...Just some things worth thinking about. As petet thiel rightly notes, there are varying abstractions of 'sales' skills that come into play, not all are of the door-to-door "sales guy" variety.

7Figures2Commas 13y ago
> This seems a little harsh or judgemental. It wasn't. My statement was prefaced with "If that's the case..." > Big Co's don't care about your 10pc better product, because it may be 10% of a cost center that is maybe 15% of revenues. That makes it a 1.5% margin business for them, which is literally not material. You're missing the point: you realistically aren't going to know what product to build, or be able to assess its value before you build it, if you have no domain expertise. An entrepreneur with domain expertise is far less likely to build a product that doesn't create enough value to be viable than an outsider who doesn't understand the businesses he's targeting. In other words, the entrepreneur who actually understands what he's doing because he understands the industry probably isn't going to build a 10% better product that is 10% of a cost center that is associated with just 15% of revenues.
- deleted 13y ago
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  - energyboy 13y ago
    i agree and am also a big believer in the notion that your product usually needs to be 10x better to displace the competition. however, sometimes there is benefit in not being a "domain" expert. naivety can drive an entrepreneur to do what industry insiders have been conditioned to believe is impossible. while young entrepreneurs are inexperienced, their age also works to their advantage in certain situations.
    - 7Figures2Commas 13y ago
      > i agree and am also a big believer in the notion that your product usually needs to be 10x better to displace the competition. Do you have any evidence whatsoever to back this notion up? Without much effort, I can think of a lot of markets in which this isn't the case. One example: eDiscovery software for law firms. There are young companies gaining traction in this market and they're absolutely not "10x better" than the competition as far as technology, usability and overall sophistication go. Some are actually less robust than the competition but are able to compete on price alone because there isn't always a need for the Cadillac offerings.
      - energyboy 13y ago
        in the example you bring up, these new eDiscovery software providers are competing on different dimensions. in fact, i would argue that they're carving out a new market (smaller law firms who don't need the cadillac)/disrupting incumbents through a simpler product that better fits the needs of a different type of law firm customer. in this situation, they are a "10x" better product in terms of a better product-company size fit + pricing that is orders of magnitude better (enabled by the focus on a different customer set with a simpler product).
        7Figures2Commas 13y ago
        > in the example you bring up, these new eDiscovery software providers are competing on different dimensions. Uhm, most businesses compete "on different dimensions." What's your point? > in fact, i would argue that they're carving out a new market (smaller law firms who don't need the cadillac)/disrupting incumbents through a simpler product that better fits the needs of a different type of law firm customer. Ironically, you're providing a perfect example of the importance of domain expertise because I can tell from your comment that you're not familiar with this market: 1. Not all of the eDiscovery upstarts, many of which are engaged in offering hosted document review, are targeting smaller law firms. In fact, this really isn't such an attractive target market because small law firms are far less likely to have cases large enough to warrant the use of a hosted document review service. 2. Large firms have relationships with multiple eDiscovery vendors, so an upstart vendor has the opportunity to play ball without having to displace entrenched competition in one fell swoop. 3. eDiscovery is ultimately paid for by the client, so clients make the final decision on which vendor is used.

by 001sky 13y ago

7Figures2Commas 13y ago

> This seems a little harsh or judgemental. It wasn't. My statement was prefaced with "If that's the case..." > Big Co's don't care about your 10pc better product, because it may be 10% of a cost center that is maybe 15% of revenues. That makes it a 1.5% margin business for them, which is literally not material. You're missing the point: you realistically aren't going to know what product to build, or be able to assess its value before you build it, if you have no domain expertise. An entrepreneur with domain expertise is far less likely to build a product that doesn't create enough value to be viable than an outsider who doesn't understand the businesses he's targeting. In other words, the entrepreneur who actually understands what he's doing because he understands the industry probably isn't going to build a 10% better product that is 10% of a cost center that is associated with just 15% of revenues.

deleted 13y ago
[deleted]
- energyboy 13y ago
  i agree and am also a big believer in the notion that your product usually needs to be 10x better to displace the competition. however, sometimes there is benefit in not being a "domain" expert. naivety can drive an entrepreneur to do what industry insiders have been conditioned to believe is impossible. while young entrepreneurs are inexperienced, their age also works to their advantage in certain situations.
  - 7Figures2Commas 13y ago
    > i agree and am also a big believer in the notion that your product usually needs to be 10x better to displace the competition. Do you have any evidence whatsoever to back this notion up? Without much effort, I can think of a lot of markets in which this isn't the case. One example: eDiscovery software for law firms. There are young companies gaining traction in this market and they're absolutely not "10x better" than the competition as far as technology, usability and overall sophistication go. Some are actually less robust than the competition but are able to compete on price alone because there isn't always a need for the Cadillac offerings.
    - energyboy 13y ago
      in the example you bring up, these new eDiscovery software providers are competing on different dimensions. in fact, i would argue that they're carving out a new market (smaller law firms who don't need the cadillac)/disrupting incumbents through a simpler product that better fits the needs of a different type of law firm customer. in this situation, they are a "10x" better product in terms of a better product-company size fit + pricing that is orders of magnitude better (enabled by the focus on a different customer set with a simpler product).
      - 7Figures2Commas 13y ago
        > in the example you bring up, these new eDiscovery software providers are competing on different dimensions. Uhm, most businesses compete "on different dimensions." What's your point? > in fact, i would argue that they're carving out a new market (smaller law firms who don't need the cadillac)/disrupting incumbents through a simpler product that better fits the needs of a different type of law firm customer. Ironically, you're providing a perfect example of the importance of domain expertise because I can tell from your comment that you're not familiar with this market: 1. Not all of the eDiscovery upstarts, many of which are engaged in offering hosted document review, are targeting smaller law firms. In fact, this really isn't such an attractive target market because small law firms are far less likely to have cases large enough to warrant the use of a hosted document review service. 2. Large firms have relationships with multiple eDiscovery vendors, so an upstart vendor has the opportunity to play ball without having to displace entrenched competition in one fell swoop. 3. eDiscovery is ultimately paid for by the client, so clients make the final decision on which vendor is used.