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Today, he sent me the following testimonial via email:
I’ve had BUNCHES of failures. More than I can count. More than any sane “marketing guru” would care to admit in public.
About the time the first edition of the Facebook advertising book came out, we started a company called Fanalytix.
I got a call from one of my sales guys. “Perry, we’ve been in to see several large agencies and the customers are DROOLING over this thing. We’ve gotta throw all our muscle behind this, cuz it’s going to pay off BIG.”
Fanalytix gave you all kinds of amazing insights about your Facebook fans and helped you figure out how to target buyers.
I’m picturing our Software As Service company generating ongoing subscription revenue and eventually selling to a bigger company – maybe even Facebook itself – for millions. We’re drooling.
We even put callouts about Fanalytix with a free trial offer IN our published book itself.
We got the software to a functional state, and….
When it was time for people to write a check, they wouldn’t do it.
They said it was COOL – really cool – but they didn’t buy.
They gave applause, but no money.
We had to close it down.
This happens to marketers… a LOT.
When it does happen, at least we have an alibi: “Well, the customers SAID they would buy it. In fact, they were drooling. I have pictures of the drool dripping from their mouths. Hey wait, I think I even have a drool sample in my briefcase!”
So, here’s the deal:
If you can’t get ONE customer to write a check first, you shouldn’t build the product.
Had we said, “Write a check right now and we’ll give you a 75% discount. And we won’t even cash your check until the product ships” — the whole debacle never would have happened.
It costs you a LOT less money to sell Unit Numero Uno for a 75% early bird discount – having gotten a real check – than it costs you to build a finished product that no one wants.
Part of Success is Staying Alive Despite Failed Products
As an inventor myself, I am personally familiar with failed products. I have created over a hundred inventions and filed patent applications for several dozens. But many of my inventions did not work out in the market. Nobody wanted to pay money for them. So I abandoned the patent applications early, usually before they were granted. I cut my losses by not spending any more money and time on failed inventions.
A failed invention does not have to mean bankruptcy. I should know, because I am still here, running a successful company that has little to do with my failed inventions.
The difference between a successful company and an unsuccessful company is that the former has a high frequency of innovation, but does not get killed by its innovation.
Failed products are common. Many innovations do not make it to market. The trick is in recognizing the looming failure early enough so that you can cut off funding and free it up for other critical business needs. The important thing always is how to prioritize your resources such that the focus is put on what is a tangible success.
What happens when you do not do this? What if your priorities are all wrong, and you have zero strategy, no clue about patents, and poor business instincts?
Perry Marshall`s testimonial above emphasizes the message of my FREE “4×4 Innovation Strategy” book (click here). In my free book you can find the true story of Andy, an inventor. Andy invented a new optical testing system used in the making of pre-cast concrete buildings.
Andy’s Success Story As An Innovator
His is a story of success, because Andy avoided all mistakes that are typical for losers like Gene (Gene`s story is found in Chapter One of my free book “4×4 Innovation Strategy”, click here, and I recommend to read that book if you have an innovation):
- Andy had the right team from the beginning. Andy knew that he was a perfectionist engineer, and so he partnered with Peter, a flamboyant sales character who understood the market, and Mike, an analytical manager who was organised and got things done. From that onwards, he always had help. His core team was a mix of complementary personalities and skill sets. Gene started out alone, and stayed alone throughout.
- Andy had a realistic strategy. He was willing to plan and listen to expert advice. Andy did his homework, by identifying the phases his innovation would go through. The core team would make sure that their actions aligned with their desired outcomes. For every product phase, he and Mike would set aside a realistic time plan and budget, and Peter would reach out to his business network to determine interested market segments. If Andy got over-enthusiastic about the technical aspects, the others would bring him back to reality. All decisions made were based on knowledge of their competitive landscape. Gene lived in a dream world, had no plan, did not listen to anyone, and did not care about understanding his competitors.
- Andy’s R&D focused on what the market needed, and adapted the product accordingly. His original product was an optical testing system meant for swimming pool tubs. But Peter did market response tests, and realized that there was an untapped market – building contractors who wanted a testing system for documentation to defend liability claims by their developers. So the invention ultimately served to make buildings. Without getting actual input from the market, Andy would never have realized that. Gene stuck with his original idea, and never adapted his product to actual market demand.
- Andy’s R&D process was also efficient and timely. Mike mediated between the conflicting tendencies of Andy (product development) and Peter (sales). Often, Peter would find paying customers for early iterations of the product, but Andy would not be willing to sell the product until it was technically flawless. Mike would then convince Andy not to wait for a perfect product, and also persuaded Peter to not promise more than what they could deliver. If he had to, Mike would tear the product out of Andy’s hands and deliver it to paying customers in time. Gene had nobody to force him to deliver a finished product.
- Andy had a comprehensive FTO from day one. Andy, Peter and Mike checked existing patent publications to see if there was any possibility of infringement. They also checked for other business and legal issues like regulations and compliance. In addition, they researched potential obstacles, including hostility of competition, bad publicity, potential legal threats like product liability, lack of formal user training for device users, and dealing with device replacements, among others. All this preparation came in handy when Peter talked with potential investors. It generated trust and showed investors that the team knew what they were doing. Gene had zero FTO.
- Andy had a solid IP protection strategy and a patent attorney with the right technical background. Andy would note down every new inventive concept in a growing patent application document. Before entering the next product phase, he would secure a filing date by filing the document with the local patent office. Andy’s patent attorney was supportive of filing makeshift patent applications at an early stage without putting too much work time in, thus keeping costs down. This patent attorney also had an engineering background and previously worked as an R&D engineer in electromechanical measurement systems. So from a technical point of view, both of them were speaking the same language. Together, they made sure to file a litigation-grade PCT patent application for the four main aspects of his invention before the end of the priority year of his first patent application. Gene had zero IP strategy, and also listened to bad advice, filing expensive patent applications that had little or no value because they were not in line with his actual product.
- Andy did market validation using specific marketing techniques with the goal of generating customer response. Peter was an expert in online marketing, and the first thing he did was to set up a landing page with information about the intended product on the company website. They referred to this often when talking to potential customers and investors, thus saving a tremendous amount of time. Later, close to the launch of product v1.0, the landing page allowed them to collect the contact information of interested customers, in return for allowing them to download useful information about the product. That helped build up their email lists for later marketing purposes. Gene ignored all marketing activities.
- Andy talked to customers and investors from the beginning. Peter and Andy were aggressive in meeting people. They wanted to achieve maximum penetration of their target market. They attended trade shows where they met many potential customers. After, they would follow up with these people over LinkedIn and exchange emails, slowly building a relationship of trust. Within only a year, Peter had built up a database with 5,000 leads, from both potential customers and investors. Gene ignored potential customers and investors.
- Andy’s “bottom up” approach of first doing market response testing before developing the product led to strong investor interest. Peter leveraged his database with the help of a commercial CRM system. He could commit full-time to fundraising and sales, because there was Andy to develop the product and Mike to meet the deadlines. Peter put in an incredible amount of sustained effort, spending about 1,400 working hours over only four months, contacting and pitching more than 3,000 investors, and performing due diligence and term sheet negotiations. He was so busy that he had to hire two assistants for that. As a result, the team achieved investment of $1.5 million, before their product v1.0 was even ready. Their fundraising triumph made Andy realize that the success of their start-up was determined by their own financial inertia, and not so much by the quality of their product, as he had initially thought. Gene could not attract serious investors because there was no product to show, nor any existing relationships of trust.
Compare Andy`s success story above with Gene`s loser story in Chapter One of my free book “4×4 Innovation Strategy” book (click here).
Being an innovative person often is a curse, and not a blessing. Many innovators end up in bankruptcy and depression.
The difficulty lies in developing your fragile new ideas into viable, commercially-successful technologies. Because innovation, if done wrongly, has drastic consequences.
The good news is that there is a natural structure governing the field of innovation.
It is my calling to shed light on this structure. This is my ultimate reason for writing my free book “4×4 Innovation Strategy” (click here) for you, a professional who works with inventors. Because I want innovators to have a guide map for bringing out the best in themselves, instead of stubbornly fighting against nature.
Everything is connected. Gene was aware of the innovation tactics, but he applied them (or not) at the wrong time or badly. Gene’s approach was piecemeal, and never came together in a cohesive strategy.
Andy from the beginning had a clear long-term goal and a well-defined strategy, and applied every innovation tactic in an efficient and effective way towards that end.
Both Andy`s and Gene`s stories are found in Chapter One of my free book “4×4 Innovation Strategy” book, click here, and I recommend reading that free book before you turn an innovative idea into a real product or service.
Martin “Success” Schweiger