I recently had a very refreshing day in terms of strategic marketing. I spent several hours with two entrepreneurs in Toronto who are building a great business. It is the way they are going about building the business that is so refreshing to me. It is a well-focused, pragmatic, and calculated strategic campaign to ultimately be the 800 lb. gorilla in a well-defined niche market. I am speaking of Shaun Ricci and Somen Mondal, co-founders of N4 Systems, and their safety and compliance service, Field ID. More about their success and future plans in a moment.
The reason their approach is refreshing is because I have been exposed to ineffective application of Steve Blank‘s preachings (Not all those who wander are lost, The four steps to the epiphany, The startup owner’s manual, and his very popular blog at SteveBlank.com) as well as Eric Ries’ philosophies for new product development as prescribed in The lean startup. From some of my observations, I have struggled to understand how some startups will achieve success. There is a very complicated set of management disciplines, product attributes and distribution mechanics that need to fall into place to create the growth effect espoused. It works, don’t get me wrong. It just won’t work for everyone all the time, especially if there is not a clearly defined need or problem that people will pay money to solve. Which is to say that the problem definition must lead to a solution for which a market can be identified.
The techniques and teachings can be applied in such a way as to leave too much up to chance in terms of desired business outcomes. Perhaps the “blue sky” metaphor is taken too literally in some cases. In these cases, a technology is envisioned that has no clear and apparent utility in an existing economy. Therefore the Minimum Viable Product (MVP) becomes too abstract for people to understand, which impedes the acceptance and use of the technology in novel ways. I believe technology needs to be assembled into a MVP that solves a problem to which a majority in a target audience may instantly relate. It should also have a direct path toward a market that it might disrupt. I am a little old school that way. Measuring incremental improvements without direct correlation to a “next step” toward a desired market outcome seems problematic to me from a business planning point of view for all but a few exceptional cases.
On a billion-dollar growth path
Back to N4 Systems and the smart guys who have been nominated for E&Y Entrepreneur of the Year and who are building that Deloitte Fast 50 recognized business. These entrepreneurs appear to me to be solidly on the path to a billion-dollar business. Four years ago they saw a market that was underserved by technology and therefore ripe for disruption — the safety audit and inspection of cables used in construction (think cranes). Many of the characteristcs of an effective solution seemed apparent while others did not. They devised an application that addresses the apparent characteristics with a few features they reckoned would be useful. The fact that the MVP was born from previous contract work in the construction safety industry was very helpful. They understood that mobile and cloud enablement were keys to delivering a solution that had a chance of disrupting the current manual and paper-based methods of safety inspection, audit, and compliance reporting.
They raised a bit of angel money, built out the mobile platform, developed the initial solution and injected themselves into the market and started winning customers and delivering on the promise to increase productivity. These guys have a handle on all the important metrics needed to measure the success of the product, the health of the business and ensure they develop the right features and maintain the desired growth trajectory. As a result of measuring, adjusting and understanding their market, as well as the adjacent markets, they are evolving the product and growing rapidly. While I am unsure how much of the business is related to the original crane cable inspection, I can tell you they have diversified (or to use a Lean startup term — pivoted) to applications such as industrial “Lock out/Tag out,” the process of securing machinery for safe maintenance or repair, where they are achieving considerable success.
As a result of measurement and adjustment, they know what it takes to find and acquire a customer inclusive of lead generation, conversions, selling methods, cost to acquire, potential deal sizes, all of it. The business is modelled effectively using history and all of its learnings which are used to inform the future. As time marches on they have moved into adjacent use cases. Safety harnesses, building site safety and so on. These expansions into adjacent use cases were deliberate and driven by learning from customers who saw the applications and informed the development decisions. The expanded market opportunity is identifiable and the business outcomes predictable. None of this would have been possible without the first customer, and the first customer may not have come along if the MVP was not perceived to solve a problem that was real to them and easily understandable.
With laser focus on a specific market, they got to know it extremely well. The major players in the market ecosystem inclusive of competitors got to know them. As market knowledge broadens and relationships deepen, their ability to understand what is required, how to be positioned and how to win increases. This knowledge is translated into better product, better marketing and continued growth. Perhaps more importantly, this knowledge can be used in what they are planning now. This is where I go from being impressed with their success to date to being in awe of the position they have created for themselves and the opportunity in front of them.
After disrupting the process with an effective product and earning a coveted position as innovator in the market, they are now planning a disruption in the entire ecosystem that plays in that market. The beauty is that this is a short putt for them technically and as a business and it opens a 4x increase in total market opportunity. I won’t give away the farm on them and describe the innovation or what is being disrupted. I will say that I really like their chances. It is a well-researched business model, it has been applied successfully in other markets and these guys have a solid track record of execution.