Business is a lot like sports. I learned loads of business metaphors growing up on fields, courts, and diamonds. And because my biggest startup exit began as a sports-data play, those metaphors were extra-valuable.
But there's one glaring difference between business and sports that tends to trip up a lot of business leaders. Unlike sports, talent and hard work aren't enough to get into the business "big leagues." If you want to win with a startup, you need to change the game.
I'm not just talking about a "game changing" product. You also need to change the rules of of the game by creating and then dominating a brand new market.
How New Markets Get Made
I learned this lesson at Automated Insights, where we created automated narrative stories out of data. To show off our amazing tech, we built websites for every professional and college football, basketball, and baseball team in the U.S. We then updated those websites up to five times a day with our automated content , including game recaps and previews, and player-stat profiles.
This blew people away. However, almost every single one of those 800 teams already had human reporters covering the team. That market was long-established, highly-competitive, and frankly, our solution wasn't much better.
Then we went to fantasy football. For Yahoo Fantasy Football and NFL.com, we created millions of matchup recaps every week (and still do today). It was (and is) a wildly successful application of our tech.
Instead of competing in the sports journalism market, we developed a new market around writing stories where it was impossible for humans to write stories. We expanded out of sports into finance, marketing, and other industries, and we sold the company to a private-equity firm four years later.
Here's how we developed the market that proved to be a slingshot for our product. It boils down to three basics.
1. Start with the end game and work backward.
I often talk about the three stories of startup. There's the A Story, what you're doing today, the B Story, what you plan to do at the next level, and the C Story, what's going to get you to a billion-dollar valuation.
All your time and energy should be spent moving the A story forward, with some focus on the B story and maybe keeping the C story in the back of your mind. But the key to innovation is writing the C Story first and working backward to develop your B and A stories.
A lot of startup leaders just work on what's in front of them and worry about the future when the future arrives. But if you don't have a billion-dollar plan, you won't have a billion-dollar future.
2. Don't play the incumbent's game.
We want our startup to be "X but better" -- where X is any unicorn startup and "better" means cheaper, faster, more engaging, or whatever.
It's easier to find initial traction when you target a known market with a known offering.
But if your customer is already familiar with your offering, it's likely because they already have a solution. Now your product is no longer solving a problem -- at least in their minds -- it's solving a problem that's already been solved but a little bit better.
If you're going after an incumbent, don't play the game on their terms.
- Don't speak to the problems they solve.
- Don't target their customer champions and personas.
- Don't use their vernacular and language.
- Don't measure your product's benefits with their metrics.
Instead, tie your own strengths and weaknesses directly to the customer's revenue, and show how you can increase it.
3. Build a customer bridge from the old to the new.
If you're going to develop a new market, your customers are going to need help moving from the old market to the new market. There are three components to building that bridge.
- Education. Once we stop using "X but better" and all the incumbent terms, we're leaning on something that's never been done before. Thus, few sales will happen without some education. Once your prospects understand what it is you're truly offering, the sale becomes exponentially easier. So build a team around prospect education.
- Onboarding. Again, if you're first to a new market, your customers are not going to have the built-in expertise to get the most out of your product. Onboarding becomes a critical tool in getting their organization to a point where they can take full advantage. This includes a customer success team on the front end and a managed services team on the back end, both working to get the most out of your product for every single customer.
- Evolution. In every new market, you're going to have traditionalists. Almost every innovator I work with has at least one customer who pays them to do things the old way using the new tool. Consider these folks dinosaurs who don't want to evolve. You can still serve these customers, just don't change your product to do it. Build hacks, hire temps, whatever it takes to get to revenue without going backward.
Listening As a Startup Superpower
Remember, your customers will define the market rules, not you.
You may be on the forefront of innovation with your product, but the ultimate success of product fit in your new market depends on a balance of how your customers adopt your product and how your startup feeds that adoption.
Too many startups make the mistake of anticipating what the customer wants next. Customers will tell you what they want if you listen, so make sure you're listening. Once you've got their ear, it's too late for your competition to beat you.