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| Probing the Pitfalls |
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Find the pitfalls." Three simple words that signaled the client seated opposite us in an Israeli office was serious about investigating the market prospects for his product — even if the results spelt the death of what appeared to be a promising new product.
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"The successful man is the one who finds out what is the matter with his business before his competitors do."
– Roy L. Smith
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His approach was a refreshing one. The success of Israeli high-tech has led many to believe that all
it takes is a good idea, hard work and a little luck to become another CheckPoint. But, as Check Point's
CEO Gil Schwed recently pointed out in a Globes article entitled "Dreaming of a Successful Start-Up?," the
idea and the technology upon which CheckPoint was based lay dormant for three years until the potential
market and business model were identified and, from then until the real financial success, several more
years went by.
Canny developers take the time and the money to ascertain if their brainchild really has a potential market — if the investment will justify the effort. And this is just what our client requested we do: investigate the market and ascertain if the product he envisaged launching would meet market needs. "Find the pitfalls," he urged.
 Subsequent market research showed that the market was not ready for the product in the format the client had envisaged. But instead of being discouraged, or angered, by our findings, the client decided to redesign the product to meet market needs.
Israeli entrepreneurs, living far from their main markets, are somewhat notorious for developing products ahead of their time and generating new technologies that the market just is not ready for. "Some clients are unwilling to accept that the market isn't geared for their brainchild," says Steve Rhodes, managing director of The Trendlines Group. "It's very hard to dispense with cherished beliefs about a proposed new product or technology and to have to go back to the drawing board. That's why when we come back to a client with a negative report on the market feasibility for a product, we do our best to present workable alternatives and wherever possible, encourage clients not to disband the project but to channel their R&D efforts in a different direction."
"Do your homework," urges Rhodes. "Don't just rely on what's posted on the Net and published in the papers. Speak to industry leaders and people in the know about where they believe a product or technology is heading. They might see a need for your product and have some very specific suggestions about what features the product should incorporate. They might say there's no future for your product and save you from making a very expensive mistake. They might tell you that the technology you are developing would be of use to a limited market sector, and that the cost would be prohibitive.
But until you talk to the right people, and take a long hard look at what the competition's doing, you're making assumptions that might not fly in the real world." Of course, you need to know the frame of reference of those with whom you are speaking, and why they are willing to speak to you — what's their agenda?
"Sometimes, our clients get nervous when they learn that there are already competitive products in the sector they want to enter," comments Rhodes. "But the presence of competition shows us that we are not going where no one has gone before. Active competition suggests that there is a market for a product and reveals a great deal about market interest. Someone else has already laid the groundwork, investing money in educating the public and advertising. To be the market leader often means you're ahead of the game and while this can bring the greatest rewards it surely presents the greatest risks as well. With the massive investment in introducing a totally new product concept to the market, it's often the later entrants who end up grabbing the lion's share because the groundwork has already been laid."
"The path to market is paved with pitfalls," observes Rhodes. "But taking the pragmatist's approach and anticipating potential problems in the project initiation stages is a lot healthier than fighting fires when the product's on the production line or piling up in a retailer's warehouse."
"Bearing in mind the dismal failure rate of start-up companies (more than half of this year's start-up companies will fold within three years), potential entrepreneurs would do well to test the waters before they get in too deep," he concludes.
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