You Want to Start a Company. Where Do You Begin?

By Barbara Nelson August 09, 2007

Find a problem, solve the problem, tell the world you solved the problem, and sell it.

If you’re market-driven, find a pervasive problem people are willing to pay to solve, don’t over-engineer the solution beyond what people are willing to pay, tell a well-defined set of prospective customers, and sell it profitably.

Even Intuit®, a multi-billion dollar software company, started with only two guys: Scott Cook, who cut his teeth at Proctor & Gamble® and Tom Proulx, a Stanford engineering student. Intuit is one of the most market-driven companies I know.

The idea for Quicken®, the first product, came to Cook when his wife was complaining about balancing her checkbook. But he didn’t rush out and build a product.

Find a problem

Cook used firsthand customer data to support his intuition. Before writing the first line of code, he called people to find out whether they disliked dealing with personal finances. He randomly called people in two communities representing upscale consumers likely to buy PCs. He hired his sister-in-law to call hundreds more to get a deeper understanding.

As Intuit grew, they institutionalized first-hand customer research. In 1989, six years after Intuit was founded, they created “Follow Me Home.” People throughout the company regularly watched consumers use the products in their natural habitats. The motto, “We Are Not Our Customers” was bred into the company culture.

Solve the problem

Intuit designed a system that looked the way people do it manually. Quicken was the first product to use the checkbook metaphor. The user interface emulated what consumers were familiar with and didn’t ask them to change their orientation.

Intuit didn’t lead with technology. Cook saw the potential of the exploding PC market, but didn’t try to “create a need.” The technology was not an end, but a way to improve customers’ lives by managing the tedious task of managing personal finance. They beat the competition by having a much deeper understanding of the problem through direct customer research. In fact, there were 46 competitors when they launched Quicken. Cook and Proulx used to joke about having 47th mover advantage. But the competitors didn’t understand the fundamental problem and created hard-to-use products, focused on features, not customers. Intuit understood that their main competitor was a pencil, not other software.

In order to beat a pencil, the goal was that a PC novice would be able to write a check within 15 minutes of opening the package. The goal was achieved.

Tell the world

With Cook’s solid grounding in consumer marketing, he knew he needed to not only build the right product, but that he needed good marketing. It didn’t happen overnight (they almost ran out of money before succeeding). He knew it was critical to focus on consumers’ problems (“End Financial Hassles”). Intuit used testimonials, direct-marketing (magazine and TV ads), and engaged press and industry analysts to help spread the word. Marketing tested everything from response rates to observing how customers reacted to packaging in the stores.

Intuit knew “we build it, they will come” would fail. They invested in marketing from the beginning.

Sell it

In order to reach critical mass, Cook knew he had to leverage distribution channels. He forged strategic alliances with banks to distribute the product to their customers. He knew the retail channel was a critical component, but until customers began requesting the product, the stores wouldn’t carry the title. In order to successfully sell, the marketing efforts had to go hand-in-hand.

So what have you learned about starting a company?

Find a problem, solve a problem, tell the world, and sell it.

Categories: Leadership Market Analysis
Barbara Nelson

Barbara Nelson

Pragmatic Marketing, Inc. has continuously delivered thought leadership in technology product management and marketing since it was founded in 1993.Today, we provide training and present at industry events around the world, conduct the industry’s largest annual survey and produce respected publications that are read by more than 100,000 product management and marketing professionals. Our thought-leadership portfolio includes the Pragmatic Marketing Framework, e-books, blogs, webinars, podcasts, newsletters, The Pragmatic Marketer magazine and the bestseller “Tuned In.”

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