Four steps to increase your odds of success launching an edtech product
As a startup operator, I participated in seven new product launches selling to schools, districts, colleges, and universities. There were many other product ideas that were never developed (that’s a good thing — we likely saved both $ and the market from ideas that weren’t going to work!). Over the course of those product development cycles we made plenty of mistakes, but we also successfully rolled out products that turned into hundreds, even thousands of paying institutional customers for these new products.
Here are four important takeaways about what I learned launching these new products if you want your launch to succeed:
- Look for prototypes for early signs of a market.
If you want to identify signs of demand for your product, look no further than the current activities of your target customers. Innovative teachers and school leaders often realize they have a problem before entrepreneurs do. That’s why they build in-house prototypes in order to address the problem.
What does a prototype look like? Well, for example, prototypes for school workflow products often involve off-the-shelf tools like Microsoft Word or Google Docs or MS Excel or Google sheets. You can find prototypes in most schools and districts across the country. Teachers and school leaders use these tools and more to create a solution as best they can. When prototyping, teachers and school leaders invest time and energy into the tools they have available, and often (not always) are limited by what these prototypes can do. Customers who build in-house prototypes do so because the current choices in the market don’t meet their feature or price needs. The prototypes are useful, but many customers want more than the prototype provides.
This is an opportunity for an entrepreneur to drill down and learn more about the prototype, what problem it’s trying to solve, and what the customers likes and doesn’t like about it. If there’s pain in building/maintaining the prototype and there’s a pattern of similar prototypes across a set of schools or districts, this is a strong signal of an early market and spells opportunity for an ambitious entrepreneur.
- Develop a product thesis (or two or three) and meet with potential customers.
Once you’ve found a problem you can solve, put together your product thesis. This is as simple as a slide deck that describes your understanding of the problem and the proposed solution. The key here is to not over-invest or over-engineer a product at this stage because you still don’t know if your product idea is worth building. Continue learning about the market opportunity and whether or not you have an idea that will resonate with your target audience. Meet with lots of potential customers with the objective of learning more about the problem, getting feedback on your thesis, and iterating the product idea. You’re focused on research and development at this point, not on selling.
How do you know if you’ve met with enough prospective customers to validate or invalidate the idea? Eventually, conversations become more consistent with customers nodding their approval for your proposed solution. At this point, you might be onto something, but you’re not there yet.
- Drill down to see what customers are willing to pay for early on.
Once you validate the problem and proposed solution, don’t stop there. Dig in and ask questions that help you determine what (if anything) customers are willing to pay for your solution. Ask a customer if they like the product. Then ask them if they’d pay $5K or $10K a year for it. Listen as the whole conversation changes. Key questions include:
- “What’s an acceptable price for this innovation?” (this is a low-friction price)
- “What’s an expensive price for this solution?” (this is a price that captures the value you’re offering), and
- “What’s beyond what you’d be willing to pay for this solution?” (you’re out of the money with this price).
You’ll learn what they’re willing to pay for and get valuable information on how to charge as well.
4. Keep grinding away at R&D until you can pre-sell customers.
This step is difficult and requires discipline, but it pays off when you do it. Pre-selling an initial cohort of customers at a price that works for your customers and that you’re willing to accept accomplishes a few key things:
- It’s a strong signal that there’s real demand for your solution. Customers who are willing to pay for your product before it’s built are bought into your product being a must-have, not a nice-to-have.
- Second, you need co-creation partners with a voice into how your product is developed from day one. Without these partners, you run the risk of building your product in a vacuum and then having to redo it when customers get their hands on it. You could give away the product, but customers who get something for free are more reluctant to give direct, honest feedback. Early customers with skin in the game give it to you straight.
- Third, you now have product development that’s paid for by customers. Congratulations!
Following this process also helps you determine price before you go to market with the knowledge that customers are willing to pay. Determining price just before going to market is a recipe for failure. Don’t make this mistake as you develop new products.
What other product development moves have you seen that help ensure a successful launch? On the flip side, what happened that sabotaged your launch or caused problems? I’d welcome your thoughts.