As a startup founder, you need to know the market you’re aiming for inside and out: not just your prospective customer base, but what your competition is like and who they’re aiming for. Where do you look? How do you do it? Where do you even start? HP Tech Ventures partner Angelo Del Priore knows, which is why we have him come give a talk to our cohorts about the strategic value and techniques of market and competitive research. We caught up with him afterward for a brief follow-up conversation:
HWY1: What’s the most commonly overlooked element when doing market research?
ADP: People too often rely on top-down market research instead of doing the hard work of a bottom-up synthesis, forming their own understanding of the market they’re going after, and really developing an understanding of the ins and outs of their industry: this many customers, this price range, this amount of recurring revenue, etc. Anyone can refer to the same five analysts: you need to have done the bottom-up work yourself.
Your talk goes deep on competitive analysis with a lot of different real-world examples; how do I determine what the most important competitive factors are when performing my own?
Talk to your customers with an eye toward what they think about when they’re going through the purchase process: what are their top 3–5 criteria? When you’re buying a PC, for example, it’s price, GPU, CPU, etc. When you’re buying a watch, it’s fashion, color, brand image, etc. Every customer goes through their own purchase process with slightly varying criteria, but I would argue that in whatever market you’re going after, there are always going to be certain criteria that will aggregate up. You’ve got to understand what’s most important for your target customers, and convey that you know this market in your bones.
All of this analysis and research seems like a full-time job; as a first-time CEO, how do I prioritize which things to actually do?
When you’re fundraising, it’s worth your effort to do a quite a bit of secondary research to get grounded on the market: your competition, the supply chain, potential customers, trends, etc. You’d better know every market research report that I’ve seen and then some, plus all of the relevant government statistics, podcasts, speakers, etc. After that initial deep dive, I think a CEO should spend on average of a couple of hours a week looking at secondary data — it’s a great way to efficiently stay on top of what’s happening. Given that the CEO is their company’s number one salesperson, PM, hiring manager, and so on, they can’t be making informed decisions if they’re not constantly learning and up to date. One of my favorite ways to do that is attending conferences, which make it easy to see everyone’s latest public positioning as well as provide opportunities to chat informally with people. A very light method is to set up a couple of Google alerts so you can see what your competitors are hiring for, when they make announcements, etc. My last piece of advice is that this isn’t just for the CEO; lots of people in a startup — business development or product management — could benefit from being in better touch with the market.
