With Gabriella Levine, we had the amazing luck to have Jeff Hoffman who “is a serial entrepreneur in the internet, technology, and entertainment industries. He has founded, co-founded, and been the CEO of numerous start-ups and larger companies, and has led his companies through acquisitions and public offerings (Priceline.com, uBid.com, CTI, and others).” Jeff told us that many people have great ideas, what really makes a difference is the execution, but more precisely the targeting of the customer. Who will buy? At what price? What kind of quantity? When? How? These are critical questions that change over the lifetime of a product and keeps changing as the technology improves, the cost fluctuates depending on the supply – demand balance and the marketing and distribution strategies.
We had for Jeff these 2 main requests :
- Help us narrow down our customer target
- Help us “choreograph” the timing in the pricing and product / technology development
Put the client in the room
Jeff’s first advice was to literally put the client in the room. So we did! We drew a life-size client in the room who would be writing either a bank check (yes!!!) or a “fail” sign (no!!!). Having the client in the room helps you answer these hard questions. The client should be there at every stage of decision. We called our client “William” and quickly we realised that William would not be our (only) client in reality, if our client at all. So… we realised that we would quickly see a “fail” sign if we were not more thoughtful here. So… who is Protei’s client?
Who will buy Protei? At what price? In what kind of quantity? How?
Jeff told us that most entrepreneurs would say that “the entire world would buy their products” (by year 4, more than 50% startups would die btw), but since it is impossible to target the entire world, it is a wise idea to target as precisely as possible to start with. Jeff said “Think big, act small“. The people would buy / use Protei come in many different color sizes and flavours (from left to right) :
- Humanitarian user: someone who’s life depends on the data / clean up work produced by Protei. This user is hard to reach, has very limited resource and needs a very highly performing product. Even if this potential user makes the greatest use of Protei technology we may not be able to serve this user immediately since our technology is so new and untested.
- Kid: Kids are great users, they want a product that is easy and fun to play with, it has to be cheap and robust, plug and play and we can sell in great quantity, but few parents are ready to put a lot of money on expensive toys.
- Hobbyist: Hobbyists are great because they love novelty, they are patient to receive their order they have passed on-line, they tend to be very dedicated to assemble, test, document their activities and give us feedback on-line.
- Hacker / Maker: want a product that is modular and extendable to modify and run their own experiences on the product as platform. They tend to be very good at tinkering and sometimes good at documenting and sharing their improvements with the community.
- Ocean Scientists: are our ultimate target as they are the one that serve the highest goal of Protei that is to explore and protect the ocean. That’s what we want to turn kids, hobbyists and hackers into: active advocates, data-producers and ocean-cleaners. Now Ocean Scientists in academia and institutes generally do not purchase machines and instruments with their own money, they would carve out part of their lab budget to buy Protei. What ocean scientists need is reliability and extendability since often times, the instruments they will put inside will add up to be much more costly than Protei itself. So, interestingly, if ocean scientists may not make the biggest volume of sales, we want their technical needs to drive the evolution of Protei.
- Sailors: We have sailors (of real large boats) but they are falling very much in the hobbyist category when it comes to operate a 1 meter long Protei.
- Industrial: this is where most revenue may come from in the future but currently the technology is not mature enough to market Protei. These guys are willing to put big money for industrial applications but they need industrial 100% reliable results.
- Military: big money surely, but that is not our culture and not what we want Protei to be developed for.
We decided :
- GREEN: Our target for MARKETING = Hobbyist / hacker! This is where the greatest volume of sales can be achieved, determining the packaging, channels of marketing and distribution (mostly on-line distribution).
- RED: Our target for QUALITY = Ocean Scientist! We want Protei to be used for ocean science and collect ocean data, so we need to know more from our “golden user” the ocean scientist that will drive product and technology development.
Product evolvability : in short that means that we will market a product aimed at hobbyists and hackers that would be easily upgradable to be used for ocean science.
Redefine Product with a user-centric lens
Now we know who is our target market (Hobbyist / hacker) we take in consideration what they want in GREEN, they want to have fun:
- 1. Easy to use
- 2. Affordable
Right after which comes the requirments of our quality target (Ocean Scientist) in RED, they want reliability:
- 3. Robust
- 4. Modular, Extendable
so they can install all sorts of ocean sensor on the sailing robot.
This is a user-centric approach that redefines our product agenda and development strategy.
Very different from the engineering, scientific or intuitive / artistic approach we had so far. It was more than time to do this.
We made the assumption that different buyers would buy a device at a very different price (with different features of course) :
- $1 : Humanitarian user (subsidised)
- $250 : kid (parents paying)
- $700 : hobbyist
- $500 : hacker
- $1000 : ocean scientist (using lab budget)
- $700 : Sailor
- $5000 : Foundation
- $7000 : Industrial
Empirical criteria ranked on a scale of /100 :
- Pricing: at which we can sell each machine depending on the client profile (above)
- Promotion: satisfied clients are our best representatives / evangelists. Especially at the beginning, influence might matter more than pricing or even volume of sales.
- Improve and share: Protei is Open Hardware that means that we actually invite people to use (copy), modify and distribute our technology for free. We’re asking in return to be credited but most importantly we’re requiring our community to contribute to improve the technology. So our customers are really our R&D department, we treat them as our most precious collaborators.
- Contribute data sets: We may have few sales to ocean scientists, gathering data, analysing them is going to be what adds the most value to our sailing platform for remote sensing.
- Accessibility: How easy it is for us to reach our clients? That’s totally subjective, that’s our social networks, the people we like to talk to, the people who like us.
- Ease of Production / expectations: Industrial users have extremely high expectation and even if they are willing to pay a high price it will take us a long time to meet their expectation. Kids just want to play, it is much easier to produce for them. Hobbyist / hackers / ocean scientists are the most likely to tinker and to be satisfied with an alpha product.
- Ease of delivery: where are we located? Are there high tax / regulation / compliance on imports in the country for the application envisioned? Is the country we’re trying to work with politically unstable, suffering corruption?
These different factors allow us to carve out the potential each client profile have for us. That’s the yellow line.
Next is to roughly estimate how many Protei boats we can sell to each of these potential client. That’s the red line.
So now we multiply the yellow line by the red line and obtain the sales potential per client profile. That’s not an accurate technique in any way, but that’s fast and easy helping us find out who gains the most value from our product VS what’s the sales opportunity for us.
For Protei at the current stage, the rank for potential revenue from sales would be :
- Industrial: scoring the highest because that’s where we can make the biggest marging, but the technology is not ready for that yet.
- Hobbyist: that’s the immediately most accessible market
- Sailor: same as hobbyist as they are passionate about sailing and willing to invest money in their passion
- Foundation: they would finance buying many units at the same time but they are quite hard to get
- Kids: as we come on the market, we want to build a brand culture that is welcoming for kids but that’s more aimed at ocean scientists
- Ocean Scientist: our favourite user but almost smallest group!
- Hacker: “hyper-technological-human-anomaly”, but oh so valuable ;)
- Humanitarian user: the one that personally needs our technology the most that is also the hardest to get to and serve.
This research is highly valuable since it tells us that extreme users – that we expect to represent a minority of our clients – are the one that are driving technology development even if they rank very low in our sales potential. I think this is not unusual, and crucial for us to aknowledge who are the most valuable (in volume) and/or influential buyers / makers of our products. That also tells us that we need to fight to get to industrial users as fast as possible.
Strategy & Marketing, to reach our goals of sales and cultural growth
Now we know the quality we want to achieve (ocean science), and we know the target client (hobbyist), how are we going to orchestrate our sales?
As our customers are our R&D , our community for a Open Hardware technology, we cannot stress enough how determinant it is for us to be intentional about how we set the right culture (hands-on, hacking for ocean science) around our product depending on who are going to be our first users.
- $1000: Early adopters, setting a culture. Ocean Scientist. We want our first users to be hackers – ocean scientists. They are a minority of power users, that will be our star-testers, tinkering and driving with us the development of this new technology.
- $700: Quality UP, Price DOWN! Hobbyist, sailors. Driven by our small but high-profile community, we can improve the technology and deliver a second generation of machine with many more features as a kit. Basically it would be a version with more sensors, more powerful electromecanics, more processing and communication range etc. As a reminder, even if $700 could sounds like a lot, it would actually be a very good price for a sailing robot that could be made autonomous with a suitable embed intelligence and sensors.
- $500: sustainability and growth. Hackers. $500 retail price is the current average price for a basic 1 meter long RC sailboat. For that price, I believe we should be able to build a very robust sailing robot fully fitted with sensors and an android powered CMU on board. That kind of price and high quality for value should satisfy the greatest volume of customers while being a powerful and extendable platform for science for a while.
- $250: Democratize! Kids. Once our technology has been validated by a small (read manageable) but highly qualified core group that would have contributed design and code improvement, it would be time to broaden the diversity of customers. We should open to a large volume of sales also after we have built a robust and scalable data infrastructure to welcome. The dream is ”Science instrument at the cost of toy!”.
- Kits: customise your product. As an Open hardware company, we pride ourselves to be transparent and offer our clients to buy the parts they want and assemble the boat they dream of. From travelling around the world and talking to potential clients, it became very clear that Protei would be one product in our catalog and that even the internal components of Protei could be used for many other sailing robots designs. At this point we will diversify our offer and empower the community of makers that want to explore and protect the oceans like we do.
From making this one day research we learnt enormously about our sales strategy, and how we intend to building our community and culture around products that they would love and invest in. Thanks a lot Jeff Hoffman for this great lesson!