Market Timing

One challenge for entrepreneurs is how to catch a large, growing market at the right time.  With team and product you have a little more control over your direction, but with market/timing there are many factors outside your control. Enter too early and the market is not yet ready to buy and sales are too slow. Enter too late and competition has intensified with many undifferentiated offerings and you have missed any first mover advantage and economics. Here are three ways for an early stage company to assess if market timing is right.

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What external factors are accelerating market adoption?

In many fast growing markets, there is often an external technology factor that accelerates market growth.  Whether that be the internet, mobile, cloud, etc. applying those technologies can open up markets. As an example, one of our portfolio companies SingleOps leveraged the fact that smartphones are now already in the hands of their green industry customers' workers. That fact makes use and adoption of software to help run their business that much easier vs. if this were 5-10 years ago with limited mobile/smartphones in the field. External technology factors can really increase market growth.

What are customers doing today to solve the problem?

It's oftentimes easy to assume new/better technology should logically be used by customers. However, what problem are the customers solving? Are they already trying to do something today to solve it (even if internally or via paper/Excel). In my experience, if customers are not already trying to solve the problem in some way, they likely are not really feeling the pain and ready to adopt. My first startup experience (many years ago) was with a company that tried to make work more efficient for the construction industry by putting all invitations to bid, specs, communication, etc. online so general contractors can more easily fill out and manage job bids. Great idea, and plenty of solutions exist today. However at the time, most customers were content with the status quo and were not yet ready to change. They did not feel this was enough of a pain point. Additionally, most contractors did not have computers so per my first point, a key technology enabler was not in place. Needless to say, great idea but too early for the market.

What else is out there?

Another simple thing to do is some google searches on key topics/words. What pops up in terms of number of searches, potential solutions/competitors, market organizations, industry coverage, etc. This information can give you a much better sense how far along potential buyers are with trying to solve the problem as well as other companies are to building competing businesses.

While you cannot control much of market timing, there are a few simple things you can do to try and ensure you are giving yourself a chance to catch the right market wave. While you can do some research from your desk, ultimately you need to be out talking to potential customers and let those conversations guide you.