Comments on: 96: TZ Interview – Sean K. Murphy / Startup Strategy

By: Jason

Mon, 03 Jan 2011 07:07:38 +0000

@Philippe Monnet – Thanks for writing down such a succinct summary of the Appignite customer segmentation. It’s actually really helpful to look at it that way. Also, that article on BATNA looks very interesting and I’ve added it to my reading list. 😉

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By: Jason

Mon, 03 Jan 2011 07:03:10 +0000

@William – I agree that targeting web developers at companies sounds like it’s the most promising option, but I guess we’ll see how it plays out. There are pros and cons for hosting apps versus allowing customers to run apps on their own servers, but regardless I think I’m going to need to offer both options to some degree.

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By: Jason

Mon, 03 Jan 2011 07:00:02 +0000

@BAMS – I think I sounded dejected because before the show Sean was trying to convince me that Preezo still represented more of an opportunity than Appignite. I obviously don’t agree, but I think it must have effected me a little bit.

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By: Jason

Mon, 03 Jan 2011 06:56:56 +0000

@Andrew – I’m glad you’re back with us! But what smiley face are you talking about?

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By: Jason

Mon, 03 Jan 2011 06:55:49 +0000

@Ben Boyter – You’re right, we developers tend to undervalue things because we think we can do it ourselves quickly and easily (even if that’s not quite the case). I think it’s okay to start your pricing on the low side and then raise it over time while grandfathering in existing customers. That is assuming people continue to convert at the higher price points.

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By: Jason

Mon, 03 Jan 2011 06:51:31 +0000

@Rdbhost – I’m glad you enjoyed the show. Sean is a real expert and had so much interesting stuff to say that it might be worth listening to it a second time with a pen in hand just to write down the key points. Once again, this would probably make for a gerat blog post. If I only had the time… 😉

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By: Jason

Mon, 03 Jan 2011 06:46:52 +0000

@Spencer – That’s very clever! 😉 In fact, it might make a good topic for a blog post.

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By: Jason

Mon, 03 Jan 2011 06:45:46 +0000

@Sam – Yeah, those were good points. He had a lot of them actually. My favorite was about pricing to the result, although I don’t remember how he actually phrased it.

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By: Philippe Monnet

Mon, 03 Jan 2011 01:01:02 +0000

I finally took the time to go back and track down the little gold nuggets regarding the customer segmentation discussion for AppIgnite (as it is an interesting case study).

Four segments were identified and discussed:
1) Business users (thousands of $) in a small organization (non-IT) – scope: internal application
2) Web dev group in a company – no capacity outside big value apps => may be the right segment to pursue
3) Small startups – External Site Developers
4) Consultants building a solution for a business using a fixed bid model

Each customer segment would have a different price point.

For a good summary of the “Best Alternative To a Negotiated Agreement (BATNA)” see this article.

Per the discussion, the BATNA for the startup segment (#3) was:
a) find a technical unpaid co-founder – assume that this is out
b) raise or spend $ to hire developer or consulting firm – assume a budget in the range of $50K-250K
So for AppIgnite the pricing for the startup segment could be possibly in the $20K-250K range (if lowering the entry price).

I never realized that the BATNA approach could be applied to product pricing so good lesson!

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By: William

Sun, 02 Jan 2011 11:48:33 +0000

This was an excellent show–especially the ending advice about the Appignite market. One market that you were targeting seemed like it could be the bootstrapping startup–but then you run into the problem that either:
1) You have groups with skills with no money, so they’ll just do it themselves
2) You have the Joomla/Wordpress template crowd where they have an idea, but they’re not programmers–and maybe they don’t have money–this audience is large (like perhaps my sister), but the support burden is high.

I think the idea of targeting web developers at companies sounds more promising, but you need to set the price point so that managers can easily sign off on it. For example, we have a project (already being implemented) to do essentially inventory management (RFID tracking, etc.) with a web based form. It started out as a skunkworks idea of a nonprogrammer–I got as far as doing some of the backend work, but ran out of time (we tend to run very lean)–now, we have someone in IT working on it (now that it has funding).

But even for simple projects like inventory management, it takes time to put together even a basic prototype and if one could get a quick prototype up and running and show it to management and test it in a limited setting, then it might be able to convince them to put real resources into the project. If the price point is right, then they might get management to sign off on the prototype. Where life gets difficult is in the support level–if it’s something running on your server it’s fine–but if it has to run on ours, that becomes more of an issue. One is the practical question of how difficult is it for a small IT team to get it operational on their servers. The other question is security–let’s take the inventory management software idea–how does the client gauge if your product is secure? Do they are a large organization, do they have to do a security audit?

But, I can definitely see the advantage of this in the prototyping stage!

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By: Philippe Monnet

Sat, 01 Jan 2011 17:17:49 +0000

I felt that the first 2/3rd was somewhat slow and low energy but once the focus shifted to the customer segmentation analysis for AppIgnite it became very interesting and insightful.

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By: Bopinder Abu Morpalinder Singh

Fri, 31 Dec 2010 22:00:47 +0000

Jason, you sound so dejected in this one, stay positive!

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By: Andrew

Fri, 31 Dec 2010 15:42:30 +0000

Forgot all about this Podcast, now I’ve listened to 10 or so episodes in the past 3 days – love it. Also, why is there a tiny smiley face in the bottom left?

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By: Ben Boyter

Fri, 31 Dec 2010 04:58:32 +0000

This is easily on the same level as quality as Andrew Warners shows guys. Seriously well done. It also makes my question my own plans about compeating with a low cost. I then all developers have that issue because we know for just time we can solve most issues so we value things less.

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By: Rdbhost

Mon, 27 Dec 2010 18:17:22 +0000

This has been one of the better shows; good catch.

“Don’t sell to customers like us; sell to customers with a lot of money, who think high price is a measure of quality.”

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By: Spencer

Mon, 27 Dec 2010 05:17:56 +0000

Conclusion of this show: Jason’s product is market-ably polymorphic. lol.

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By: SKMurphy » The Snow Lay Round About, Deep and Crisp and Even

Sun, 26 Dec 2010 14:38:02 +0000

[…] was interviewed last week by Justin Vincent and Jason Roberts for their 96th Techzing podcast. It’s about 90 minutes and covers a wide ranging set of topics, […]

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By: Sam Howley

Sun, 26 Dec 2010 14:27:44 +0000

Justin,

Now that you have a super sales pitch pluggio homepage you could try a small amount of linkedin / facebook ads targeted at recruitment or marketing people, get Ilya Lichtenstein on the case. If you’re already all over this please let us know how it goes!

Good podcast, a couple of bon mots that will stay with me (probably slightly paraphrased) :

“Sometimes a couple of hours in the library save a year in the lab”

“You’re trying to make the price so low that the perceived risk falls to zero, that won’t work”

Sam

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