Great Idea- but is it a product?

Introduction

As a baby boomer (50+ or so), you have probably experienced a lot of new products brought to market, changes in manufacturing or distribution that lead to increased profits, or outright failures. Failure is not a pejorative in the startup world- it’s a sign that you tried to solve a problem and it did not do what the customer wanted. The most important part of product failures is the lessons that we might take away from the experience. Sometimes its hard- I worked very hard to start my first company, AirAdvice. But the product did not become a huge market success or even a success that allowed investors to recoup their investment with a healthy profit. The real question for me: what did I learn from this? Likewise in other companies, we had products that were very successful, and then some in between

The Main Idea

We can start with a question:

How do we know if our idea to solve a problem is the right idea?

I think I can best answer this question, partially, by describing the origins of our first startup company. My wife suffered terribly from her severe #asthma for years. We tried everything we could find or afford. After our last serious hospitalization at the Cleveland Clinic, we were told by the attending physician(s) that they, the Cleveland Clinic, had no tools to treat my wife or therapy to keep her alive. They gave my wife a huge prescription for steroids and sent us on our way. To us- that sounded like a death sentence. This was 1993 (pre world wide web). We decided that we would find a way through this.

We knew that exposure to certain airborne pollutants would trigger an asthma attack. We felt that the only solution was to move from Ohio, and its coal fired power plants, to a different environment. Using older printed reports (pre-WWW, remember), we thought that Phoenix would be a good start. So we gave up all our friends and relationships of 10 years, packed the kids and our belongings and moved to Phoenix. We were fortunate- through coincidence I was able to get hired by Motorola to help them startup a new product line.

My wife’s condition improved immediately upon arrival in Phoenix. And, for about a year or two, she was like a different person. But slowly, her symptoms started to return. That’s when we started noticing the air pollution over the main part of the city every afternoon. Yep, we had no choice but to move again. This time, we moved to the Portland, Oregon area and once again her symptoms improved.

You might think that after all this disruption in our personal lives and all the doctor visits that we would have a pretty good idea of what an asthma “solution” might contain. The idea we developed for the product was an early warning system that would alert someone, like my wife, that they were breathing in poor quality air. In my wife’s case, these would be the small particles called PM10 and PM2.5 and oxides of sulfur. The “10” and the “2.5” refer the average diameter of the particle in microns. With asthma, you often do not realize that your lung capacity is declining after exposure to airborne triggers until you start to wheeze. Once the wheezing starts, your meds will either slow the cascade inflammation of your lung tissue or it won’t. If it does not, you will need oxygen and hospitalization. As you can see, early warning of exposure might give a you minutes to several hours of time to intervene. Clearly, this was the path forward, since the medical industry had no solution.

Another company had come up with a great idea around the same time as we started our company (1999)- an Internet connected #spirometer (for lung function) device and had patented this idea. It sounded great but did not succeed in the market place. I missed the implication of this company’s efforts.

The product we imagined was a network of in-home Internet connected air quality appliances (IAQ), a cloud based data base to collect and analyze the data, and a set of algorithms that were used to provide warnings and advice (hence the name: Air Advice). At the time of inception, dialup Internet dominated in the US and broadband was still at the early stages of market penetration. I made the decision to stay with dial-up and did not see a major hurdle to change the network edge connection to broadband (once the prices came down). But this “in-home” idea carried a huge implication- if it was not covered by Medicare or commercial health insurance, the customer would have to foot the bill for the device and the monthly subscription fee.

My work experience to launch this kind of product was pretty good. I had worked with semiconductors, sensors, and software for years and knew how to put together a networked system. In addition, there were no competitive products on the market that targeted asthma and air quality. The patent databases showed very few patents that made any claims relevant to our proposed solution.

Design and prototyping of the product did not take too long nor cost us a lot of money. I was able to get help from a close associate from a prior company to convert my simplistic data collection system into a small integrated PC board. Others pitched in to help with the dialup modem interface, our Linux/MySql based servers, and the server side scripting to collect and analyze the data. My product vision had become real!

Problem 1.

From the description above, can you tell what the fundamental problem(s) of my approach might have been? The first problem was customer definition. Who is the customer? I was sure it was homeowners that had asthmatic partners or children. Many people agreed or shared very heart rending stories of holding their young wheezing children in a hot shower to try and provide some relief. I had only worked in marketing and selling to industrial and scientific customers in my career. I had no idea how to sell this product to homeowners. Considering that the severe asthmatics are a subset of the asthmatic population in general, we would need to target these families very carefully. Is the customer really the homeowner? We were about to find out.

We would need a strategy to find these homeowners and a distribution channel partner to get our products and services to them. The HVAC channel partner would need to be nation-wide, well developed, and our product would have to enhance sales of their existing products. In our case, the channel partner we recruited was a very large supplier of heating, ventilating, and air conditioning equipment (HVAC). But by bringing in a channel partner, we also brought in a new customer. So who is the customer now? The distribution channel or the end user/homeowner?

Concept 1- The customer is the person who writes the checks for your products.

In this case, the channel partner would be writing the checks to us and our product would be provided to the customer by the channel. We maintained our direct connection to the end user through our web interface and daily messaging to the homeowner/enduser. This was a very sharp deviation from our original idea and carried many unforeseen issues.

Problem 2.

By bringing in our distribution partner, we were suddenly faced with their needs- more revenue in a stagnant or slow growing market. But this meant that we would need to alter the product, the underlying value proposition, and our features and benefits to target their sales people and demonstrate growth of their products. Very quickly, Air Advice became an “indoor air quality” company where we provided the diagnostics (your air is bad!) and the HVAC distribution partner provided the solution- an expensive air cleaner that was an add-on to existing whole house air conditioning systems.

Our system and new “IAQ appliance” were modified with more sensors and analytical capability for the channel partner. And suddenly, my initial target customers were just a small part of the overall market strategy. We were doing presentations at our partner’s sales meetings, some sales people were using our system to “diagnose” a homeowners problem, then show them that the IAQ problems went away installed a whole house air cleaning system. Progress!

Analysis

Based on the very abbreviated description I’ve provided, did we have the right solution? Was our initial idea the right way to solve the asthma problem? The first answer might be yes- we had an innovative solution, first hand knowledge of the asthma problem, a channel partner, and marketing strategy, and it appeared that we were locked and loaded and ready to go. But there are also signs that the answer was no- we did not have the right solution to the asthma problem. I’ll upack these two answers a bit and try to gain a better understanding.

Lets start with yes- we had the right solution. Our original idea, a sensor-based early warning system was not new. Diabetes patients relied on frequent finger sticks and blood glucose sensors to monitor blood sugar. Within the asthma community, everyone knew how to use and interpret a spirometer (simple mechanical system to measure air flow). But being in the medical space, we violated a basic tenet in medicine- nothing will get between a patient and her doctor. And to some degree, our rather presumptuous idea about early warning sounded good, but did pulmonologists agree? For patients with severe asthma, their first question about our product probably went to their doctor, not us. By and large, the doctors were somewhat skeptical but understood our approach (removing the triggers from the home that cause asthma) should be a good thing. ( I won’t speculate on the other non-product reasons why a physician might refer a patient to use a non-prescription based device to solve their health problems that could reduce their doctor and hospital visits).

But with the medical community now part of the solution, we had another set of “influencers” that could determine if our product was the right idea to solve or ameliorate the problems associated with severe asthma in their patients. As many people told me, it is very challenging to get doctors to adopt or recommend a new product. We may have had the right solution but it was going to take a lot of time and randomized trials to provide medical grade answers to our asthma solution. There is no way my family could afford the time and effort needed for this. And this is a warning to you- this was probably a good time to hit the brakes and re-evaluate- is our idea the right solution to the problem?

The second way to look at this product idea is to say no- you did not have the right product or solution or, more cynical, we were solving a problem that no one wanted to solve. And this is a very key point- as an innovator or entrepreneur, you goal is to solve the customer’s problem, not revel in your design brilliance. Building a product because you think it is the right idea, is not the way to go. In our case, the existing guidance to reducing the severity of asthma attacks was more basic:

• Move to a location with better air quality

• Stay inside during bad air quality days to reduce your exposure

• Get rid of cats if the patient is allergic

• Remove all rugs and carpets as they will attract large quantities of dust

• Use a spirometer to monitor lung capacity

• Encase all pillows and bedding in mite proof wrappers

As a family, we did all of things and my wife’s condition improved. What I missed was how our product should be used by the end user. Parents of asthmatic children might do all of the things I enumerated above. If the symptoms persist, perhaps monitoring the home for IAQ problems for a week or two could uncover other problems that could also contribute to asthma like symptoms. But the HVAC partner understood something that I did not- that solving problem (eliminating the asthma triggers in the house) was the goal. Our solution was just a means to and end. This had very severe impacts on the company- it would be very difficult to sell an ongoing service with a subscription model after you had identified and removed the asthma triggers from the house. In the ensuing years after I left, the company tried to expand horizontally and make claims about a much more broadly based set of indoor air quality issues like humidity/mold and radon.

Coming up with an idea to solve an “unsolved” problem is clearly a first step toward creating a new product or service. The challenge is to start with customer. Customers can’t always express how to solve a problem- that is our job. Even if you can already identify how you will implement the product, you should wait and talk to more customers and influencers to gain a better idea of what a proposed solution might do or not do. There are many tools out there to help with this stage:

a. Voice of the customer

b. Porter’s 5 Forces

c. Focus Groups

d. Basic SWOT analysis

e. Ad nauseum…

All of these activities can be done at your desktop so no excuses about not having enough time. With tools like Zoom™, Facebook™, and others, your ability to identify, recruit, and connect with specific market segments and affinity groups are dramatically enhanced.

Second, testing your idea at the lowest possible cost is essential. This is still part of the idea stage. In our case, we were able to create a completely functional system using all off-the-shelf technology. And, we were able deploy a system and demonstrate its efficacy to the customers. But even some limited success does not equate to a yes- we have the solution and understand the problem completely. We will talk about low-cost/no-cost prototyping and its importance later.

Third, you might think very carefully about how to get the product to the customer. If it makes sense, as it did with us, to work with a large manufacturing and distribution partner, perhaps your solution might be better integrated into your partner’s solution, rather than a standalone system. In our case, I filed numerous patents that specifically put up obstacles to working closely with our partners. This was a mixed blessing.

But there is still more to learn here. The business model that you should have developed with your idea might disappoint you. Your thoughts of millions of your products shipping around the world is quite enticing and ego-building. The reality may be that the best way forward is just to license your idea and settle for what you might gain from this. This is not a “loss” but could provide you much greater insight into where the financial pain is in the market space. There are secondary reasons for this also- if you are new to entrepreneurship, a small “win” via licensing that allows you to pay back some early-stage or angel investors gives you a bit of a track record, making your next idea much easier to fund.

Finally, its worth noting that determining if your idea is the right solution to a problem is challenging. It is easy to generate hype about a product and raise some amount of external capital, but that can send you on an accelerated to road to disaster. We call it “Mr Toad’s Wild Ride”, from the character in the children’s book by Kenneth Grahame. So lets read a bit more so you can avoid Mr Toad’s unfortunate crash.

Summary

In the following posts, I hope to introduce you to a number of different concepts about getting an idea into the market place. Along the way, I'll introduce key business and academic concepts to help shed some light on some the more challenging pieces of starting up a new venture. But remember- as a #boomer-entrepreneur you have a huge advantage over younger folks that lack the experience. You don't need to work for a millenial as a "senior experienced engineer" to add income to your family- start your own firm and get your friends to help.