Building a Stool with Three Legs

There are three core elements to building a successful software business: People, Markets and Innovative Products.?

All three elements should be valued differently at different stages of the business development cycle. Identifying the market is the most important element at the very beginning because you can't change a market–people and products can be changed–the market cannot.

Let's talk about identifying and valuing Markets.

For Protection Zone Management, the market is the electrical utility industry. No explanation needed: the electric utility market in the United States is MASSIVE. Do electrical engineers and technicians need software to help them manage substations, electrical infrastructure and work-to-be-done? YES. Are they interested in continuous improvement of their systems and equipment? YES. Do they have the budget to pay for software, training and services? YES.

The electrical utility market is huge. The amount of money put into utilities for equipment and personnel is large. So that was easy.

But, finding your market is not always this easy.

Other items to look for in finding markets are government and/or industry regulations. For electric utilities, they must inspect their substations and power lines on a regular basis. Not only is this mandated by the industry, but the insurance companies demand regular inspections and detailed reports happen on a repeated basis.??

Attending industry trade shows and conferences will help you get a very good idea of the market you are entering. Are there a lot of trade shows? Where do they have trade shows... in the middle of nowhere Nevada, or Las Vegas? What type of vendors attend? How big are the attending vendors? How many people attend the trade shows?

I also like to research salaries and job openings within a market. Are the salaries high, low, or average? Growing markets are hiring like crazy... so who is hiring? Are lots of companies hiring? What do current employees say about their jobs?

The last piece about markets is looking at the current competition.

I get excited when I see big, legacy software companies dominating a market. Does their software look like it was built in 1863? What new products have they released? Are they hiring software engineers, designers, marketers, etc?

The problem with established incumbents is they can't change. For them to release new products would require design and codebase changes. They will not do it. They can't. The engineer that wrote that section of Java code is long gone. And besides, with current paying customers, everyone at that legacy company is happy.