Every Company Needs a Good Map

Often, small or start-up companies spend too much on product development and not enough on marketing and sales. It is easy to see why someone would feel that by improving the product they should be improving the products marketability. Everyone wants the easiest road to travel and selling is a tough road in most cases.

Finding potential customers is easy. It is so easy that people often confuse potential with probable and that is a big error. When I designed my patented petri dish with my brother-in-law Selby Hatch, in 1994, I went to various labs on the Caltech campus to see how many they would buy. Why spend thousands of dollars on a patent if no one wants the product or the technology?  I had "orders" for 10,000+ dishes. When it came time to get people to actually buy them no one was willing to do so. 

What was wrong with my market research... 

 (Do you think my choice of image was influenced by the fact that I am listening to Beatles music as I write this?)

At the time I was working in a lab. I knew exactly why the design was useful. What I did not know was that most people did not see that and were very willing to say yes to buying one because they did not want to offend me. They also may have assumed that by encouraging me I would become rich and famous and so I would be able to support their research some day. Most likely, they figured it would never happen and so they would not actually have to come up with the purchase order. When push came to shove, and I asked for the order, they all backed away. When a company that was willing to license the patent did some market research they found almost no interest in the dish. Oh well. it was an educational experience nonetheless.

This line of thinking was inspired by the recent news about how Norman Hsu was able to raise millions of dollars from people who would not have otherwise invested in anything other than a bank account. He did it by finding his first investors with a ruse that he needed a little money to help secure a loan, then he returned an 80% increase to these people. Once he had the first customers other seem to have rushed in to make such a large profit. 

I'm not going to discuss the implications for the politcal spectrum. My guess is that every candidate has many donors they, not just Hillary and Obama, would like to distance themselves from. There is a question about how much responsibility they sould assume, or their campaign fundraising staff, about the quality and nature of donations but that will be better dealt with by others. 

As a person who has raise millions for start-ups and who continues to work on similar projects, I find it frustrating that many great and wonderful ideas go unfunded and this con-man raised what appears to be over $100 million for a ponzi scheme. Why did people foolishly invest money in this when they normally over analyze the potential of a cancer cure, an energy saving technology, or a new web business?

I have my guesses:

1. First customer result or testimony - Trust
   
2. The amount of potential gain - Greed
   
3. Desire to believe in instant riches - Gullibility
   

What do you think?