by Tim Maliyil
When I started my company, my peers in the encryption industry didn’t exactly cheer me on.
The company was, after all, entering a market dominated by larger security firms that had been around for years. I heard everything from the tactful, “Isn’t someone already doing that?” to the slightly more blunt, “They will crush you.”
The field was intimidating, and when it came to venture funding, encryption wasn’t the exciting new area everyone was looking to invest in. But we also knew (which fueled us in the early stages of the company) that we had found our niche.
The Value of Entering an Established Market
Although the potential for growth in emerging industries can be huge, it comes with its own set of pitfalls. A new market means the criteria for success is still unclear, and few industry players means not many businesses have verified its potential.
While established markets may lack the sex appeal of uncharted waters, they certainly don’t lack opportunities. Whether it’s a matter of improving a dated user experience, finding the sweet spot for a new solution to an old problem, or identifying a shift in user behavior, these markets are rife with possibilities. You just have to know what you’re trying to accomplish before you dive in.
Isolate Your Niche
Not all industries are ready to be disrupted, and many are hostile to new players. But there are a few questions you can ask yourself to determine whether there’s a niche waiting for you, including:
- What are the pain points? There were already plenty of encryption solutions when we came onto the scene, but we saw a lack of centralized control, audit capabilities, and ease of use. By focusing on fixing the pain points in the industry, we found a purpose for our software and a great marketing pitch to boot.
- Is there something established companies don’t want to touch? Sometimes there are parts of an industry that bigger companies won’t mess with for fear of cannibalizing their own businesses. For instance, a drug company that makes a steady profit by treating an ongoing disease might not be motivated to find a cure. If you can discover a way to undercut an existing business model, you’ve found your way in.
- What are the barriers that could prevent you from getting access to customers? Whether practical or political, if there are significant barriers to getting your product to consumers, then it might not be the right ring to throw your hat in.
Capitalize On Your Strengths
Once you’ve found your pain points and determined where you can strike, the next step is execution. As a startup in an industry full of behemoths, you have the ability to move faster and recalibrate if needed, but you also have fewer resources. It’s important to start off on the right foot before competitors have a chance to regroup and retaliate.
Here are three action steps you should be taking:
- Tackle objections to your business model head on. It’s important to show your determination to deliver a unique experience for your customers from the beginning. For example, when Tesla first started out, the major objection was the lack of available charging stations for commuters. Tesla worked to solve that problem on its own by setting up free chargers in the U.S. Tesla didn’t only commit to its cars; it committed to its core concept.
- Emphasize customer service. Every aspect of your business needs to stand out from the crowd, but how you interact with customers is key. If you’re trying to convince consumers that your company is better than an established business, highly personalized customer services need to go above and beyond.
- Know when to partner up. Evaluate if it makes more sense to partner with an incumbent to improve both products. I took this approach with my company. We knew what we had to offer wasn’t better encryption; it was an enhanced user experience. So rather than developing our own encryption standard, we took on a partner. Our customers were more confident in our security, and we could deliver a better user experience faster.
Starting a new company in an established market isn’t inherently better or worse than tackling emergent industries. Each option holds its own risks and rewards, but having a vision of how your product can help customers in a way that’s unique to your company will get you on the right track. This will hold true no matter which industry you choose, so here’s to finding your place!
Tim Maliyil is the CEO and data security architect for AlertBoot. AlertBoot protects customers from data breaches that damage their credibility, reputation, and business. The company’s managed full-disk encryption, email encryption services, and mobile security services deploy within minutes to customers’ PCs, smartphones, and tablets, providing tremendous insight, visibility, and control.
U.S. Army | Courtesy of Tim Maliyil