Think About The Market As Much As The Product

Entrepreneurs spend a tremendous amount of time focused on specific product ideas and not enough time evaluating the overall market and trends. Most successful startups pivot at least once before finding the idea that turns out to be the one, so picking a good market increases the likelihood of developing knowledge in an area that has multiple opportunities.

Back in March of 2007, Pardot started out as a Pay Per Click (PPC) bid arbitrage platform whereby we would generate leads and sell them to companies. Much like LendingTree.com where you fill out a form one time for a mortgage and get several responses, we wanted to do the same thing for B2B technology leads. Add in some industry analysis like Gartner or Forrester and you have a pretty good idea of Pardot 1.0.

After 45 days of Pardot 1.0 we realized that we’d picked a good market (helping tech companies with lead gen) but didn’t pick the best product offering. At that point we pivoted and decided to offer the tools we’d built to help generate, track, and disseminate leads as a standalone marketing product instead of selling leads. We then spent the next four months fleshing out the product and did a soft launch in September 2007. After six more months of finding product/market fit, the business took off and the rest is history.

In the end, our original idea wasn’t successful but we picked a great market and had impeccable timing. Entrepreneurs would do well to spend time thinking about the market in addition to the product.

What else? What are your thoughts on the importance of picking a good market?