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Start-up Marketing for
Value Creation
"We did a
scan of every company in our market, then put each of them into a matrix."
from the desk of Peter Fillmore
September 2000
How does marketing excellence help a start-up attract investors? I went
behind the scenes to explore this topic at Extreme Packet Devices.
EPD is a Kanata fabless semiconductor company specializing in design of
high-speed chip sets. They raised about $30 million during their first
year of operation, and were then acquired by PMC-Sierra
for US$415 million in March 2000.
"Marketing is really just two things," said Bruce Gregory, CEO
- "positioning - to understand what you are going to communicate, and
communication - to get the message out." Here are some ideas you can put
into action at your company.
Positioning - It starts with Segmentation - "Segment,
segment, segment." said Gregory, "We put a ton of work into segmenting,"
With dozens of potential competitors, EPD knew they had to understand what
was going on in each product category, especially the adjacent spaces, and
pick a space that allowed them to establish leadership.
Build a Competitive Matrix - "We did a scan of every
company in our market," said Gregory, "then put each of them into a
matrix. We also bought research reports and talked to the analysts, just
to make sure we had all the bases covered." The conclusion was: EPD would
specialize in the "10 Gigabit per second Traffic Management." This space
was quite unique when they started. Most of the market thought the demand
at this speed level was still years away.
Build an internal Management Matrix - At the outset the
EPD management team listed the critical things that had to be done, and
who was responsible for each, in a one-page matrix. They used this simple
matrix to build a full-blown business plan, and then focused on execution,
avoiding distractions.
Tighten your Niche Definition - "We stuck to one thing,"
said Gregory, "and although there are many competitors, they tended to
allow expansion in their claimed area of expertise." Often technical
groups tend to fuzz and expand the boundaries. Watch for this mistake in
your competitors, and avoid the temptation yourself.
It helps to have the right money - In the device
marketplace there is a tightly knit community. Talking to their early
investors (Celtic House, Kodiak Venture Partners) gave EPD introductions
to many of the analysts & thought leaders. "All of these dialogues helped
us validate our message as 'We do 10 Gigabit/sec Traffic Management,'"
commented Gregory.
Communication - Start with a vision of the coverage you want
- Imagine the "article" you want your future buyers to see, and who you
want delivering the message. Working with your PR agency, or on your own,
you need to quickly identify industry "thought leaders" in your space, and
include them in your "news list." Get started early on contacting these
people as they often take a long time to reach. When you reach them,
however, they will usually give you very valuable information about their
interests, plans and timetables. They value knowledge about new trends, so
follow up and give them your story as it unfolds. Set specific goals -
here are several suggestions: show consistent identity, declare niche
leadership, and establish credibility.
Get visible to key trade analysts - Working directly and
through friendly introductions, a lot of phone calls need to be made, with
follow up letters and profiles ready to send out. Seek face-to-face
meetings. "Marketing execution takes huge commitment," commented Gregory,
" we had up to 8 meetings a day in Boston and San Francisco."
Identity & Branding - In the case of EPD, they have a
50-company market, so there were no ads or mass media. The company just
put together a quality, brandable identity and used it for all market
contact. For examples, see their website at extremepacket.com. Branding
also takes a product you can deliver, or, in the early days, a great
engineering progress story that will pass the scrutiny of the best in your
industry. Also, getting early customers with the right pedigree is very
helpful in building your brand.
Results? EPD had two excellent analyst reports - one in
EE Times and one in The Communication IC review. The message was simple -
EPD owned the 10 Gigabit/sec Traffic Management space. This had a strong
impact on the company's recognition & respect earned. Either on their own,
or within an acquisition, EPD was poised to do very well.
Your comments, questions, and suggestions for future articles are welcome
fillmore@westpark.com
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