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January 09, 2003
Four Questions Every Start-up Ought To Answer
As I go around and visit companies, I usually ask them four questions:
- What's your product?
- Who's your customer?
- Why do they buy your product?
- What's your competitive advantage?
You'd be surprised (maybe you wouldn't) to find that there are companies who can't answer these questions. They might think they're answering them, but usually they're waving their hands a lot while their talking. I want to know the answers to these questions before I ever hear word one about the technology. Sometimes people think the first question is answered by talking about their technology--its not.
Questions 3 and 4 may seem similar, but their not. Question 3 could alternately read: "what problem are you solving for your customer?" and question 4 could alternately read: "why can't any other bozo with a wheelbarrow full of money do the same thing?" Contrary to popular belief, access to capital is not a competitive advantage.
I'm also usually pretty blunt about asking about gross revenues, burn rate, and their funding situation, but only after a substantive talk on the first four. I'm having a lot of fun. I need to find a way to get paid for it. :-)
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Aradyme
Today I got to spend some time with another of Utah's high-tech start-ups: Aradyme. Aradyme is a database company run by a couple of folks who have been around the Utah high-tech community a while: Jim Spencer and Kirk Tanner. At first I thought that they might be doing something crazy like trying to go head to head with Oracle or Microsoft, but I should have had more faith in these guys.
According to Gartner, 75% of the database market (some $60 billion) is in the small and medium sized business area. Oracle and MS SQL Server aren't in that market. Gartner says that the market is largely served by off-the-shelf vertical apps (like specialized solutions for a doctor's office or an inventory management system). Very little custom development is done in this space due to the cost. What development there is is usually done on MS Access by users themselves. Access is the putty that fills the voids.
Aradyme believes that they can attack this market by selling customized Aradyme-based, off-the-shelf apps in specific vertical markets. Their believe is that their database engine and integrated RAD tool make this kind of customization possible where it wasn't before and thus give them an advantage against competitors. This is not just a pipe dream, they've done it for a number of clients already.
I wasn't in any position today to evaluate the technology. I'll come back another day and try to do a deep dive on the technology. What I did see, however was a good business plan and some very well thought out marketing. Even though their target market isn't the enterprise-scale database applications, I think they need to think about how they connect to them (they might have and we just didn't get to it today) because large enterprises build plenty of small and medium scale database applications. I used to get sick thinking about all the Access databases sitting on direct attached disks that the State depended on for mission critical applications.