Being 50-60% cheaper than the market with an innovative product does not guarantee an easy ride, especially when it undercuts margins for its resellers on existing products.
That is just one of the generic barriers British innovator Securenvoy had to overcome to get its tokenless mobile phone technology adopted on a sound footing both in the UK and abroad.
I met co-founders Andy Kenshall and Stephen Watts at Infosecurity 2011 where they received a Queen’s Award for Industry to mark their success in exports where they outlined to me some of the key challenges they’d overcome.
“Don’t Get Venture Capital”
“There are two ways you can go,” says Andy. “The first is the extreme VC route to blast your product into the existing market and hope that the market moves. Or the second, the old school way, is to do it gradually and incrementally.”
Andy and his co-Founder Stephen Watts have kept control of Securenvoy by not going the VC route.
“Don’t get a VC,” he advises. “Try to do it in a controlled way where you own your own destiny. Build something that works. Spend as much as 2-4 years before the launch to make sure you have something to sell that works.”
Like many innovative entrepreneurs Andy and Stephen started their careers in mainstream companies - Andy was the 5th European employee in RSA Europe, selling security tokens.
In 2003 he and Stephen identified and grasped an opportunity for tokenless mobile phones, seeing a gap to be exploited with the US being slow off the mark with mobile.
But it was still a hard slog. For the next two and a half years they didn’t draw a salary, and survived by building up incremental subscription renewals.
Cheaper and Better is Not Easier
Being cheaper and better doesn’t make things easier to sell. Being nearly a step change cheaper than products with tokens, any sales channel taking them on was likely to lose revenues, at least initially.
“It’s like Peter Dyson selling a vacuum cleaners with no bags, when retailers were making high margins on the bags”, says Andy. “But if the technology is better and the quality is highest then it will come through.”
Securenvoy won through by exploiting the huge competition among the 20-30 security resellers in their market. If one channel got aggressive they would move to another channel with a different sales model, for example using wider choice as a unique selling point.
They also had a “too good to be true” obstacle to overcome. “A lot of customers couldn’t believe how simple the idea was,” he says.
Punch above your weight
The second key challenge was getting noticed. To do that they made a conscious decision to punch well above their weight. They invested in a strong website - “if that’s not slick you’re less credible to larger organisations”, says Andy - and also went in big the main sector trade show - the Infosecurity Show in 2005. They stretched themselves almost to breaking point by investing in a large stand right next to the very big companies. The gamble paid off.
“Go big or do nothing,” says Andy. “It’s a massive risk but a big professional statement.”
* Searching for success: I'm always looking for practical case examples showing how innovative companies have successfully broken through generic barriers into large enterprises or government. Please point me to good example you know! Thanks!