Semiconductor Marketing, Part 2. bob.bridge at zilkerlabs.com PhD, EE, UT, 1976 CEO Zilker Labs

Transcription

1 Semiconductor Marketing, Part 2 bob.bridge at zilkerlabs.com PhD, EE, UT, 1976 CEO Zilker Labs 1

2 Guide to Understanding the Material Concept is important to success in this class! Concept is important to success in a real business! On later slides, the size of the icon shows relative significance. 2

3 Agenda for Lecture 7 Important Questions About the Market Doing Competitive Analysis Advanced Marketing Concepts Closing Note 3

4 Important Questions about the Market Pick your markets wisely! 4

5 Pick Your Market Wisely To get series A funding, your founding team must have enough credible experience in your target market It s hard to recruit (or relocate) founderquality, team members until you have series A funds What markets are Austin semiconductor marketing and design folks experienced in? 5

6 How Heavily-invested is the Market Segment? If there are many competitors, you can t prove to a VC that you have a differentiated technology 60 start-ups chasing various aspects of You can t research the plans of 60 startup who are all in stealth mode. What s the chance that YOUR company will be THE winner? See who s getting funded by subscribing to Venture Wire Alert, 6

7 Have Other Start-ups been Successful in this Segment? Success is measured by a Merger & Acquisition [M&A] or Initial Public Offering [IPO] Looking at the last 10 startups in this general category, how successful have they been? If restaurants at this location always fail, If no one in this segment has ever been successful, then why should your company 7

8 Is this Market Hot or Dead? Is the market no longer attractive? E.g., telecom/datacom intra-structure is in a major slump No one needs another Network Processor Goods news: Fewer competitors Bad news: Funding bar is very high Need a really strong story; a compelling value proposition Is the market hot? Good news: funding may come more easily Bad news: maybe too late to gain market share; hard to differentiate; major VCs may have all placed their bets 8

9 How Risky is this Market? The big risk Big, well-known, competitive markets You either win big or lose big Hard to maintain competitive leadership Anticipated Revenue The smaller risk Larger number of potential customers Long time to build a big company But will there ever be a profitable company? Years after funding 9

10 The Easy Part of Market Analysis Quantitative, top-down analysis Goal of top-down analysis: minimize market risk It doesn t usually identify specific opportunities Uses existing market reports and data Investment bank reports Market research firm reports 10

11 Minimizing Market Risk Look for: Large, existing markets Don t plan to create a new market Market growth is nice, but not a requirement in a very large market Markets with no dominant competitor Don t plan to displace Intel from PCs Markets with no dominant customer Don t make business success dependent upon ONE must-have design win (from SONY, Cisco, or DELL) Beware the big, obvious, hot, new segment By the time Dataquest identifies a hot market, it is usually too late to enter 11

12 Analyze the Revenue Potential Revenue = market size times share% The more narrow the segment is defined, the higher your share but smaller the market Market share definitions are more credible when you can describe it in terms of projected design-wins at specific customers Ideally, your company generates tens of millions of revenue in third or fourth year $10M = 10M units at $1 each (tough to get those volumes) $10M = 100k units at $100 each (tough to get that average selling price) 12

13 The Hard Part of Market Analysis Micro-level, opportunity identification Identifying specific opportunities Get direct customer feedback about their pain Spend lots of the company s energy talking to customers Developing unique insights into solutions for the pain Define defensible technology that solves the pain Look for problems more fundamental than the customers describe Synthesize higher-level solutions (think outside the box) This is how you build company value! How many times does this slide refer to customer s pain? 13

14 Weak Approaches to Understanding Customer Needs Survey customers to find out what they don t like about a current data sheet Looking for incremental pain Tactical thinking No imagination No systems insights or perspective Former systems-company employees can make great semiconductor marketers Using fresh-out college graduates to do marketing Typical of large semiconductor companies 14

15 Powerful Approach to Understanding Customer Needs What is the most significant pain that a specific design manager faces? What are the design manager s or company s fundamental challenges in getting their system to a leading market-share position? 15

16 The Big Win Make an emotional connection What keeps the design manager from sleeping well at night? What would get the design manager promoted or a big raise? What would get the General Manager promoted to Chief Operating Officer? Solve these problems and you have a winning product strategy Manager may actually take the risk of betting on a start-up Defining product strategy isn t just about technology! 16

17 Doing Competitive Analysis Pick your competitors wisely! 17

18 Who is the Competitor? Directly Competitive Solutions Same customer problem Same market segment Same product category Alternative Solutions Same customer problem Same market or customer segment Different product category Evolutionary Product A better train system Revolutionary Product Airplanes replacing trains 18

19 The Goal - Unique Sustainable Advantage Is there a fundamental innovation that makes it difficult for competitors to duplicate your offering? Sustainable Architectural Advantage Does a competitor have to replace his architecture with yours in order to complete? Time-to-market isn t good enough!!! 19

20 The Goal - Unique Sustainable Advantage Potential barriers to entry Competitors heritage prevents them from quickly moving to your approach Heritage can be, e.g., type of staff, type of fab process, their business model, approach to risk taking, etc. IP protection Patents are nice, but do you really want to fight a legal battle with TI? The company with the biggest legal budget and biggest patent portfolio often wins 20

21 Basic Skills Determine what your competitor has to do to be successful in its own core business Determine which of the competencies it has that are transferable to your business Determine whether it has a strong competency in those particular areas relative to your own company 21

22 Business Flexibility How creative or flexible is the competitor in how they run their business? Willingness to re-invent themselves to match your strategy Successful business units are slow to change Aggressiveness in marketplace Ability to do creative marketing 22

23 Business Strength Market share Any dominant competitors? Large number of competitors with small share is best No one with strangle-hold on the channel Distribution strength How strong a sales force How tight a relationship to key customers Geographic strength Asian vs rest of world Vertical vs horizontal market focus 23

24 Engineering & Financial Strength Designs skills Can competitors easily duplicate your designers skill set? What quality of folks do they have on staff? Don t expect as powerful a response from a company with B players Big companies on average have average engineers Financial Margin model goals or constraints Enough cash to be able to move aggressively into your space Cost competitiveness Internal/external fab On-shore/off-shore R&D 24

25 Advanced Marketing Concepts How the Best Marketing Folks Think! 25

26 Keys to Gaining Market Share Define the customer problem as VERY CRITICAL Overcome all customer barriers to adoption Look as big and as credible as possible as soon as possible Be perceived as having market momentum 26

27 Another key: De-position the Competitors! A positioning strategy spotlights benefits most related to customer segment s critical need A need unmet by competitors Keep changing the problem statement until you have the only solution for this problem Let the world know that the competitors are solving the wrong problem, and that only you are solving the real problem 27

28 Market Leadership Behavior Your company defines the market vision (for you and everyone else...) Does Intel or AMD get to define where the industry needs to go? Your company defines the problem that the industry needs to solve, and name the product category Palm established the PDA as a significant product category Your company defines the vocabulary for market participants What are the specific words used to describe next year s hot technologies? 28

29 Market Leadership Behavior Your company partners with other leaders (even if it costs more and takes longer ) Your company executes everything with quality (within budget constraints ) Your company drives market leadership position (and brand) Your company defines the competitive parameters, then de-positions the competitors (next slide) 29

30 Closing Note Continual Refinement of Your Ideas 30

31 Continual Business Plan Improvement Start by defining a business strategy Founders, unique technology, market, competition, financial model Identify weakest element (be intellectually brutal) Make that element stronger (be intellectually brutal) Replace/demote marginal team members Change the technology until potential customers start grinning at you Change the market/product to minimize competition Find a larger or more open market Keep searching for sustainable architectural advantages Iterate! 31

32 Discussion 32