When Gordon Nuttall, CEO of Fort Collins' Couragent, Inc., began his presentation last Wednesday by pulling out his portable scanner, I groaned. "A scanner. Really?" I mumbled to myself. "Aren't scanners going the way of the fax machine?"
Plus, the market's already saturated, isn't it? There are numerous offerings in this class of device. So much so that when I did a quick smart-phone Google search on the keywords "portable scanner," the Flip Pal scanner did not come up until Page 3. The on-the-surface competitive devices are built by Brother, Fujitsu, VuPoint, and Gordon's former company, HP. 

However, on Slide 3 of Gordon's pitch, I began to understand. With its patented "flip-and-scan" technology that keeps photos safe in their album and its ability to stitch together multiple scans, the Flip Pal's market is a sizable niche: 17+ million scrapbookers. More recently, they've expanded to include genealogists, collectors, photographers and designers. Gordon and his team of talented 2008 cast-offs were astutely applying key lessons from Crossing the Chasm and Innovator's Solution. And they're demonstrating lean startup principles in their execution (e.g., The Lean Startup by Eric Ries).  So far, they're succeeding.

It's exciting to me when you see these concepts in action, making visible differences in the launch of a business. I thoroughly enjoyed Gordon's presentation and the insights gained from a company that has demonstrated a true learning orientation during its first two years of existence.

So, here are five of the many lessons from Couragent and its Flip Pal product that you can apply to your own business.
1.    Avoid butting heads with incumbents: focus on sizeable niches.
When you extend the search terms from "portable scanner" to "portable scanner scrapbook," Flip Pal is the dominant search result on the first page. Flip Pal now includes genealogists on its core customer list. I seriously doubt the strategists in HP or Brother are sitting up at night worrying about how to best serve scrapbookers and genealogists. These niche market segments are small when compared with much more sizable business traveler segment. Couragent understood this and that they'd be clobbered if they took on the likes of HP and Brother directly out of the gate. The niche positioning strategy appears to be paying off. They're doing quite nicely, thank you, with sales projected to more than double to $4.5M in 2012.

Flip Pal portable scanner for scrapbooking and other hobbyists.
The Flip Pal is a portable flatbed scanner designed with protection of the object being scanned as a core feature.
When you think about how you position your business or product, are you putting yourself in a situation where you are taking incumbents head on? Instead, identify candidate niche markets and select one that is large enough to be interesting. This will give you time to prototype your business or product and build momentum.

2.    Narrow your focus to secure a beachhead across the chasm.
By choosing to initially focus on scrapbooking, Gordon's team made their life a lot simpler. They could limit the 'noise' and resource drains required to chase multiple non-core niches. They could thus apply a narrow filter to determine which product features were essential and which were not. While they're not quite across the chasm, they've secured at least a nice toehold on the other side. And they've done this in about a year. This approach has meant saying 'no' to opportunities and even offers that appear quite attractive on the surface but ultimately detrimental to the strategy.

Are you finding yourself chasing numerous adjacent markets simultaneously? Do you appreciate how different each of these markets is and how that impacts your product and your business? Push yourself to be selective in where you place your bets and apply your resources.

3.    Think creatively and efficiently when developing your product.
The Couragent team has been quite selective in adding in-house staff and did not grow an internal R&D team. Instead, they identified a manufacturer in Asia that had demonstrated skills in building a core element of the Flip Pal. Because that manufacturer also had some nice engineering capability in house, Gordon and his team struck a deal where the manufacturer took on the non-recurring engineering but also became the exclusive manufacturer of the Flip Pal. The net result? A very capital efficient development program and a strong working relationship with a motivated partner.

Are you operating with an honest assessment of your core competencies? How are you leveraging partner relationships and their skills? Can those organizations alleviate your capital requirements? 

4.    Scale sensibly and incorporate learnings rapidly.
Couragent envisions realistic and attainable financial targets. Gordon and team realize that building a strong foundation based on its initial launch product requires their full attention. Launching a second product too soon will distract the team during a critical chasm crossing and will dilute precious capital resources. Couragent's leaders were eager to test, learn from, and adapt to what the market and the business was telling them. In Flip Pal's case, Gordon and team have been applying numerous learnings associated with sales channels. They have learned which sales channels work and which do not, which ones cause unwanted growth in inventory levels and undue strain on cash. One example of this learning has been the implementation of their own order fulfillment center that serves both direct and indirect sales channels. 

Are you prototyping your business with achievable growth targets? How tight is your feedback loop from testing to failing or succeeding to adapting?  Make sure your feedback loop is not focused solely on the product but is broad enough to address all aspects of your business operations.

Couragent's Core Values
5.    Tackle the Who first, then work on the What
This lesson is listed last, but it really is the most important. Gordon assembled his founding team by relying on relationships developed during his networking activities post departure from HP. The team is biased in skills and experience toward the marketing of consumer products, and that has been a great asset for Flip Pal.

Once assembled, Gordon and his team of co-founders began by first defining their core values and company vision before jumping into product definition. Their core values, drawn from Gus Lee's Courage - The Backbone of Leadership, are Courage, Integrity, Collaboration, Innovation, and Care (read more about how Couragent defines these values). They examined their skills and experiences, crafted a vision for the future, and only after that did they define a launch product for the company.

Do you have a strong and balanced founding team? Does your founding team share a unifying set of core values and vision? Resist the temptation to put these important issues off while you fiddle with product features. These are hot buttons for any investor as they are critical ingredients to success. 

Gordon Nuttall's presentation ended up being one of the more interesting and fun presentations I've seen in some time. A lot of this is due to Gordon and his enthusiasm. But as he will be the first to admit, his team is what has made the difference. Because they agreed early on to a common set of values, defined a realistic and achievable vision of the future, and clearly practice a learning orientation, they have set themselves up for long-term success.

3/17/2013 11:38:47 pm

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8/29/2013 06:28:08 pm

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