Intimate market knowledge is the key to taking your startup business to the big leagues.
Every year hundreds of new B.C. companies start up with a hope of someday building a list of major-league clients. But for many, especially in B.C., that A-list never happens. It’s a small-business province, and many businesses remain stuck on the small-business-client track. Occasionally, though, a company does break out of this trap and becomes a market leader. One such company is Verrus Mobile Technologies Inc., the Vancouver pay-by-phone parking company that is snaring contracts around the world.
Verrus is a case of an “overnight” success that took seven years. It began way back in 2000 after a few young technology workers began searching for a problem that new mobile technology might be used to solve. They hit on problems endemic in car parking – the constant search by drivers for coins to feed meters, the fines, the need for someone to go around and collect all that cash. It was a primitive industry ripe for upgrading via new technology.
Verrus’s plan was to let car parkers pay for their parking via their cell phones. But then came the tech wreck, and suddenly that sweet spot went sour. For a couple of years, possible investors ran for cover and potential corporate customers didn’t want to hear the word “technology.”
The Verrus founders drew some interest from early-adopting private lots, but it was clear that it was time to change the plan. Verrus CEO Desmond Griffin and partners started surveying parkers, cell-phone users, parking-lot corporations and municipalities. They wanted to really understand their market.
What they found was that many operators were more interested in managing other parts of the parking industry. It was still a paper-based business, and their pains involved such trivialities as dispatching workers to fix broken meters and to pick up coins. So Verrus added a parking-service management system, and business started to move. Within a couple of years, Verrus had pretty well cornered the private parking-lot space locally and was expanding to other cities.
But the really big clients – municipalities – still eluded them, largely because cities tend to take a wait-and-see approach to new systems. Following advice from a board of directors filled with seasoned entrepreneurs, Verrus looked for a way to convince the bigger users. Its benefits would be convenience and low cost, and so, unlike competitors that were appearing in Europe, it began offering its services to municipalities with no up-front fees. Instead it would earn money by charging for each transaction. In other words, it would take on the risk, instead of forcing customers to do it. Soon Verrus had sold the idea to a few smaller municipalities, such as the City of White Rock.
Then in 2006, it got its first showcase client: Vancouver. The city, which had been watching the growth of pay-by-phone parking in private lots, decided it would capture some of the cost benefits by converting its 8,000 meters to a pay-by-phone system. Verrus beat out competitors from around the world to supply it.
Once you have a big client in your nest, other prospects tend to view you differently. Several U.K. municipalities soon signed on to the system, and near the end of last year Verrus buddied up with a real gorilla: the six central boroughs of the city of London, which sport some 40,000 parking meters. That gave Verrus a leg up on a big U.S. client, Greater Miami, with some 50,000 meters. Currently Verrus is trialing a system in San Francisco and is talking to other cities, including Dallas.
“We’ve been around for a while and now I guess we’re the leader in the space,” observes Griffin. “2008 is going to make a significant difference for us.”
—Keep the faith. Initial enthusiasm for a startup fades and depression can set in as obstacles mount. Entrepreneurs have to lean on advisers and practice hard-core determination to continue.
—Study. Many ventures start with only a cursory understanding of the market. But if you’re going to vault from small fry to big fish, you’re going to have to know that market intimately.
—Offer value. It’s hard to draw attention to yourself and change customer behaviour. Even though it’s a cliché, your products have to offer significantly more value to potential clients than the other guys’.