Transcript of the live chat session that took place Thursday, September 14, 2000. These sessions are normally scheduled for 12 noon-1 PM US Eastern Daylight Time (GMT -4) every Thursday.
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Bob Fleischer (Home Page)
Barbara Seltzer (Home Page)
Richard Seltzer (Home Page)
sean Walter, Boston, consultant to high tech startups
Bob Zwick (Home Page)
Richard Seltzer -- Welcome, Ray and Bob. Please introduce yourselves and let us know your interests. That will help us get off to a fast start.
Bob Zwick -- Hello, I'm Bob Zwick - an independent consultant and software developer in the Dallas Fort Worth Texas area.
Richard Seltzer -- Welcome, Sean. Please introduce yourself and let us know your interests.
sean -- I'm Sean Walter from Boston, MA. I work as a consultant to tech startups.
Richard Seltzer -- Welcome, Nacim, please introduce yourself and let us know your interests. Are you associated with a startup that needs market research?
Nacim -- Hello all
Richard Seltzer -- Welcome, Bob Fleischer, glad you were able to make it. Do you have any quick questions or comments? (If you can't get them in on time, please send them to me by email for inclusion with the transcript. email@example.com)
Bob Fleischer -- Richard -- thanks for the welcome. I'm just curious today, no questions. It's an interesting topic!
Ray Deck -- The first two questions a venture capitalist will ask an early-stage entrepreneur are "what is your market" and "what is your competition." eGlean.com helps entrepreneurs answer these querstions by generating customized intelligence reports on markets, customers and the competitive landscape around a given entrepreneur's proposition. We employ a focused template of ~1,000 data points to generate reports quickly and at a price point that (we hope) entrepreneurs can afford.
Richard Seltzer -- Ray -- when I think of market research, the names that come to mind are Forrester, Gartner, Giga, etc. I think in terms of mammoth reports that take months to produce and cost thousands of dollars and that cover a broad market niche, rather than being written for a single client. I believe that Internet startups need 1) much faster results, 2) more targeted results (since their product or service may be unique, may lead to the creation of a new niche), and 3) at a far lower price. I also believe that these startups need such information for different reasons than traditional companies -- first and foremost for initial business planning and presentations to potential investors. Do you fill that need? If so, how do you do it?
Ray Deck -- Richard: Certainly that is the intent. Startups need certain focused information that tells them about their strategic landscape. Forrester and Giga are great organizations, but their clientele are larger organizations that have more cash and more time. We're trying fill the gap by providing reports that are focused not on some static "industry," like online recruiting, but rather at the market intersection the startup is interested in. By focusing ourselves this way and pre-selecting specific data points, we can get the research done quickly (in about a week) and at a substantially lower cost. The Market Review product currently costs $900.
Richard Seltzer -- Ray -- in a week and at $900 certainly sounds tempting. But what does the customer get? I would think that the quality of the report probably depends largely on the input the customer provides -- customers who are not very forthcoming about their prospective business (due to concerns of secrecy) would be at a disadvantage. Is that the case? What does the customer have to do to get maximum value from this service?
sean -- Related to this, I'd like to get a sense of the depth of the results.
Ray Deck -- We conduct this research over the internet on public and certain gated sites, employing a network of analysts and researchers who are themselves dispersed and who communicate over the 'net.
Richard Seltzer -- Ray -- It seems that the Internet is the source of both the problem and the solution. The fast pace of business and technology change requires money up front, which means the need for credible data about the market and competition. and at the same time the Internet provides ready access to valuable information sources and also the means to network together a team of researchers. I'm interested in exploring both those aspects today -- the unique needs of the entrepreneur, and your approach to using the Internet to solve them.
Ray Deck -- There are two key considerations; the inputs from the customers, and the data points we provide (or that any project would provide). Our template drives off of three core data points from clients: the customer to whom the client would sell, the need the client is filling for the customer, and finally the solution/technology the client is bringing to bear on the problem. With these three data points, we can look at the market and strategic landscape.
Ray Deck -- So the second part is the data points we provide. We look at each of the "market areas" I described before individually and in combination to identify size and growth opportunities. We also profile and segment prospective customers (identified from the "customer" data point). FInally, we look at both direct and indirect compeititon, depending on whether the potential competitor intersects with the customer, need, or solution of our client. Overall, these add up to about 750-1k data points in a single report, depending on the availability of the data on the 'Net.
sean -- Ray -- 750-1k data points sounds pretty deep for a week of research. When you say "depending on the availability of the data on the 'net" that sounds like you are focusing on public sources. Are you also talking to potential customers?
Nacim -- Ray -- Is the data gathered for the reports mined exclusively from the web? do you use more traditional research methods? And is the data mined form available retreived from sites searchable through public search engines only or do you have access to databases and online services such as lexis nexis?
Richard Seltzer -- Nacim -- good question. Ray -- can you tell us something about your sources? both the data and the people on your team?
Ray Deck -- But I think focusing on whether the data is gated might be missing the point. Search engines are helpful for one level of sifting through the web, but human beings are necessary for sifting out the significant from the chaff. That's where the analyst network, mostly undergraduates at universities, are important. These students have excellent electronic research skills, skills that are largely unutilized by the market at large. By focusing their efforts on specific data points relevant to the strategic questions for the client, we can leverage their talents to produce the true value.
Ray Deck -- Sorry, I think one of my messages got lost. The first half of my answer was that we search "publicly available" sources as well as gated sources, including Hoovers (for company profiles) and Northern Light's special collection. We originally used Lex-Nex, but NL had a better collection at a better price.
Bob Zwick -- Ray - can your services be applied to a new product launch or is it geared only to startup companies ?
Ray Deck -- Bob: It's geared toward business launches, which could be large companies entering a new market or introducing a new product as easily as a startup which is creating a whole new corporate entity. In fact we have done some work for companies doing exactly what you describe. Our marketing focus has been on the startups, but the applicability of the product is broader.
Nacim -- Ray -- Can you quickly tell us about some of your actual customers and how they have reacted to the reports you have provided?
Ray Deck -- Nacim: Our actual customers have been, with two exceptions, early-stage startups putting their business plans together and seeking funding. Our reactions have been mostly positive. The two negative reactions came from mismatched expectations, when the client was expecting primary research or a Giga - level product. Managing those expectations and being clear about the value proposition has been a major marketing and client relations priority over the course of the last few months, and will be key to establishing/growing our reputation.
Nacim -- Ray -- Have your customers come from particular verticals? if so which ones?
Richard Seltzer -- Ray -- so far, what industries have your reports covered? (I'd think that the more times you deal with the same general industry, the more effective your approach will be.)
Ray Deck -- Verticals: We've covered a wide range of topics, from e-recruiting to biotech cosmetics to accent reduction for teleconferencing. The theme and the focus going forward is B2B internet-based businesses, as that is where we have developed our strongest skill sets. Within that vertical, we are assigning "editors" to projects based on prior related projects to deepen their expertise in these fields and add more value.
Nacim -- Ray -- I am currently working on a project for a Software company based in the middle east that has developed a translation engine (arabic to english and english to arabic) and they are very interested in finding out who their customers could be in the US. Is that the type of project you think eGlean could help with?
Ray Deck -- Nacim: That is exactly the kind of project we can help with. We would help answer both who the potential customers are but also who else is competiting, directly or indirectly, for the customer's dollar.
Richard Seltzer -- Nacim -- have you contacted Systran (the outfit that provides the automatic translation technology for AltaVista's Babelfish service)? They currently only handle European languages.
Nacim -- Richard -- no I have not as of yet The project is still in it's very early stages. Will do so soon.
Ray Deck -- Richard's question about iteration intersects with Sean's about depth. We're working on an iterative process and a means of providing more value on a follow-on basis. As for current reports, we're planning to have a "sanitized" report that we did this summer up for review by prospective clients by next week. The life of a startup is defined by that which is about to happen next.
Bob Zwick -- Ray - is the end result of your research directly plugable into a business plan ?
Ray Deck -- Bob: it could be, and at least two clients have done exactly that, to my knowledge. However, I think the best use of our research is as a "springboard" for the next round of analysis. We provide contact information on both the customers and competitors we profile, faclitating a round of talking to people to find out if the "dogs will eat the dog food." We believe that it is this second round in combination with the data we provide that will be the most compelling story.
Ray Deck -- We got started early this year when I was doing consulting for early-stage e-businesses to help put together business plans etc. I found myself doing a lot of work on market research, and that the questions I was answering were the same every time. I decided to call up a former intern (then a student at West Virginia University) to help out, and from there we developed this geographically dispersed network of skilled researchers, mostly at major universities, who can fill in the data points for the research projects.
Richard Seltzer -- Ray -- I suspect that the most difficult aspect of starting such a business is establishing reputation. The more credible your results, the more valuable they are to your clients in helping them make their case to investors, etc. How are you going about establishing reputation? (e.g., do you have testimonials on your Web site? what else?)
Richard Seltzer -- Ray -- since general reputation is slow to build, are you making targeted efforts to get the attention and earn the respect of particular venture capital firms or Internet incubators? I'd think that your standard format and approach would be very attractive to companies of that kind. If they could get all the folks making presentations to them using the same service for market research, it would be far easier for them to make comparisons. is that a direction you plan to head in?
Ray Deck -- Barbara: I would say we provide leverage on the in-house guru. This kind of scouring can take weeks of a person's life. By providing the "secondary" (web, news, etc) information quickly and using external resources, the intelligence guru can focus on the next level of analysis: primary research (calling people, meetings) and telling the boss the implications for strategy.
Richard Seltzer -- Barbara -- I suspect that the "in-house guru" is more common in companies that are already up and running. I suspect that pre-launch startups normally consist of the founder and a "team" of folks who have tentatively signed up if seed money can be raised. At that stage, it could be an enormous help to get an independent target assessment of the market you plan to go after -- both to help you firm up your plans and also for inclusion in your proposal to investors. and once you've started with such a service, it would make sense to continue and get ever more accurate and detailed reports as your plans become more focused.
Bob Zwick -- Ray - have you partnered with any venture capital companies to have them point prospects to you?
Ray Deck -- Bob: We looked into that and I spent a good part of the summer talking with VCs about it. The end result is that while developing a positive relationship and reputation with VCs is important, the rate of direct referral is very low, because many VCs (or at least the ones I talk with) do not generally provide constructive feedback unless they have already decided to invest. We are still pursuing individual VCs for informal reference and general reputation-building, however.
Richard Seltzer -- Ray -- that's interesting that VCs don't usually provide constructive feedback. Sounds like the basis for another twist on your business model. You could do a market/competitive analysis, and then for an additional fee provide a constructive critique of the business plan and/or presentation for investors that they build based on that.
Ray Deck -- Richard: Actually, a VC recommended exactly that service as a follow-on. Sort of a virtual edition of the MIT Startup clinic. Sounds like a good idea to me; we're looking into it.
Richard Seltzer -- All -- thanks very much for joining us today. Please send me email with your followup questions and comments, also please send me your suggestions for future topics and guests. As I mentioned, I may try a new chat site next week. I'll mention that in my chat reminder, but you should be able to get there by following the usual path -- I'll just change the link. Thanks again.
Bob Zwick -- Bob Zwick - firstname.lastname@example.org
Author of eBookIt
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Ray Deck -- Richard: Thanks much for inviting me to the session. This has been a great group, and despite the technical difficulties, this has been a great discussion. Thanks to all.
Ray Deck -- All -- Please visit the eGLean.com web site at www.eglean.com.
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