Vitamins and antibiotics both cost roughly the same to manufacture, but you will pay more then 10X for an antibiotic than a vitamin. Why? Because when you are sick and need antibiotics, you will pay almost any cost to be well again. The selling point of vitamins is that, if taken daily, you won’t get sick. Who doesn’t want to get sick! One would think that a magic pill that prevented illness would sell, but it doesn’t.
It is very easy for a startup to find itself in the business of selling vitamins, even if they started off making antibiotics.
At Distil we developed a way of using video games to assess a person’s skill. We would have the student perform tasks in the virtual environment and then our AI would compare their performance to known experts. The software determined if the student passed or failed and presented clear, action based feedback to the player.
Our initial market vertical was ISO training. Every business that is ISO certified must have people that are trained in the ISO standards and procedures. These people must be ISO certified every few years. ISO is a big deal in the BtoB world. May large manufactures will only deal with ISO certified suppliers. Lose your ISO certification and that lucrative contract with Apple may disappear overnight.
Distil’s approach was cheaper and faster that the traditional methods of certification, which required an auditor to meet and observer the person being certified. Scheduling, travel and other logistics meant that it could take months to certify a person.
Our next decision put us firmly on the vitamin path. We looked at the total number of people receiving ISO certification each year. Then we created a marketing and pricing plan to deliver a better certification product for a lower price. The pitch could be boiled down to “this is something you need to do anyways. Why keep doing the painful solution? Why not do something better?” Sounds just like a vitamin pitch doesn’t it. Change your behavior, do what’s best for you, to avoid some future pain.
If I was doing it over again, I would craft an antibiotic approach. My lead generation would focus on companies that needed ISO certification fast. Either they have a new contract that requires certification or they risk losing a contract because their certification is expiring. I would then pitch a solution that could get them over many of the certification hurdles in a few days, as opposed to months. They need certification ASAP and we can deliver. Of course our solution would also be 10X more, but these organizations would be feeling the pain so acutely they would pay. Our product would be an antibiotic and not a vitamin.
When we form a new company, we usually start around a pain point. Once we’ve identified the pain point we develop a solution. Now here is where we veer into vitamin territory. We think about all of the people who might experience that pain. Wouldn’t it be nice if they didn’t have to experience the pain? Wouldn’t they want to buy a product that prevented that pain? That’s a vitamin. Stop thinking that way. You don’t care if you prevent the pain — find people feeling the pain right now. Position and pitch your product for that one time sale. Then try to convert them to a monthly payment. After feeling the pain once and buying your antibiotic they will be far more likely to buy your vitamin.