Let's define what a beachhead market is.
A beachhead market, very simply, is the first market
that you will choose to pursue.
And it will give you the advantage and capabilities
that you will use to pursue additional markets later
on that will be as good or better than your first market.
Why don't I give you a military analogy for beachhead markets?
In military operations, if an army
wants to invade an enemy territory
and there's water access to that territory,
the army almost always employs a beachhead strategy.
By this strategy, the army lands a force on a beach
in the enemy territory, very specific territory.
They control that area as their base,
and then they land more troops to get in, and from which
that, they then expand out and conquer more territory.
Is there a systematic way for AJ to analyze
such a very different and seemingly equally attractive
market opportunities and then to take one amongst them?
The good news-- yes, there is.
I suggest the following model, which
consists of seven questions.
First of all, does your customer have the money
to pay for your product?
That might seem obvious, but you need to check,
is there money to pay for the product?
By and far, the health care industry had the most money.
As everyone knows, the government spending and health
care spending are going completely through the roof.
It's the fastest growing industry in the United States
right now, second to 3D printing.
The second question that you and AJ also have to ask
is, can you easily get the product to your customer?
Is the customer accessible to you?
What we found is, the education space,
we have the easiest access to our customers,
because there's so many of them.
By and large, we look at education in the United States,
it's primarily public education, which
means there are public registries of all
these schools, where they're located,
contact information, the budget that they have every year.
It's a very transparent industry to be getting into.
Thirdly, does the target customer have a strong reason
to buy your product?
That is, do you have a strong value proposition?
Really, the value that our technology brings
is ease of sharing.
So there's a few that come to mind immediately.
It's a manufacturing facility, a school,
or somebody who wants to just share it with their friend,
a do it yourselfer of sorts.
The fourth question is, can you deliver the whole product?
You can't just deliver a partial product.
When you're delivering something that's new,
you have to deliver the whole product.
People don't what to buy a brand new carburetor.
They buy the whole car.
In this case, they want the solution.
Can you do that?
Can AJ do that?
Well, what we found was that there
was a big mismatch in what the customers wanted
and what we were able to provide.
They had already gone out and spent a few thousands
on their 3D printer and didn't want
to spend a few thousand more to make it better.
When our bill of materials was higher than that,
didn't make any sense to us from a business standpoint
to try and sell upgrade to 3D printers.
So question number five that you and AJ have to ask yourself--
is there entrenched competition that
could block you from getting this business?
That could be real or perceived.
And that's not real or perceived by you.
It's a real or perceived in the eyes of your target customer.
The biggest competition that we faced
was in the aerospace industry, the medical industry,
and in engineering and design industries.
Sixth-- it's very important to understand
that if you win this market, we it
help you win other segments as well?
The question is, is this a strategic market
that will give you capability, credibility
to win other markets that will be equally profitable or more
profitable for you?
I really see 3D printing as being
a very generational thing, in the sense that all
of the markets that are being currently occupied
by conventionally educated people,
as I like to think about it.
Engineers who are creating solutions to problems,
thinking in a conventional sense,
are never going to think outside the box
as far as design is concerned with the 3D printer.
So really, the industries that I see 3D printing being the most
valuable are the ones that are the most forward looking.
And in that case, I see education
being the one where you really going
to make a difference in how people think about something.
Seventh-- is the market consistent with the values, passions,
and goals of the founding team?
For instance, as AJ looks at this,
is this something that they're going to feel comfortable
doing for the next six years?
Are their personal financial goals something
that they need to realize in a three-year time horizon?
And their market that they're looking at
might require 10 years to mature.
These are important questions for you
to think about and AJ to think about
as he selects a beachhead market.
One of the biggest issues that we were facing
is, when we first started this company,
we essentially wanted to become a modification to current 3D
printers.
We wanted to go after people who were thinking about building
their own 3D printer, who hadn't built their own 3D printer,
or an engineering company that owned one and wanted
to modify it to make it better.
We found out that there was a mismatch between what they were
willing to pay for the rest of the solution.
We didn't want to create a product
that we didn't know was going to work for sure.
So that led to this "A-ha!" moment in our heads that said,
guess we've got a make our own printers,
because that's the only way we can actually
control the entire solution.