Mike Urbonas – Product Marketing/Management and Business Intelligence Blog

By Mike Urbonas

Why do some products succeed while others fail? We laugh at the failure of notoriously disliked products like the Ford Edsel, but what about products people seem to like, such as the Chevy SSR truck, which also fail? Why are some business plans funded and other potentially viable plans are are not? Answers to these and other questions were answered by SolidWorks Founder Jon Hirschtick in his “Billion Dollar Business Plans” presentation as guest speaker for the BPMA‘s November 2005 meeting.

Jon shared his business planning expertise gained from founding two companies, Premise and SolidWorks, the latter venture capital-funded company producing the #1 3D CAD software, with over 400,000 users and annual revenue of about $250 million and cumulative revenue in excess of $1 billion, hence the title of Jon’s presentation. His first product, DesignView, had total sales of $1 million; SolidWorks has racked up cumulative $1 billion in revenue. Jon shared what he learned from his first product to the next in many critical business planning areas: markets and buying; market risks; product positioning; product design and, finally, thoughts on the business plan itself.

Jon shared clear and critical insight on markets and buying habits; both critical to any new product. He emphasized that the best way to think about markets is not using charts and graphs, but rather by how people are buying things. Buying, Jon noted, is a special human behavior. You must build products that people want to buy.

This led to another important point: there is a very big difference between liking a product and actually buying it. While it’s no surprise people did not like and did not buy the Ford Edsel, the Chevy SSR truck is a well-liked car that is selling poorly. Jon also noted during the presentation that the Chevy SSR is a reminder that design is important, but it’s not everything.

Jon’s timely commentary on the Chevy SSR echoes recent commentary by automotive commentators, such as Netscape Auto Editor Eric Peters, who chided domestic automakers for “building cars that management thinks buyers ought to want rather than building cars the market does in fact want.” It is therefore critical in the product design process to see the world through the customer’s eyes; watch the customer in action; get into the customer’s head. Doing so enables you to look for and fulfill customer needs, not wants. The effort made here will also repay you when demonstrating your product, which Jon noted, should differentiate itself to the customer from 10 feet away and in 30 seconds!

Interestingly, Jon noted, initial designs of the SolidWorks product had less functionality but included really hot features too. The early product didn’t have it all, but it didn’t overshoot the market either. The idea, Jon said, is to build a little and check in with customers, and evolve the product. Focus on product design is also a must. SolidWorks, for example, focused on those organizations with a budget and on Windows-only platforms, choosing to qualify leads in as opposed to adding features or platforms to go after every possible deal.

Jon shared clear and direct advice on getting product positioning right, including focusing on a strong position statement using this suggested template: “For (target customers) who (have the following problem), my product (name) is a (product category) that provides (key capabilities). Unlike (reference competitor), our product (key point of differentiation).” For SolidWorks, Jon said, the positioning statement was: “For engineers who need to move to 3D CAD, Solid Works is a 3D CAD system that costs only $4K, unlike Pro/Engineer, ours is an easy to use windows program.” Definitely a very solid elevator pitch, and the elevator has not yet reached the second floor!

Jon concluded his presentation with advice on selling your business plan to potential financial backers. You must set proper expectations as it is those expectations you will be judged against. Also, lead off with the vision of your business plan instead of stating how many people and how much money you need. Even venture capitalists are emotional buyers, Jon said.

Jon quoted former SolidWorks CFO Elliot Katzman during the presentation, including the thoughtful “Plans are nothing, planning is everything.” Put differently, the effort you make to understand your market, how your product will succeed in that market, proper pricing, realistic spending and sales plan, etc. will repay you with a funded and ultimately successful business plan.

Jon Hirschtick is a Group Executive with Dassault Systemes, a leading developer of 3D Product Lifecycle Management solutions. Jon is a founder and former CEO of SolidWorks Corporation. SolidWorks was acquired by Dassault Systemes in 1997. During Jon’s tenure as CEO, SolidWorks grew to over $100 million per year in revenue, with over 200,000 SolidWorks users.

Jon’s career in mechanical engineering and CAD spans 20 years. Prior to SolidWorks, Jon was founder and president of the mechanical computer aided engineering pioneer, Premise, Inc. Prior to founding Premise, Jon was the manager of the CAD laboratory at the Massachusetts Institute of Technology (MIT). Jon has bachelor’s and master’s degrees in mechanical engineering from MIT.