This post is part of my story on our failed startup Camargus.
In the previous post, I explained how we were trying to transform our eye-catching video technology into a product. We managed to sell a prototype to our first customer Fletcher and it ended up being used by ESPN. Despite successful try-outs, our product did not have enough added value to justify a follow-up sale. We were struggling with an issue shared with many other startups: product/market fit.
After a while the relationship with Fletcher cooled down. We were not making huge leaps forward in terms of taking our technology to the next level in terms of image quality. To acquire customers beyond Fletcher, we had to develop a new value proposition that would appeal to other leads. Here's what we came up with. We didn't formulate our value proposition based around the product. Instead, we packaged our prototype into a distribution agreement: buy a demo system and get exclusive rights to distribute future products in your region. The demo system was supposed to be used for trials with regional leads, rather than reselling.
Our proposition resonated with a production company we met on a trade show. They had plans to expand their business toward innovative products in broadcasting. It was a sizable deal, again worth more than $100K. Our distribution partner would eventually discover the same difficulty of finding customers. They were set on trying to cash in on their newly signed distribution deal by reselling the prototype, even though we had indicated this was not its purpose. They began questioning the viability of our "product". The technical issues with our prototype also didn't help. The relationship was going sour, and there were no alternative qualified leads for our distribution concept.
Again, we were misleading ourselves and others in thinking that there was product market fit. Our hope was that by putting our tech into the hands of others, they would tell us what the end-user needs. But guess what? Distributors are not interested to develop the product for you. The bottom line is that we should have kept our focus on end-customers and end-users. The distribution deal did buy us some time and revenue, but it didn't solve the main issue: product/market fit.
