You’ve got a product, so what’s your Grand Differentiator?

Last night at the Entrepreneurs Roundtable I saw a very cool product, the MTouch from Merel technologies, which is a new multitouch table product and app store ecosystem, and not based on Microsoft’s Surface.  Towards the end of the presentation or during the Q&A, the CEO was asked what their big selling point is or why someone would buy into their ecosystem versus going the Microsoft route and he responded, price.  

It was at that point that I shuddered a bit and wanted to go down and sit the gentleman down for a few minutes.  Having just gone through a decade’s worth of this exercise with Sooloos, as a small player/startup, price should never ever be your sole differentiator.  If it is, you will simply lose in the long run as the big boys cost down and price you out of existence.  They could do it at any time, or at whatever moment they deem you a threat. They could sell their product as a loss leader and eat whatever loses they incur, or simply trim their margin to near 0, and all justified as a marketing expense.  They could simply devote ever more resources to R&D to trim their BOM cost.  Whatever it is, if price is your differentiator, it won’t be for long and then you’ve got nothing.

At Sooloos we made a luxury digital music system which was expensive – when we launched in 2006, a core system retailed for $12,000.  Needless to say we continually had to explain and defend our product and price, our business (and plan), and ultimately ourselves. Why would I buy your system over a Sonos system? Or iTunes?  The answer was always the same: User Experience.  We focused from day one on providing the customer with the best possible digital music experience so that once it was experienced, it was understood and validated.  That was our differentiator and why we not only could deflect the criticisms but march on towards sales, customer acquisition, industry awards, and the eventual sale of Sooloos to Meridian Audio. 

So, if I could sit down that CEO from last night, I would say only one thing: focus on the experience, make it awesome and fulfilling to the end user and they will become your customer instead of Microsoft’s, or anyone else’s.