Most new enterprise software products fail to generate a profit. They don’t fail because of technical challenges, lack of funding, or market conditions. Instead, new products fail because most companies build products that don’t solve a market need, and therefore, customers don’t buy them.
Enter Daniel Elizalde. His new book, The B2B Innovator’s Map is a practical guide to taming uncertainty and discovering opportunities to develop products your customers will be eager to buy. By following this map, you’ll always know where you are and what your next step should be through these six stages of the B2B innovation journey, to get from idea to your first 10 successful customers.
For each stage, you’ll learn actionable tools and techniques to help you understand your market and your customer’s needs with proven methodologies to verify your solution’s market potential for customers and investors alike. Whether you’re a B2B strategist, product manager, investor or founder, The B2B Innovator’s Map is an accelerated guide for bringing profitable products to market.
Hey Listeners, my name is Drew Applebaum and I’m excited to be here today with Daniel Elizalde, author The B2B Innovator’s Map: How to Get from Idea to Your First 10 Customers. Daniel, thank you for joining, welcome to The Author Hour Podcast.
Daniel Elizalde: Thank you so much, Drew. It’s very exciting to be here, having the opportunity to talk about my new book.
Drew Applebaum: Great, well, why don’t you help us kick it off. Can you give us a brief rundown of your professional background?
Daniel Elizalde: Of course. I always like to say I was born and raised in Mexico City, and I have a background on electronics engineering, and after college, I was fortunate to get my first job in the US, so I moved to Austin, Texas, and from there, I started working in several technology related jobs, usually on industrial-type of solutions.
I work for National Instruments as an architect and from there, starting really getting involved, not into the technical things but into the business side of technology which later, I realized is called product management. So the rest of my career around 20 years or so has been around product management and business innovation on multiple industries from retail to automotive, eCommerce but my passion has always been on climate.
So, I’ve had the opportunity to move to Silicon Valley and work as Head of Products at a company called Stem, which is AI-powered, energy-stored solutions, and while I was there, I was also teaching at Stanford University. I teach IoT product management at Stanford. After working with this starter for some time, I decided to go my own and became a consultant.
With that, I was able to look at the product strategy of hundreds of companies working on Internet of things or IoT connected solutions, and I got the opportunity to join Ericsson as their vice president, head of IoT for North America. So that gave me the opportunity to look at large corporations and how to do innovation in that sense.
With the pandemic, my wife and I decided to move back from Silicon Valley back to Austin Texas where our family is, and then, with the pandemic, I took about a year Sabbatical to take care of our one-year-old daughter, and that’s when I started writing my book. Now, as we are coming out of the pandemic two years after, I decided to become again, an independent consultant.
So today, I work as a product advisor helping climate tech companies accelerate their product innovation, and that’s where the book fits into the work that I do today and the type of advisory work that I do today.
Drew Applebaum: So, was it that you just had some time on your hands that you decided to write the book, or was there anything else inspiring out there for you? Was there an “aha moment” where you said, “You know what? I really should write this down and spread it to the masses”?
Daniel Elizalde: Well, I’ve always loved to write, and you know, I’ve been writing my blog for about eight years, and when I had the opportunity to start teaching at Stanford, it was because I had a lot of my own structured approach to IoT strategy in my blog, so that lent itself really well to teaching. So, I love to write, and when I was writing my blog, I always thought, I would love to write a book. I just never really found the time.
I was actually in negotiations with a publisher to write a book about IoT and I decided not to. Now with the pandemic, the time was right and because I — since I was focusing on my daughter, I had only maybe a handful of hours a week to work, and I decided, “Well, I’m going to use that time to write this book”. And really, what the genesis was is that, I’ve been, you know, an executive in a few companies.
I’ve been consulting with hundreds of people in Silicon Valley and around the world, and I had my understanding of product strategy really well baked, and the more I talk to companies, the more I realize that there were some big gaps in from where I was looking at the world to where a lot of companies launching new products were and so, the book was an opportunity for me to fill in those gaps and have a cohesive structured approach to innovation from idea to your first customers.
Drew Applebaum: I think you led me to my next question here is that, you’ve been doing this for so long, but when you dug into some of the topics in the book, maybe just by doing the deeper dive, doing some more research, did you have any major breakthroughs or learnings along your writing journey?
Daniel Elizalde: Yes, I did. I had several. I’ve always been a product person, it’s called in the profession, right? So it’s always about understanding your customer’s needs, and so when I started writing the book, I talked to a lot of people in my audience about what were some of the challenges that they had. One of the main things that came very apparent very quickly was that there’s not a lot of information for business-to-business innovation.
A lot of what’s out there is for business to consumer, so creating consumer applications and you know, as I’ve experienced throughout my career that just doesn’t work for B2B and so, I understood that there was a niche there that I could not only pour my expertise into it, but there was a need in the market.
So, that was one of the big “aha moments” and another one if I may, Drew, was that there are a lot of books and workshops and gurus that talk about innovation and focusing on understanding the market, et cetera, but there’s not a lot of literature out there on how to make sure that your company supports your efforts throughout your journey, and that’s where I see a lot of companies and a lot of innovators fail.
So with my book, I try to give a holistic approach to innovation in the early stages that has to do with understanding the market, giving the readers the tools that they need to make sure that their company is coming along the journey, supporting each stage of the journey.
Drew Applebaum: Yeah, I’d love to talk about those early days because like you mentioned and you talk about in the book, you know, innovators and they have their initial enthusiasm, they’re so excited with your idea but something sinks in and then innovators start to worry. So what happens there?
Daniel Elizalde: Yeah, that’s a really interesting way to put it. One of the main things that I’ve seen is that most people that embark in this innovation journeys, whether they are entrepreneurs that get funding and they start a company or they are corporate innovators, meaning, people inside a large corporation focused on launching new products, they usually have an idea and they start at the end of what I call, the B2B innovator’s map, the journey, right?
Basically, they start by building something, and then once they spent a year or two and all their money into building something, they try to put it in the market, and guess what? Turns out that nobody had that problem or that specific product does not meet what the customers really wanted, so they fail.
There are actually a lot of statistics about it depends on which one you look at, from 70 to over 90 percent of new digital products fail within the first three years, which is a huge problem, right? So a lot of what I wanted to explore with the book is, “How do you increase that rate of success?” and one of the reasons why I’m personally invested in that is because, as I mentioned before, my focus is on helping climate tech companies.
What that means is, companies that are building solutions to fight climate change and so, if there is an area that really needs to develop those solutions and hit it out of the park, it’s something like climate tech because we have this global crisis and so I really wanted to help all companies doing digital products in B2B but specifically climate tech companies to say, “Hey, don’t just build something and throw it on the wall and see what sticks. Here’s a better approach to do it so that you can maximize your chances of success and can avoid some of the costly mistakes that are prevalent in the industry that I’ve done myself, to be honest.”
It’s Experience, Not Theory
Drew Applebaum: You know, what I love about the book is that, a lot of these comes from experience, it’s not theory. So, I’d love to ask you about your experience in this space because you do talk about success on one side and you talk about some things that have been failures. So can you just give us some overall maybe rundown of some of the more successful ventures you’ve had and then some of the ones that you thought you were really excited about and you built and you thought were going to crush it and then ultimately fail?
Daniel Elizalde: Yeah, that’s a great question, Drew, and it is true. The book, it’s 100 percent based on my learnings and my experience, so I wanted to document and talk about things that I lived and I know. So all of the examples in the book, which there’s a ton of them, are based on either things that I did myself or that I worked through with my consulting clients.
Now, of course, I’ve changed all the names to protect the innocent, but every single story there is true, and I wanted to make sure that I portray the good and the bad because there’s a lot of learning in the bad. The story that I open up the book with is this time that I was head of product for a company, creating this new testing solution for our customers, you know, with my team and supporting of my company would build this product that nobody wanted.
So we were in the worst possible scenario which is, we sold one, right? So now, it’s not that you can just kill it, right? You have one customer that you have to maintain so it’s even worse, and so, I open with that example in the book because then I say, “You know what? In hindsight, you know, 20 years later, if I had the tools that I’m going to share with you in this book back then, I would have not made a lot of these mistakes” and that has been really reassuring for me when I’ve been getting quotes from executives and other people that I admire that have been kind enough to early reviews of the book.
A lot of the feedback that I get is, “I wish I had this 10 years ago, it would have saved me a lot of trouble” or like… So that’s why I wanted to include those tough examples to show like, what does that failure really looks like as supposed to the idealized failures that we read in the – you know, in Silicon Valley.
Drew Applebaum: So, what should companies be doing with their early clients, to just make sure that that product is sticky enough to go big?
Daniel Elizalde: Yeah, so the way that I approach the framework in the book, I focus on providing value to your first 10 customers, and so the journey that I provide in the book has six stages, start with strategic alignment, then market discovery, user discovery, solution planning, prototyping, and early adopter.
So the whole idea is, you take something from an idea through these six stages, and once you get 10 early adopters that you can demonstrate that value, you can start thinking about scaling or about whatever the next step of investment is.
The reason I focus on that Drew, is if you read any of the lingo of Silicon Valley or innovation today, the term product-market fit gets thrown around a lot, right? You know when you are ready to invest when you reach product-market fit. But as part of my research and my personal experience, nobody can define what product-market fit is.
You ask 10 companies, they have 10 definitions, and so when you are in early stages of innovation, what you want is cohesiveness of vision within a team, so that everybody can drive on the same direction for a common goal, but if product-market fit is the goal then nobody really knows what that is, then you can’t measure success and it’s very washy-washy.
My philosophy is, let’s get away with that term and let’s set something concrete. Everybody understand what ten customers mean. If you have five, you have not proven that you can deliver value, right? But after ten B2B customers, and by a customer I mean a company not a person, right? Like Walmart, Target, those will be like customers.
By 10, you’ve probably seen every variation of what could go wrong with your product and you are ready for the next stage of growth. I’m not saying scale, but there is a lot of learnings that I say in the book of what does that mean, right? But like you’re ready to start thinking about something else. Until you have ten, you are still in innovation experimentation mode, right?
Mapping Out the Six Steps
Drew Applebaum: So you know, as the name of the book, you did create this B2B innovators map, which does include six steps. Can you list those steps and maybe talk a little bit about how you narrowed it down to those six?
Daniel Elizalde: For sure. So when I started drafting the book, I had this very ambitious idea to do a book from idea to scale, and very quickly, some of my advisors told me, “Well, that’s too big” first of all, and second, the people that work on early stages of a product are very different than the people that work on growth versus the people that work on scale. So I set up myself kind of like from book two and three there, right?
But I wanted to make sure that okay, it’s this very well-defined portion of the journey. Then I wanted to figure out how to do it in a way that is structured because one of the main challenges that I heard from talking to a lot of people is that there’s a lot of information out there but it is really hard to put it together. I remember this interview that I had with a CEO of a company and we were on Zoom and he turned his camera and showed me behind his office.
He had bookshelves and bookshelves of tons of books, and he said, “You know, every time I need something about innovation, like a little piece of information is in one of those books and I spent hours trying to piece it together” and so what I wanted is have a structured approach, kind of like a one-stop-shop, right? So based on that, I had to talk about the different stages, the most common stages and what do they mean.
So the first stage that I decided to do is strategic alignment. I struggled a little bit with whether I needed to include this, but after talking to a lot of people, I learned that a lot of companies struggle with strategic alignment, and I have struggled with this in my own professional career itself. What that means is that the company needs to agree on what problem the innovator team should solves.
It sounds obvious but it is actually harder than it seems. A lot of companies just say, “You know, we’re going to have an innovation team: go innovate” and especially in the areas that I deal with, right? Go build something in IoT, but then, without that clear direction, first of all, it is really hard to nail something down, and second, even if you bring something to the table, the company might be like, “You know, no, we really don’t want to go in that direction” or “That is not a market that we want to go into” et cetera.
So having that alignment with your executive team on what is the area we want to explore, and again, you are not committing to building anything, you are just exploring, but you have to have that backing so that you get resources, you get time, and if there is an opportunity for business, the company can get behind you, right? So that strategic alignment stage is super important.
So once you have strategic alignment, the next stage is market discovery. What that means is from all the possibilities of people in the world that you could go after, you need to decide which group of companies you’re going to target. Basically, who has the problem that you agreed with your executive team that you want to go solve, and this is also very important because a lot of companies that are starting, they are afraid of narrowing down a market because they are afraid of losing out on others.
So, “What do you mean I need to focus on a specific geography or in a specific vertical or in a specific used case? My product can solve everything for everybody” and that doesn’t work. If you want to find 10 successful customers, they have to be 10 customers that are testing your solution from the same target market, and so in stage two, market discovery, I talk a lot about how do you select the target market, how do you evaluate its size, its potential and how do you understand the pains of the person responsible to solve a specific outcome for a company.
Once you have that, the next stage is use of discovery. Now in B2B, you have this challenge of having buyers and users, right? The person who buys your product might not be the one who actually uses it. The perfect example is like a CRM system for sales. You know, the person that buys a system in a company might be the VP of sales but the users are going to be the independent account executives and admins and the IT administrators.
So it is very important to understand your – what I call the user ecosystem, so who all is going to touch your product and then which problems do they have where you could actually create a differentiated solution, right? I provide a lot of techniques on how to do that specifically. Moving onto the next stage, by the way, the framework is divided into halves. So the first three stages are all about understanding the problem you’re going to solve, and then the second half, stages four, five, and six are about figuring out a solution and whether that solution has traction in the market.
So when you move to stage four, solution planning, this is basically saying, “From everything we heard, what could we potentially do that can meet those customers’ needs and be profitable for our company?” Okay? I provide techniques on how to do all of that, but the fact that you select or have an idea of what you could build doesn’t mean that that’s going to be ahead with your customer.
So that’s why in stage five, prototyping, it’s all about iterating in small chunks and testing your hypothesis to make sure that you understood the problem that needs to be solved and your way of solving it is differentiated, and that is value. As you continue going through prototyping, you keep refining your prototypes until you have something of value that is so valuable that a customer is willing to pay for it.
That will be your first early adopter, and that puts you in the last stage, which is early adopters. Now in B2B, it’s very common to have pilot projects, and you know, there’s this term of pilot purgatory, right? It’s like all the applications go to die, so understanding how to navigate pilots and early adopters is super important. So that is why I made that the last stage and the goal of that stage is work with early adopters in order to get ten companies to adopt your product and show success.
If you are able to do 10, then you’re ready to exit this stage of innovation cycle and figure out what comes next, right? Which could be very many things. Now, the framework is iterative. It doesn’t mean that it is linear, right? Let’s say when you’re doing market discovery, you might say, “You know what? We couldn’t find a specific market that we can see is profitable.” So instead of moving forward, you can move back to strategic alignment.
Say, “Let’s agree on a different problem to solve” or when you are prototyping you might say, “You know what? This thing that we thought we could build to solve a problem, the market doesn’t want it.” Okay, instead of spending three years and five million dollars from building that, just go back to solution planning, come up with something else and go back to prototyping, right?
I show a lot of examples of my own experience where I have actually gone back and forth in the different stages because the whole idea is to minimize the waste. So if I can spend three weeks prototyping something and it doesn’t work, it’s better than building a whole thing for a year and then figuring out it doesn’t work. So that’s how the whole framework fits together.
Drew Applebaum: Now, I just want to reiterate is that these again are not theoretical. These are tried and tested and true methods that have been used in these business scenarios before, right?
Daniel Elizalde: Correct, they’re all tried and true. What I do is I bring my experience specifically into a B2B context and more of an industrial context, put it together as a framework with my own approach, and then when it is time to dig deeper, I am the first one to say, “You know what? For user discovery, you should go out and look at this other book” or “For market discovery or for prototyping specific tactical prototyping techniques, here are three books that you need to look at” right?
So that that way, they have a clear path because each one of these stages, it is a full discipline. What I am doing is I am providing the structure so that people can understand at a high level what does navigating the B2B innovation journey looks like so that they can have alignment and they can move forward as they go.
Drew Applebaum: Now, you thanked a lot of contributors in the book in the acknowledgments section. So how much collaboration did you do, and what did others bring to the book or how did they help you along your writing journey?
Daniel Elizalde: Yes, so everything in the book is based on my own experience and my own writing, but when I get stuck, that’s when I reached out to my mentors and people that I admired, and I actually did it in public because I have my own podcast, The Enterprise Product Leadership Podcast, and if I had a question about early adopters, well, I want to see if I can talk to the guru of that section, and I interviewed Jeffrey Moore, and you know, I was able to understand perspective so that I can refine my thinking.
So I did a lot of those to refine and then a lot of the collaborators helped me just reading the early drafts. The draft that’s going to go like the manuscript that went live is like, “Rewrite number ten” the first one or two iterations were really destroyed. I mean, some people were really honest to say, “You know what? I think you have something here but come back to me when you have something that is better.”
Then by rewrite seven or eight that was getting this like, “This is what I wish I had 10 years ago” so I knew that it was shaping up correctly.
Drew Applebaum: Now, alongside the book, you have a companion website where you do offer readers and listeners a B2B innovators kit. So can you tell us what the website is and what exactly they could find in that kit?
Daniel Elizalde: Yeah, of course. So the whole idea is that this book is for an innovation journey. So there are a lot of different parts, there is a lot of knowledge. It is not something that you can just do tomorrow, right? So on my website on danielelizalde.com, I have a lot of other articles and podcasts, et cetera, but with the book, I created this kit that has a couple of things.
One is an extended list of additional resources, meaning the book contains a lot of recommend books, but in the innovators kit that you can download for free, it has additional books and it has all the links to my podcast that tie to each of the sections, right? Like the interviews that I did with top thought leaders are on market discovery while you can listen to all of them as you come. So that is one, additional resources.
The other thing that I include in that kit is the companion workbook because this is a process that you are going to go through with your team and so what I did is I extracted a workbook out of the whole book so that you can sit down with your team and basically start filling it out and the goal is to see where you have gaps. I can tell you, it’s very unlikely that anybody could fill out that whole workbook because if you did, you were already past your first 10, right?
So the idea is, “Okay, do you have strategic alignment and this is what it means.” Okay, do you have all these different things that would mean you have market discovery correct. “No, I don’t.” Okay, so now you know where you need to focus, and the book will guide you, and that’s where also I come in with my advisory services, you know, companies hire me to help train their teams and get them unstuck into these different sections and I come in and I work with them.
Giving them all the tools and techniques, and I actually use the same workbook to work with my clients because basically, it is like, “Let’s fill this out together, let us figure out where you’re stuck, and let me help you get unstuck.”
Drew Applebaum: Well Daniel, we just touched on the surface of the book here. There is so much more inside of it and on your site, but I want to say that putting a book out there just to help innovators’ dreams of success come true is no small feat. So congratulations on having your book published.
Daniel Elizalde: Thank you so much. I am very, very excited, and I can’t wait for more innovators to get their hands on this so they can accelerate their innovation journey.
Drew Applebaum: This has been a pleasure. I’m excited for people to check out the book. Everyone, the book is called, The B2B Innovator’s Map, and you could find it on Amazon. Daniel, besides checking out the book, besides your website, is there anywhere else where people can connect with you?
Daniel Elizalde: The best way is through my website, it has all my information. You can contact me directly there. I am also on LinkedIn and you can also go to b2binnovator.com, that is the main page of the book and you can download a free chapter if you want to check it out.
Drew Applebaum: Nice. Well, thank you so much for coming on the show today, and best of luck with your new book.
Daniel Elizalde: Thank you so much, Drew. It was a pleasure.