Building a Product Roadmap
Why you need a roadmap
Entrepreneurs often present investors with great technology ideas,
but no roadmap describing how that technology will be brought to
market. Building a product roadmap can substantially increase your
chances of getting funded, because investors can see the potential
applications, without losing sight of the immediate goals.
A great roadmap walks the fine line between being too narrow ("a
one-trick pony") and too wide ("all over the map").
Investors will want to see that you have a focused idea of where
you are going in the short term (and why), and that you have plenty
of other market opportunities to explore in the longer term, both
for increasing your market, and in case your initial markets donít mature.
How to build a roadmap
Start by brainstorming all possible applications of your technology.
Try to think "outside the box" as much as possible. Write
every idea down, no matter how crazy. Talk to colleagues and friends
in related markets, and ask for their ideas. As the flow of ideas
runs dry, begin organizing them into related markets. These relationships
can be technology-based (e.g. different hardware bus technology)
or market-based (e.g. enterprise software vs. consumer software).
For each market, define the product that you would build to target
that market. Size the market conservatively, using analyst estimates
and reasonable assumptions about your penetration. Estimate the
cost to develop and sell the product, and calculate a rough ROI.
Take into account your teamís experience, and the learning curve.
Understand the competition, and what your technical edge is.
Look for areas where you can use the experience gained in one product
to develop other products more quickly. For example, you may be
able to reuse 80% of the development effort for one product to build
another product more quickly. Often these reusability factors can
be presented as competitive differentiators. Your roadmap should
make clear how your product is different from your competitors.
Rank the markets on these factors, and decide on one or two products
that you will initially develop. Also identify several other markets
that make sense to pursue in the future, or if the first ones donít
pan out. Your roadmap should show your company building a manageable
number of products (like two or three) developed in a realistic
timeframe (a year or two). Products that are further out do not
need to be very specific, but should be characterized by one or
two key differentiable features that enable entry into new markets.
How to present your roadmap
Demonstrate focus by building your plan and presentation to spend
the most time on your initial products. Size the markets conservatively,
and pick realistic penetration rates. Show potential and reduce
risk by presenting secondary markets, and emphasize that they are
follow-ons or backups to your initial pursuits.
Roadmaps are always subject to change. Venture capitalists usually
have relationships with experienced industry veterans who will look
at your plans. Be open to suggestions that you make major revisions,
or re-prioritize your roadmap. Early stage investors expect that
plans may change as more development and market research is performed.
A good product roadmap demonstrates to potential investors that
you have carefully considered your product lines and target markets.
It highlights your product focus, and reduces the likelihood that
you will be distracted by related markets. Investors will be able
to see related products that increase the total market size, and
reduce the risk of having only one product. In the early stages
of a company, a roadmap is a great way for an entrepreneur to communicate
company direction, and ensure that he doesnít get lost.
An example company
One of our portfolio companies, HotRail, developed a chipset for
high performance communication in multi-processor computers, and
bootstrapped themselves to $1million in sales and near break-even.
We discovered that their product was near the end of its lifecycle,
so we worked with them to develop a product roadmap for the SMP
space. The founder then worked to develop a next generation technology
to address the needs of newer processors in SMP machines.
With a clear plan for future products in SMP, we led an initial
round of funding and began to expand the company. As we began to
discuss follow-on rounds, a potential investor suggested that this
technology might apply to other sectors, particularly the communications
space. We found an expert to help us build a new roadmap to encompass
these other sectors. Here, we had a real breakthrough: analysis
of these different sectors showed that the value of this technology
in communications was much higher than in SMP computing. We decided
to refocus the company on communications.
Once this switch was made, raising money became much easier, because
the market was large and growing, and the product direction was
clear. After three years and three rounds of venture financing,
the company agreed to be acquired for $400 million by Conexant.
This was a terrific outcome for the investors and the entrepreneurs.
The process of creating a roadmap, broadening it to include a variety
of sectors, and then focusing on the highest value application,
directly contributed to this success.
Tom Shields, Woodside Fund