We had a group come by our offices recently that was working on a product which would make everyone re-think their data center strategies. They are an early stage startup company (meaning of course a new product with few, if any customers). What they were saying seemed logical but then we got to the question of who are the beta users and what are the use cases? The fact that that they were not able to answer these questions was alarming — if their product was so good then why didn’t they have any users? And when we asked who their early reference customer was they mentioned an Azerbaijan ISP. We’re sure that the Azerbaijan ISP is a vibrant organization with a significant infrastructure in place but it sort of defeats the purpose of a reference account for an early stage company. Customers are (rightfully) cautious about what does and what does not get put in their data centers. They’re more than curious about who else will be using a new product and how are they using it. If you’re chasing the Fortune 500 market, it’s hard to see how any service provider, especially one in a remote corner of the world, would be a helpful referral. What’s more, if that’s the best you can do it’s not unreasonable for a potential customer to lose interest if that’s all you’ve got. A startup that’s interested in a market segment, let’s say for instance the healthcare market, in addition to building a product should build a knowledge base about the vertical markets that they’re most interested in. Considering that reasonable funding is available for most of the infrastructure startups understanding a market segment costs very little and the process should reveal which customers set the “Gold Standard” as reference sites. While it might cost hundreds of thousands and even millions of dollars to build the product, it’s only a small fraction of that amount to determine the value within the key verticals, who might make good references, and who the “poster child” should be. (On our website is a template for our Market Opportunity Analysis (MOA) framework. If you’re interested: IRG’s Market Opportunity Analysis.).