What’s different about GovTech?
I’ve spent the last eight years building and selling products to governments. At the risk of oversimplifying what works in govtech, I think success comes from three factors.
03 Jan 2017
Building and selling products to government is hard. If you’re reading this post, I’ll assume you’ve heard the “if we only fixed procurement…” soundbite.
This post isn’t about fixing procurement, procurement is a symptom.
I’ve spent the last eight years building and selling products to governments. At the risk of oversimplifying what works in govtech, I think success comes from three factors:
- Founder-product-market fit
- Understanding zero-sum budgets
- Scale through social proof
Every sector requires companies to find product-market fit as quickly as possible. There’s not a better post than this one when it comes to the importance of product-market fit. However, government is different. It’s almost impossible to “eat your own dog food” in govtech. You can’t create a QA environment that replicates the planning and zoning counter. The only way to replicate public safety use cases is to be in the field with the folks doing the work. The inability to use-what-you-build puts enormous pressure on the founder(s) to place themselves in the environment and build a product that works.
Understanding zero-sum budgets
City budgets are a zero-sum game. Allocating dollars to a new product simultaneously forces withdrawal from something else in the budget. Your product has to be so good it entirely replaces another product or a human process. There’s a good chance that product or process you’re replacing has been in use for 25+ years. Products can’t be 10% better in government, they have to be 10x better than the incumbent. This might sound like every other sector, but risk aversion is high in government. In order to replace something in the budget, the bar for product viability isn’t minimally-viable.
Scale through social proof
Concentrated impact, either geographic or within a domain, is a common thread in successful govtech companies. To combat the inability to use your own product (highlighted above), the only way to gain understanding and thus scale is through social proof. Random smile and dial doesn’t work in govtech. People forget that selling software to non-IT departments is a new phenomenon. Most of these folks haven’t been sold software, ever. These are domain experts and only experience value through narratives, stories of similar people finding value. In the case of government, similar people means the city next door or another person that does my exact job. The danger in govtech is trying to get scale through the force of a sales operation long before product-market fit exists.
With all of that said, success in govtech is there for the taking.