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the challenge

Jad Saliba, founder and chief technology officer of Magnet Forensics Inc.Fred Lum/The Globe and Mail

Each week, we seek out expert advice to help a small or medium-sized company overcome a key issue .

Jad Saliba doesn't want his company to be a one-hit wonder.

Mr. Saliba, a former constable with the Waterloo regional police, is the founder and chief technology officer of Waterloo, Ont.-based Magnet Forensics Inc. The company, which sells digital forensics software to law enforcement and government agencies and corporations, was originally founded in 2009 as JADSoftware Inc.

It has grown rapidly over the past year and a half, with the number of employees jumping to 25 from three. Sales have also been rising fast, to about $3-million in 2012 from $648,576 in 2011.

All this has come from a single product: Internet Evidence Finder, the software used to help in crime detection by more than 1,200 customers, ranging from Bank of America to the U.S. Department of Homeland Security.

"We have this flagship product that's doing quite well, and there's so many more things that we could be doing with it," Mr. Saliba says.

"But, at the same time, we have other product ideas. Some of them are complementary, and some of them are brand new ideas for different products."

What he knows is, "we can't just stay with one product forever."

Mr. Saliba isn't sure how to balance his development dollars. He knows that Magnet needs to continue to maintain and improve its core product. While he also wants to move beyond it, he doesn't want to sink too many resources into new and unproven product ideas.

"Until you release a product and you start making sales, you'll never really know how successful it'll be," he says. "I think it's really risky for a company to start diverting resources from something that's proven and is doing well to new projects."

A year ago, Mr. Saliba was the company's sole software developer. Now that he has an 16-employee development team, "these other products are becoming possibilities."

"It's just a tough decision on how many people to divert to these other projects, and how quickly to start diversifying."

Mr. Saliba worries that if he can't find the right balance, he could risk falling behind in the rapidly moving world of digital forensics.

"I think there are dangers on both sides: one of losing current customers and current revenue, but the other of losing future customers and future revenue."

The Challenge: How can the company best balance its desire to move forward on creating new products while continuing to improve on its core one?


Alykhan Jetha, president and CEO of Markham, Ont.-based Marketcircle

Before adding a new product, you really have to consider the amount of effort it will take. For example, if you are a distributor, adding another product doesn't take too much effort. On the other hand, if you are a manufacturer, the effort is a lot more. In the software space, in the current super-competitive environment, I would say software takes even greater effort. You have to consider all the platforms and how those platforms will play out in the next two to five years.

I equate launching a new product like a rocket lifting off. A rocket burns a heck of a lot of energy at lift-off, yet it still needs energy for its ascent. The only time you want to take energy and momentum away from a rocket in flight is if you know it's going to crash. Is your main product on a trajectory that will crash? If you take energy away from it, will it crash? These are questions only you can answer after some deep thought.

Based on your revenues and the number of people you have, I would shy away from adding more products. I would make sure IEF is the top dog on the main platforms your customers will be using in two to three years.

Tom Corr, Toronto-based president and CEO of Ontario Centres of Excellence

The most important thing to keep in mind is that the voice of your customers is critically important to your future success. One place to start looking at how to move forward is to pull together an informal advisory group made up of existing and potential new customers for a brainstorming session. It's amazing what you can learn about their needs and what new products they may, or may not, be willing to pay for. Just ask them – they will tell you.

You should also be mindful to make any new products complementary to your existing offering. Don't sacrifice the core product for the sake of a new one. You have paid a big price to get the customers you have, and, ideally, they will also be customers for any new products that you create. They are the ones that ultimately write the cheques and vote with their wallets. You obviously want their votes locked in.

When you develop a new product or service, make sure it is something that is consistent with what you are known for within the forensics realm and where you have credibility. You should already know what works and what doesn't and what's already out there. It's important you innovate, not replicate. Make yourself a market leader and not just someone offering up an "us too" solution.

Jeff Shiner, CEO at Toronto-based AgileBits Inc.

The choice on how to expand, and where to focus the resources necessary to expand, is one every growing company faces. You have already made a tremendous investment in time and resources to develop your existing customers, marketing and brand equity. It is necessary for you to leverage that investment to enable your growth.

Developing new products is exciting and rewarding, but potentially disruptive. Do not allow yourself to become paralyzed by overthinking the pros and cons of adding a new product. A key advantage that a small business possesses is agility. Take small, separate teams and allow them to develop a prototype or explore a new idea. Small investments will help you determine if they are worth larger-scale investments. Keep your core team focused on improving your current product to keep existing customers happy and continue generating revenue. Above all, be prepared to change course quickly. Drop projects quickly if they are failing, or switch focus to one which is showing promise.

When determining which new products to develop, prioritize products that complement your existing product. By broadening your core product line, you have an opportunity to develop additional revenue streams while taking advantage of your current sales and marketing channels. It is more important to have a strong, differentiated product line than to have a broad set of unassociated products.


Brainstorm with customers

Put together an informal advisory group of current and potential customers to ask about their needs and what new products might fulfill them.

Stick with complementary products

Don't sacrifice a core product for a new one. Make something new that complements what you already have and builds on your knowledge, reputation and credibility. Innovate, don't replicate.

Start small

Create a separate team to explore new ideas or develop prototypes. Small investments will help determine whether you should make bigger ones. Keep your core team focused on your core product.

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