Lots Of Enthusiasm, Not So Much Profit

from the getting-over-that-hurdle dept

I was having a discussion recently with someone about the challenge of selling “TiVo-like” products – by which we didn’t mean other PVRs, but products where (a) the product’s benefits are difficult to describe but (b) the early adopters who sign on can’t imagine living without it. It’s a challenge a lot of companies face, and no one seems to have a very good answer. Some people think you just focus in on one differentiating aspect of the technology and pitch it relentlessly. Others try to build up word-of-mouth buzz. Still others try to get as many “trial” users as possible. It really depends on the actual product, but venture capitalist Kevin Laws is looking at these types of companies and wondering what it takes to jump that hurdle. Is it just a question of letting the companies grow slowly, instead of pushing for the mass acceptance right away, or is there something else to it? It seems to me, that the examples he cites of companies that have made it over that hurdle were less revolutionary than those that haven’t. That is, while the iPod and the Treo 600 have done things right, both were actually smart updates on previously failed products in that space. The examples he mentions of companies that have struggled (TiVo, PayTrust) are companies that have spent more time trying to invent and define the space themselves. The real question, then, is whether or not companies that create a space can successfully hang on and remain relevant until the market actually takes off. In many cases, I wonder if those companies have trouble because they’re so focused on their own product and defining the market that they miss out on the one big feature that catapults a competitor into market dominance.

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Comments on “Lots Of Enthusiasm, Not So Much Profit”

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Anonymous Coward says:

VC's, Sex, Money and Zen

VC’s are in it for the money. VC’s aren’t patient. It’s like adolecents/young adults and one-night stands versus dating. Some people are in a hurry to “get something”. Some people are really involved.

Angles and Inital round VC’s are interested in building businesses, it takes many years so they don’t have a choice. Later stage VC’s are in it for the rapid return on their money.

“Crossing the Chasm” faster means getting paid sooner.

Joe says:

Not so much missing an important feature

In the last line, you suggest that these companies miss an important feature. Typically, I think it’s the opposite. Besides the fact that the first company has to spend the money to create a non-existent market, the company that defines a brand-new market often doesn’t know the meaning of ‘good enough.’ A competitor that puts money toward the price point and does a minimum of features can often beat the initial mover in marketshare, if not immediately in technical perfection.

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