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Disruptively Shifting Paradigms Intellectually – and other startup myths

April 10, 2010

I love a good catch-phrase. A good mantra can rock my world. And oh daddy, the hard smack of a good platitude knocks me off my ass like nothing else. Mostly, however, I love them like I love Beevis and Butthead. I love them because they remind me how stupid most people are. For a few moments, I can revel in my own intellectual superiority, confident in my belief that it’s not the meek who will inherit the earth, but the innovative brainiacs like me who are going to forge new markets – no, whole new lifestyles – into which the unwashed masses will pour, bathing in the glow of innovation that changes the course of humanity.

Wanna buy a bridge?

One of the problems with entrepreneurs – especially those of the tech-geeky ilk – is that our vision is so clear, conviction so strong and enthusiasm so infectious that we lose touch with reality. We make it worse by cheering ourselves on with phrases like “first to market,” “paradigm-shifting,” “proprietary IP,” and “disruptive technology.” We forget that, no matter how cool our offering is, we still have to convince people to buy it. And in most cases, that first means convincing them that they need it. Which first means convincing them they have a problem that we can fix…  And so on.

Let’s take a quick look at some of our most beloved catch-phrases. Specifically, the ones I see in every single Power Point pitch deck, usually right before the slide with the hockey stick graph showing your company in the upper right hand corner of some statistically relevant collection of competitive data.

First To Market

This is a HUGE red flag for me. There are only a handful of reasons why it would be good to be first to market, most of them involve profoundly and simply changing the way that everyone in the known universe does ONE thing that they all do already. Like Amazon.com and shopping. And it’s worth pointing out that Amazon didn’t have to convince people that they should shop, they were already doing that.

You have to define and build a market for your product. That means a lot of marketing to educate consumers about why they need a product like yours, not even specifically about your product. You have to make a lot of guesses – however well researched – about how people will use your product. You have to support a very long runway to while you research and build your market AND your product. You will go into revision the moment you launch as a result of market feedback, meaning you are probably launching two products in rapid succession, not one.

Your competition – and you WILL have some, no matter what – will reap the rewards of all of the market education and definition that you did, get to market much faster because you will have done all the dirty work for them, benefit from all the mistakes you made, and will be able to release a “better” version than yours – probably faster than you can get out your version 2.

Most importantly, you will only really have access to the early adopters, which is always a very small portion of the larger market that you probably did your financial modeling based on. Basic laws (and I’ve rarely seen them bent) of the Diffusion of Innovations theory suggests that the bell curve for consumers of paradigm-shifting, disruptive technology is as follows:  Innovators: 2.5% of market Early Adopters: 13.5%Early Majority: 34% Late Majority: 34% Laggards: 16%

So, first to market gets you 15% at incredible cost an effort. Best to market gets you 85%, and you can let the first to market people do most of your R & D.

Paradigm-Shifting

People like their paradigms, and they don’t want strangers to shift them. It may be easy for you to see how the world would be better if people would shift their paradigms, that doesn’t mean they will do it. The “my business will succeed, if only the market will change,” doesn’t work any better than, “this will be the best marriage ever, if only he will change.” Can I just say, “Earth Class Mail” and rest my case? (You know, because people will want strangers opening all their mail for them.)

The upside? Probably not tons of existing competition in terms of other products. The downside, tons of competition in terms of habit and closed minds.

Do not build a business plan on the idea that you will get a huge mass of people to change their behavior. People still smoke cigarettes, and that behavior kills them. So what’s their motivation to change their behavior for you?

Disruptive Technology

That is code for “confusing.”  Similar to paradigm-shifting, the idea here is that people who are already doing something will now do it a different way because of your product. Sure, you don’t have to convince them to do something, but you still have to convince them to do it differently. And you will be battling established brands, methods and products who will fight you tooth and nail to retain their existing customers.

Proprietary IP

This is probably my favorite catch phrase in all decks. Translation: I have an idea. So what. I have billions of them. We all do. Many of us – at least the entrepreneurs I hang and drink too much with – have a dozen ideas a day, sometimes at very inopportune moments. (Oh honey, no, that feels good, I’m just distracted because I realized that if I could….. )  Ideas are awesome, innovation is the best drug and the only path to the future. However, if you can’t get it to market, with the right team, it doesn’t mean anything. You can’t build a business on an idea, you can only build it on a market, a team, and a ton of blood, sweat and tears.

Maybe I’m cynical. (Ya think?) In the year since being first to market with the first all-digital national lifestyle magazine, I’ve been kicked around hard by the harsh reality that paradigms don’t shift any faster than markets, disruptive technology scares the shit out of people and my intellectual property isn’t worth a thing if there isn’t a market that is ready and willing to pay for it. As a good entrepreneur, I still know that I am right and will keep working at it until I stop breathing, but I’m not going to get all excited every time the whiff of change blows past my lonely station at the First To Market outpost in hell.

My addressable market is huge, my product is awesome and it is, without a doubt the wave of the future for publishing. With 50,000 readers, I’m hacking away at the innovators and early-adopters (and am actually a pretty big magazine.) But, on a daily basis, I am still forced to answer the question, “what is a digital magazine.” Can you imagine trying to sell a car to people who didn’t know what a car was, how they would use it or why it was any better than a horse? (Especially if you are understaffed and underfunded, like most of us are!)

Which is why I didn’t buy an iPad, even though JUST CAUSE is available on it, for free using the Zinio reader app. I just can’t get excited about the iPad as a market because it is based on disruptive technology, and I believe that it will take years – YEARS – before a critical mass of people begin using it. Obviously, the iPad will not be a viable third-party distribution platform for any media partner until that happens.  For Apple, and even for Apple app developers, the big test is simply, “will people buy it?” That’s easy. For the rest of us – and for people who want it to change the world – the larger question is “how will people use it?”  Followed closely with the most important question, “will this become a lifestyle?”  Will an ecosystem of goods and services grow in it?

In agonizing over whether or not to spend money I don’t have on a gadget I don’t really want in order to see how JUST CAUSE works on it, I found the words of wisdom that forever soothed whatever buzz of excitement I had. Cory Doctrow, of Boing Boing fame, said in a Gizmodo post: “The real issue isn’t the capabilities of the piece of plastic you unwrap today, but the technical and social infrastructure that accompanies it.”

And therein lies the rub for all of us innovators. We can have great ideas, create amazing products, and have the potential to change the world, but none of it matters unless the world changes with us.

So should we do it? Well jeesh, we have to. Just as sure as Tiger needs to putt and text, we need to make products and companies. It’s fun, and yes, it’s necessary. We create the future, fuel the economy and sometimes change the world. I wouldn’t want to do anything else.  And I wouldn’t want you to either! Go for it, with everything you’ve got. You’re probably going to fail – the odds really are not in your favor. But go! Fail, and fail HUGE! Try everything, learn everything, and then do it again!

But be clear. Your biggest challenge is not your product, it is the people who you need to buy it. Without them, you just have an idea, and that’s not worth a damned thing.

___

This was originally written for and posted on Seattle 2.0, where lots of smart people write about startups.

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