Tech Startup 3.0

Today I want to talk briefly (because whole books have been written on the subject and I can’t claim to give it the going over it deserves in one blog post) about the idea of “crossing the chasm” – and how you can stay on your side of the so-called chasm and still succeed.

Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, by Geoffrey A. Moore has become a cult classic since its release in 1991. Its title says it all, really, but the basic premise of the book can be seen more clearly in the graphic below. 

The chasm is wrong and why do you no longer need to cross it to succeed as a tech start-up?

It used to be that the skill of companies that make it big is that of waiting out the gap between “early adopters” taking an interest in their product or service and the “early majority” getting on board.  This is no longer the case for most start-ups.

Startups – early adopters can be all you need.  Why?

1. It’s a matter of quality. You get a good and loyal customer base, whose opinion is respected in the community you are targeting.
2. It’s a matter of quantity.  With consumers becoming far more tech-savvy over the last decade the chasm curve now is simply incorrect.  The early adopters area of the curve (before the chasm) is now much larger – with up to 50% of the market are in this area now.  We’ve got mass consumer technology to thank for this: Facebook, Twitter, iPhones etc have made normal people into tech savvy people.
3. It’s the Internet baby. This one directly affects quantity – simply put, more people have access to high-speed internet and this makes the market bigger.

And with people generally becoming more and more tech savvy the numbers of “early adopters” out there is on the up – and growing fast.  This is the market your start-up needs to target and thanks to the internet, it’s becoming easier to reach.

It’s not so much that crossing over into a bigger market could ruin your company, but that it could dilute the impact of your brand.  Talking to consumers on the other size of the chasm takes different products and different mindsets – they’re conservative in nature.  It can mean leaving your existing market behind.

So don’t be a sell-out.

Here’s a musical analogy: The band The Shins was a huge hit on the indie music circuit in the US. From Albuquerque of all places, they were well known and respected among the right people, but not at all what you would call mainstream. Then a song of theirs appeared on the soundtrack to the film Garden State (and Natalie Portman’s character even said one of their songs would “change your life” in the film itself) and the band’s audience grew.

Now, that wasn’t such a problem, but what was problematic was when one of the band’s songs appeared on an ad for – you guessed it – the iPod. Now, I am a huge fan of The Shins, but I know many who thought they were selling out. (Disclaimer: I maintain the band is awesome)

Remember: the ones that do it successfully are rare and not to be emulated – unless you’re really gutsy, don’t mind alienating your existing customer base or you have such a technical product that the early adopters category is small.

Remember – stick to what you know, what you do well, and what your loyal customers value.

“Choose a niche and dominate it as opposed to trying to dominate the world on the other side of the chasm. 5000 customers at 100 dollars each per month is a pretty good business model still for a small startup!”

(For more on what not to do with your startup, see Mike’s post from a few weeks ago: “How original product ideas can kill your small business”).