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| Home - Industry Article - Apr 03 Issue |
Killing The Platform Legend
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If you ever hear that the market "is just not ready" this is just hoo-y. It’s like saying you lost a sale based on price (no…you were out-sold…). It is a sort of speaking-in-tongues that translates loosely to this: "we had a really cool product, but we could never identify and answer a really urgent business problem that anyone had." In other-words, they thought they were following the cook-book because they knew all the great things the technology would do. It was obvious to the management team. Unfortuantely, there were just not enough end-user buyers that either understood, or agreed with them.
Why does this happen? While the reasons can be as high as a mountain, I have a hypothesis based upon seeing this screen-play acted out more than a few times in the past couple of years:
- The business gets funded based upon a vision for broad-market appeal.
- Early founders are completely attached to this vision and therefore sell it heavily
- Early-stage investors are fearful of being relegated to a niche with little return, and need to see, and sell a platform vision for investment. Corporate sponsors won’t be sponsors at all unless they see that the new business is big enough that it can bring-in substantial new revenue that is material to the parent company.
- As a result, management insists upon horizontal, platform positioning at too early a stage of market development.
- The business-buyer never really can understand the value proposition of this new fangled technology as it is sold as a platform and not a solution.
- Because of an unwillingness to prime the pump with initial solutions, the company never really gains enough domain expertise to create demand at the business-end of the value chain, instead relying on IT and technology buyers, or worse-yet, relying on a service provider or channel to do so.
- As funding diminishes, it is increasingly difficult to transition to a solution orientation.
- The result: "We were just too soon for the market."
There are of course other options to going down this route, and there is always a risk-reward trade-off in creating any solution vs. pure technology orientation. But few other marketing options besides simply understanding and solving end-user customer problems offer enough clout to ever allow the transition to a platform downstream.
There is of course always the opportunity for luck; being at the right place; having the right partners; closing another round; getting the big deals. Most of the successful companies and people that have been written about have clearly been insanely lucky while most of the unknown companies have not. But consider that most overnight luck comes from doing the right things for a long time to create the opportunity for luck to present itself. Until there is a compelling and urgent business problem that buyers acknowledge with their money, the percentage of success that must be attributable to luck will be high indeed.
Mike Tanner is a Managing Director at the Chasm Group, where he provides advisory and consulting services in the areas of new venture development, market development strategy, operational planning, portfolio investment strategy and market positioning. Mike holds board seats for Apexion and Savi Technology, and sits on the advisory boards of Entivity and Unicru. He can be reached for comment at: mtanner@chasmgroup.com
 
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