Crossing the Chasm

I just finished reading 'Crossing the Chasm' by Geoffrey A. Moore. It is one of those books that you hear a lot about in the high-tech industry and especially in MBA programs (well mine anyway). One of my co-workers even mentioned that it was 'required' reading for everyone at one of his former companies. While I wouldn't call this a 'must read' for anyone in the high-tech industry, I did get a lot of take aways related to product management, marketing and general product strategy that I felt like sharing.

The general concept of the book revolves around bringing high-tech products to the market. His observation is that most products will have a fair amount of success initially with early adopters but consistently struggle making the leap across the 'chasm' to be accepted by the mainstream consumer. Even though the book was written in 1991 (updated in 1999) it still holds very true today; so many products especially in the more recent 'Web 2.0' boom never make it over the chasm and become adopted by the mainstream. I would even argue that recentl successful offerings such as Twitter and Facebook have still not truly crossed the chasm in terms of becoming accepted and used by the mainstream Internet 'consumer'.

What I really liked about the book was his strategy for actually creating and delivering a product that can cross the chasm; by choosing a 'beachhead' target market and aggressively positioning your product to attack that market. It really got me interested since I have been more and more interested in Product Management as a career path. I can think of so many products that I've been involved with which are great technical ideas but struggle to really address the needs of any specific target user. This book give some great concrete examples of how to find your 'beachhead' market and then go after it with a 'whole product' solution.

Another aspect of the book which I liked was his skepticism of quantitative market data for unknown and new markets. The example he uses: "It will be a billion dollar market in 1995. If we only get 5 percent of the market ..." struck me because I've seen others using that same logic and been tempted to use it myself in analyzing markets and industry for business plans. He gives some good examples of how to use market data (and lack of it) to make a 'high risk low data decision' as to what market is best to attack.

My only real gripe with the book is that the examples are getting rather dated so its tough to even recall who those companies are (most have gone under or been acquired) at this point without looking them up. Also I'm not sure the chapter on sales and distribution channels is really applicable today particularly for Internet based products.

All in all I really enjoyed this book and highly recommend it to anyone starting a business or developing strategy for new products. This will definitely be one that I keep on my shelf to read again throughout my career.

Welcome Mat

So classes ended last night; our group did a presentation on a new product concept for my company Local Matters. It went really well, even got a few good ideas for the product from my classmates and professor. However, I think we could have done a bit better in two areas:

• Market Size - We had some rough numbers of number of movers but didn't go into how many Realtors were out there. We also didn't project how much of the market we hoped to capture in order for the product to be viable.
  
• Financials - I think having a break even point and also some idea of how that equates to market capture rates would be good. Also some specific monitization numbers as far as what we would expect to charge realtors, how much ad revenue we could expect for each product in the customers hands.

I might try and work on these items a bit more as I have time. Almost seems like one could take this idea and spin it off into a company!

Bubble 2.0?

Ran across this on Ajaxian this morning, apparently PC Mag has an article by John Dvorak that espouses the new 'Web 2.0' bubble, aka Bubble 2.0. While I share some of his initial sentiment; I think he could have provided a little more backup than six bullet points supported by a sentence each. If you are going to make a broad claim such as: "I can assure you that after this next collapse, nobody will think of the dot-com bubble as anything other than a prelude.", you need to put a little meat behind your justifications. I hate to burst his 'bubble' as it were, but if you just look at the VC funding numbers, as provided yesterday from Venture Beat, you can see we are far from anything near the amount of financial commitment to this new wave of technology sites as we saw in 1999/2000.

So while I do agree we are headed for some sort of critical mass of mobile-user-generated-social-networking widgets I don't think one could expect anything even close to the scale of the 1999/2000 bubble. Unless of course we are only at the beginning...

RIP Business Plans?

So Don Dodge has a post today questioning whether or not Business Plans have any purpose anymore. I'm just as stumped as everyone else in regards to the Twitter deal, but like most others I don't actually use it. Don makes some great points, especially in regards to the people making the business worth investing in rather than the business plan (or even the idea). What I think he is missing is that the VCs do want something to hold in their hands, even if they will nitpick it. The Deck format I mentioned in my earlier post is a great hybrid approach I think and something I'm surprised entrepreneurs don't use more often.

The Deck business plan basically gives you a short document, written in power point with the main details of your business and why you think it will succeed. One could argue that printing the slides to the presentation is enough but the Deck is a lot more than just printed out slides. First of all, you are getting the advantage of a nice looking format that is consistent with your PowerPoint slides. Second, each slide of the Deck may follow a similar format as your presentation but will convey much more detail such as things you may talk about but don't actually list on your slides. Third, it gives the VC the assurance that although they aren't looking at a 50 page plan, you have done your homework. Finally, although it may give them something to nitpick it gives them an overview of your idea for later reference so they can pay attention to your talk rather than take copious notes for later review.

Obviously in the case of a company like Twitter, this might have actually been a bad thing since they have no business model and no idea of how they are going to generate revenue. Once all of these social networking fads have faded away and we have more stability in the market, new businesses will have to be more thorough when pitching a new idea for funding. Right now it seems like all you need is a high user base and buzz factor and you'll get money thrown at your business.

Market research and a good business plans are not gone, the presentation need some tweaking and I think thats where the Deck and other visually appealing presentation formats can be leveraged.

When is it all too much?

Okay, I'm all for this new Web 2.0 and social networking boom we have going on, and I love the fact that we're all so much more connected than we once were, but this site made me do a double take...

VentureBeat is reporting that Respecance a Social Network for sharing memories of people who have passed away just got 1.5 million in funding. I suppose it is just a natural extension of the stories that keep popping up when a kid dies who had a profile on MySpace and his profile is turned into a sort of shrine for his friends.

The more I think about it, it could work; my uncle recently passed away and my mom spent several days putting together a posterboard of his memories for the service. If this site would allow everyone to collaborate on that and come up with a video / photo album of memories from people you might not otherwise be able to contact or get media from, it could be pretty cool.

Okay, I started this post to vent on what the critical mass is for Web 2.0 social networking / collaboration sites and the funding they are getting but this one actually does seem like it might be worthwhile.

Another idea, and I'm sure its being done and has funding, is an online cookbook collaboration site where family members / friends can share recipes and then create a printable cookbook (nicely bound and such) for everyone to share. My Mom just did this with my relatives and produced a nice cookbook that I have in my kitchen right now. The problem was she had to get all the recipes from the family, compile them with some archaic software program and then bring it to Kinkos to bind it. A service for that would have been very handy I think (I'll have to poke around the web and find who is doing this sort of thing right now).

I've... got a plan.

In December of last year I entered the Lunar Ventures business plan competition with a group of students from the Colorado School of Mines (CSM) and University of Colorado at Boulder (CU). I initially joined as something to keep me busy and learn about how to prepare a business plan, but quickly realized this would become a three person venture with myself being the only one with prior business experience (a whole one semester of business school). The idea of the competition was to "collaborate in creating business ventures related to space." This meant creating a business model with both a near-term terrestrial revenue model and a Lunar application to be implemented in future space missions. Although we didn't win, it was a very enlightening experience that I thought would be worth recounting here.

Our starting point was the research of team member and CSM Computer Science doctoral candidate Arta Doci. Her thesis presented an alternative method for performing wireless communication in a mesh sensor network. This method involved a 'cross-layer' protocol stack, transcending the traditional four layer TCP/IP network stack. This technology was found in simulations to provide the following advantages over traditional wireless network protocols:

• Performance (data throughput)
• Longevity (lifespan of each mote)
• Scalability (total number of possible motes in the mesh network)

Our challenge was to take this technology and apply it to both a Lunar and terrestrial scenario and create a business model around it. A daunting task to be sure; instead of taking an idea and forming a technology around that idea, trying to find a market and measurable competitive advantage for a protocol which could be used in any number of applications. On top of that the technology needed to be sound enough that it could solve current terrestrial issues and be useful (or a starting point) for Lunar missions ten to fifteen years from now.

Since the Lunar applications are fairly nebulous I thought I'd share our terrestrial business model. Our primary offering was a mesh sensor network product we dubbed 'AquaSense'. This product was a network of sensors providing a whole system solution for municipal water networks to monitor the quality and safety of their water supply. It leveraged our proprietary cross-layer optimization protocol along with CDMA to provide communication between the sensor motes. While somewhat ambitious, our research indicated that there are a number of advantages this system could provide to municipalities:

• Environmental Compliance (Safe Drinking Water Act)
• Rapid Threat Warning
• 24/7 System Status

Without going into too much detail as to the market and our business model itself, the feedback from our judges (one of whom had worked in the water industry for several years) was that while our technology was likely unique and definitely interesting, it wasn't clear that first, this was something municipalities would actually adopt and second that others in the wireless field were not already working on similar technologies that would overshadow ours by the time we got to market.

Some of the things I learned through this process that are worth mentioning:

Don't assume your market research is done until you have actually made contact with people in your target industry. I would suggest making 'first contact' as soon as possible once you think you have a market worth pursuing. It can either serve as a confirmation that you are onto something or save you a lot of work (and potential embarrassment) if the market isn't a fit for what you are trying to do.

I really liked the concept of the business plan in a 'deck' format. We were introduced to the idea by Frank Moyes, a professor at the Leeds School of Business in the University of Colorado at Boulder (where I am currently getting my MBA). He suggests that rather than creating a voluminous business plan, put it together using presentation software formatted like a booklet. We took this approach for our venture and the end result was a business plan which contained all of the necessary information but in a format that really 'sells' your idea instead of forcing the reader to really dig into a long document to get a sense for the business. You can find some examples of using a deck for a business plan on Frank's website.

Finally, and this may be obvious but I think that when you are going into a business venture, even if it is only for a competition, you need to be 'in it to win it'. By this I mean if you don't believe in your idea and want to take it to the next level by actually putting your own blood, sweat and tears (read: time, money, passion) into it then how can you expect someone to want to invest in your idea? I spoke to the the winners of the Lunar Ventures competition, Omega Sensors, Inc. after the competition and it was immediately clear they had a drive and a passion for their idea and their hard work paid off in the end.

This experience certainly opened my eyes to what it will take next time to win a competition like this as well as the foundations of starting and funding a fledgling business.