Geoffrey Moore: observation

Transcript context

…That's exactly where I actually wanted to go next is this idea of starting very focused with your initial target audience. I think people conceptually know this. They're like, "Yeah, we should be really focused with our initial target market. We should stay very small, and expand this beachhead idea." But I think they still don't quite actually do this because it's like, "Why not go wider?" So could you just talk about why that is so important, and how to actually think about how to do that correctly? If you're essentially in a business where the category is emerging, then the most important thing for you to do is to be able to create enough power around your company that you can navigate your future on your own power. Where does power come from in an early adopting technology world? First of all, it'll come from can you get a lighthouse customer? So one of the things we try to do even before you try to cross the chasm is can you get one or more customers who put you on the map? And they go, "Whoa, did you know that the CIA used AWS?" Like, "Holy smoke." Okay, that's great. It doesn't make a company, but it makes a story, and it lets people know, "Oh, here are the guys that did the CIA project," that kind of thing. The Crossing the Chasm model is, "Can you create a viable repeatable business?" And in order to do that, you need to have an ecosystem of partners work with you in order to consolidate your position. Well, why would an ecosystem work with some startup that nobody's ever heard of? The answer would be if you had consolidated a market segment where you were number one. So one of the things we've learned about company power is that basically it's the company power plus the ecosystem together. So ecosystems form around market leaders, and they do not form around the rest of us. If you're a category leader, if you're like Oracle and Databases, you're 40 years in. You're still the leader, because the ecosystem organized around you. But when you're little, the only way you can get an ecosystem to organize around you is to go after a segment where you're a big fish in that pond. We talk a lot about fish to pond ratio. You want to be... Your first pond, your target segment should be something that in the next two years, if you hit your really high growth rates, you could be 30, 40, 50% of the market share in that segment. That would cause partners to go, "Whoa, if we're going to serve that segment, we got to work with these guys." So that's the key. The concept there is, "Well, why wouldn't you also do two or three or four segments at the same time?" It's sort of the same reason, "Why wouldn't you run in three or four primaries at the same time if you want the presidential nomination?" Although why you would want that nomination, I have no idea. But if you did, you realize if you're running in New Hampshire, votes in Vermont do not count. It's the same thing with Crossing the Chasm. You need to get three or four or five or six reputable companies in a segment to all pick you, for then the rest of the segment to go, "Well, it's pretty obvious who the standard is." I'll just close with one last comment. And the reason, the mechanism behind all that logic, is that pragmatic people buy what they see their peers are buying. So if peer one is buying product A, and peer two is B and C and D, there's no market leader, and the category goes sideways. t logic, is that pragmatic people buy what they see their peers are buying. So if peer one is buying product A, and peer two is B and C and D, there's no market leader, and the category goes sideways. But if A, B and C, if three out of four people are using the iPhone, it's like, "Oh, I guess I'm supposed to get an iPhone," that kind of thing.…

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