Lenny Rachitsky: belief

Transcript context

…han a project business, but it only scales up to the limit of the target segment. So we had this bowling alley model of extending. You could go to a second segment, a third segment if it was adjacent. Adjacent means either it's the same customer with a different use case, or it's the same use case in a different customer base, because the one case, you use your customer references. The other case, you use your partners, because the partners who built the one use case will say, "Well, we got another segment that we work with. Let's bring you into that segment too." So that can take a company from, I don't know, tens of millions of dollars to hundreds of millions of dollars in the bowling alley. And in specialized industries like computer-rated design or things like that, you can actually go to a billion dollars or higher. But with most other categories, at some point, you have this third inflection point, which is it's when people go, "Well, wait a minute, wifi isn't just for financial analysts, or isn't just for... Wifi is for everybody." So instead of saying, "We believe what you believe," which we're not there anymore. And these people aren't even really saying, "We need what you have." What they're saying is, "We want what they have. This is really cool. I want what they have," and that creates what we call the tornado. That's when people... This is when you do want sales coverage, and you do want to go broad, and you do want to have a standard product. Basically, you want to capture as much market share as you can. There's a whole playbook around doing that, which was in a book called Inside the Tornado. And then the last one, which is actually becoming much more important in this century is called Main Street, but Main Street where products have become commoditized, services become the new place of innovation. We've had taxis for 100 years, but Uber is an incredibly valuable thing. You convert the product to the service, and how do you revolutionize services? That's a situation where now people are saying, "Look, I don't want to own the product. I don't want to own it." Well, kids, "I don't want to own a car. I just want to call Uber. It's convenient." So anyway, those are the four models, and Crossing the Chasm was about that second one. Amazing. You touched on so many things that I want to talk about. I definitely want to dive into the bowling alley metaphor and strategy there. But to close the loop on this target audience to start with initially. First of all, you have this awesome bonfire analogy that I think might be useful to share. Then along that, is there any example or an example or two you could share of just someone that did that really well of picking a really good initial target? Sure. Well, the bonfire analogy is just the tendency when you're in the chasm is, "I just need more customers. I should take any customer I could find." Because we need revenue, but the analogy I have is it's like taking a match, and running it back and forth under a log. It's not going to light the log. So how do you start a fire? Well, you start it by putting a little kindling, a little crumpled up paper, and you hold the match one place until the fire starts. Then you want to build... The bowling alley metaphor is a little bit about, first of all, how could you win your first segment, but then increasingly, how would you go forward to win it? That's why adjacency is so important. If you like the fire and the piece of kindling is here, but the log is in the other room, that doesn't work. So I think those are the key ideas. There's a lot of people that have made Crossing the Chasm successful. The one that we wrote about first was this company called Documentum, and it's a good example. So it was a document management database back in the day that was not... that nobody had any, "Why would you need this?" It started with the pharmaceutical industry, because pharma said, "Well, new drug approvals are 500,000 page documents, and they really, really, really are hard to manage, and we're screwing it up. And every day we screw it up, we lose a day of patent life of our drug, and the day of patent life's worth about a million or $2 million a day. This is a bad situation. We need to do something." So "Okay, pharma, you got pharma." Great. Well, then what happened was the guys in petrochemicals said, "Well, we're in the chemical industry. We're not in the pharmaceutical industry, but we have these standard operating manuals, and we have all these regulatory demands on us too. Not quite like the FDA, but this looks like this could be pretty useful to us too." And then after the petrochemicals guys got... Well, the chemical guys got it, then the petrochemical guys got it. Of course, they're oil and gas, and they say, "Well, in addition, we have all these leases. The lease holds them. It's brilliant. This property is critical to our future plan, so we need a document database for the leases." So the guys on Wall Street who are financing these guys are going, "Well, wait a minute. Hell, I mean, we're paper from wall to wall here. Why don't we..." So what happens is you have this thing of this expansion, but in each case, it was into a new segment, but the use cases were close enough.…

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