Product #40
Crossing the Chasm, Google crushing subscriptions, focusing on the essential.
Crossing the Chasm (2014)
Geoffrey Moore recently made an appearance on Lenny’s podcast, so I thought I’d cover his most famous book this week.
Key Highlights
The Technology Adoption Lifecycle applies to products that require us to change our behaviour or modify other products and services we rely on (also known as disruptive innovations).
The Innovators are technology enthusiasts. They are first to adopt, and want to get new things. They need access to technically knowledgeable people.
The Early Adopters are the visionaries. They have the insight to match technology to strategic opportunity → they create high-risk projects inside their company. They are highly motivated, driven by a dream (Steve Jobs, Henry Ford, JFK). They are looking for breakthroughs, order-of-magnitude returns. They aren’t price-sensitive. Alert the community to technical advances. They are in a hurry, they have a narrow window of opportunity.
The Early Majority are the pragmatists. They are the bulk of market volume. They do not want to be pioneers. They learnt that the leading edge, can be the bleeding edge. Business demands push them to adopt. They like to see competition to get costs down, and to have an alternative to fall back on. Price sensitive. To sell to them you need to be patient, meet them where they are, make partnerships and alliances.
The chasm that separates the early adopters from the early majority is the most formidable and unforgiving transition. The early adopters are looking for a change agent to get ahead of others. They’re willing to work through bugs and glitches. The early majority want to buy a productivity improvement for existing operations. They want it to work and integrate into their operations. Early adopters therefore aren’t good references for the early majority. But references are important to the early majority, because they don’t want disrupt what they’re doing.
The late majority are the conservatives. Against discontinuous innovation. Stubborn. Fear high tech. They invest only at the end of the cycle. Their priority is not getting stung. Won’t support high margins, but make up considerable volume. They like things to be bundled and work together. Focus on convenience not performance.
The importance of the product, when compared to surrounding services, becomes less important as you move through the profiles. The longer your product has been in the market, the more important the service element to the customer.
To enter the mainstream market is an act of aggression. You are an invader. The target customer doesn’t want to hear from you, the companies that already serve them will react in a hostile manor.
You need to secure the beachhead (your first market segment) then push out to total market domination.You need to focus on a target you can leverage to long-term success. Concentrating your effort in one small segment will make the word of mouth effect stronger. You need to satisfy the needs of the customer, with the whole product (the complete set of products and services needed to achieve their result). You can also establish yourself as market leader in your small segment. The mainstream like buying from the market leader. The only way to win dominance quickly is to target a small market. The big fish, small pond approach.
The key to moving beyond the niche is to select the right segment to begin with. One that will connect you one or more adjacent segments.
Your target beachhead segment should be..
Big enough to matter
Small enough to win
A good fit with your crown jewels
Focus all your resources on achieving dominance in your niche market.
Divide up the universe of possible customers into market segments
Evaluate each segment for attractiveness
Develop estimates of size, distribution and how well defended they are
Pick one and go after it
Many fail, and instead suffer from hesitancy, lack of confidence. It’s a high-risk, low-data decision. You need to use informed intuition, rather than analytical reason
Focus on your target customer (not segment or market). Focusing on the customer gives us some real clues about how to approach. Build a library of possible target customer profiles.
In the News
As a newcomer at Google, you’ll likely take part in a quiz during your induction. It’s desired to showcase the breadth and impact of Google's services. You’re asked to name the Google products attract more than 1B users. Amazingly, Google boasts nine of them a testament to its unparalleled prowess in advertising and the freemium model.
This week, however, the spotlight is on Google's burgeoning success in direct-to-consumer subscriptions. YouTube is leading this charge, boasting 100 million YouTube Premium subscribers. With each subscriber paying $14 a month, YouTube Premium's revenue might have eclipsed that of Spotify, a significant milestone.
The momentum in subscription services shows no signs of slowing down. Google's innovative Gemini Ultra model is poised to join the ranks, available soon through—unsurprisingly—a subscription model. This move not only reinforces Google's commitment to expanding its subscription-based offerings but also underscores its ability to innovate and lead.
Article · Article
Quick Links
Restaurant menu trends · Article
Why Meta open-sources its AI · Article
OKR Maxims · Article
Amazing scrappiness in the early days of Square · Article
An introduction to Graph Theory · Paper
Book Highlights
This tripling of shipped mass between 1973 and 2019 required (when measured in deadweight tons) a near quadrupling of the global merchant fleet capacity.
Vaclav Smil · How the World Really Works
Addressability depends on the skills and resources of the organization and the time span being considered.
Richard Rumelt · The Crux
Different types of businesses or products have different retention rates, so it’s best to see if you can find benchmarks in your industry for successful products that are fairly comparable and, if possible, come up with an average rate in order to determine if you’re doing better or worse.
Morgan Brown and Sean Ellis · Hacking Growth
Tweets and Quotes
Very basic differentiators between ultra successful people and others...
- They are very clear about what they want.
- Actions are based on this clarity.
Dr Julie Gurner
My best career advice. At every job you should either learn or earn. Either is fine. Both is best. But if it’s neither, quit.
Garry Tan
I am focused on the essential to the exclusion of all else.
Ad Astra