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>If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried. That
by dsugarman 11y ago
>If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried.
That's the most beautifully I've heard this thought articulated. I constantly hear people in SV talk publically talk about how they're living years in the future due to getting services from startups that haven't yet hit other markets. These people are very wealthy and very short on free time; they incorrectly assume the rest of the world is as well. The reason Uber became so successful was because it became cheaper than a cab in most major markets with world class service. You have to really dig deep to justify most other on demand startups having the ability to jump the shark and it's because they don't have a plebeian offering.
- lowglow 11y agoI've called these the 10% startups. They typically only serve people in the top ~10% of earners in the US.
- AndrewKemendo 11y agoSo basically any startup with an iOS only product (disclaimer our's is iOS only).
- deleted 11y ago[deleted]
- mineshaftgap 11y agoThere are very good reasons besides demographics to start with iOS. Stability, consistency, lack of piracy etc.
- zepto 11y agoGiven that iOS has a 40%+ market share in the US, no.
- georgemcbay 11y agoThe market for smartphones is only about mid-60% of all Americans, though, from what I've read. So still not 10%, but more like 25%-ish.
- deleted 11y ago[deleted]
- jacalata 11y agoWell, the original comment was "10% of earners" and I'd bet that smartphone penetration is higher among earners (eg 20% of Americans are under 14, 0% of them are earners and ??~10% of them have a smartphone). So you could perhaps push it up to more like 1/3 earners use iOS, which is starting to be a healthy potential market share.
- frankthedog 11y agoThis shouldn't be taken as a negative per se. If that is your target market and your business can become sustainable only serving this tranche of consumers, good on you. There is a lot of money to be made serving the top decile of earners.
- guessbest 11y agoIt is like fishing. When you are fishing for smaller fish, people wonder if they have a shoe on the end of the line. Nobody ever questions the whale.
- rokhayakebe 11y agoMost lawyers serve the top 10%, yet they are here in good and bad times.
- josephcooney 11y agoI misread this as 'lawmakers', but your sentence still seemed correct either way.
- jpatokal 11y agoWhich is not a bad market to serve when that 10% owns 75% of all wealth in the US. Source: Credit Suisse: https://publications.credit-suisse.com/tasks/render/file/?fileID=60931FDE-A2D2-F568-B041B58C5EA591A4 https://publications.credit-suisse.com/tasks/render/file/?fi...
- adventured 11y agoAlmost everything, service or product, begins by first appealing to the top 10%. It moves down the line from there. It holds true to a nearly universal point. AWS, for example, was so expensive initially as to be ridiculous for most purposes unless you had a lot of money to waste. It was a 10% service. Now it's a 50% service. Tomorrow it'll be a 75-90% service. The examples that don't follow this pattern, are usually riding on previous examples of the pattern that already became cheaper (such as mobile phones -> smart phones).
- ChuckMcM 11y agoI agree with that, but I also have the experience of visiting my sister in 1995 and asking her if she understood the funny string at the bottom of a Toyota commercial that was a URL. She did not. And her only email address was one she had for work, because everyone else either wrote letters or talked with her on the phone. The point I'm trying to make is that many things of the current wave will pass into obscurity and perhaps ridicule, however some core concepts may emerge as foundational for the next wave. Further, experience with those concepts in the Bay Area may inform what is core and what isn't, and so launch better products.
- deleted 11y ago[deleted]
- mr_tyzic 11y agoYou present that as an objection, but merely repeat what he said.
- david927 11y agoI wonder, though. Your two examples are both open standards. How many companies go under (or get acquired) and take their technology with them? We're not working together, we're letting investors decide what we make, and in the end what we produce is ephemeral. Is our greed hijacking progress?
- ChuckMcM 11y agoClearly a lot do, but the concept, once shared, seems to live on. I find it particularly amusing that EBay, which pretty much defined the market for selling your junk online, has now moved so far that there are new startups like "LetGo" and the other one with the name I can never remember trying to be in this space. The concept continues, and the technology to implement it evolves. As for the question, greed always hijacks progress, that is the lesson of the Prisoner's Dilemma.
- nostrademons 11y agoThe idea behind "living in the future" is that products generally get cheaper and easier to use as early adopters contribute feedback, founders learn more about their market, and outside capital puts more minds to work on the problem. Hence, products that are only for "wealthy folks in SV with no free time" eventually become cheap enough that everybody can use them. Uber certainly followed this growth curve - it started out as a service to call a black car to drive you around town, something that even the founders called a luxury for 1%ers. So did computers as a whole ("I think there is a world market for maybe five computers." - Thomas Watson, 1943), smartphones (at $600, the iPhone was considered a toy for luxury consumers when it came out), Facebook (initially only for Harvard University undergraduates), and LinkedIn (started with wealthy professionals who had lots of contacts). It doesn't mean all startup ideas for wealthy, time-poor consumers will cross the chasm, but it seems to be a lot more feasible to go from wealthy consumers to poor ones than the reverse. (Interestingly, it's the opposite story with B2B startups, where it's easier to add functionality than cut prices or improve ease of use. Hence the low end eating the high end, per Innovator's Dilemma. Actually, this effect in B2B markets may be behind the cost-reduction effect in B2C markets, as consumer firms start finding cheaper alternative suppliers that have recently moved up-market.)
- CPLX 11y ago> it seems to be a lot more feasible to go from wealthy consumers to poor ones than the reverse This appears to be the crux of your comment, and it's an excellent point.
- poof131 11y agoI’m not sure I agree 100% with your thesis on the B2B side. I’ve seen a few companies recently that seem to be getting strangled by the long tail. They have large numbers of low paying, price conscious customers draining resources. They can’t raise prices to a level that enterprises would be happy to pay since this would kill their established customers. Enterprises don’t want to pay a different higher price, why would they. The companies usually skimp on sales, especially field sales, so they have trouble competing in larger deals. And they can become arrogant that their niche solution, while better at one thing, can take on larger platforms that solve multiple problems. Not saying your points are invalid, just that there seems to be a bit more at play and going from the long tail to the enterprise doesn’t seem trivial and shouldn’t be an after thought. In B2B it does seem like all the biggest winners have generally nailed the enterprise, but not necessarily the long tail.
- glomph 11y agoWhat do you mean by jump the shark there? Jumping the shark is normally a bad thing. It is a sign of the beginning of the end for a TV show or franchise.
- mathattack 11y agoYes - much of the world is indeed willing to wait an hour to save a few dollars. One lesson from 2001 is that Startups who Serve Startups tend to get hurt in the downturn as their customer are unable to pay them. Case in point Exodus. [0] This is especially relevant given the "Build something you want to use yourself" ethos. The flip side is that if you make something that saves General Mills, Coca-Cola and P&G money, you'll always have a buyer. [0] https://en.wikipedia.org/wiki/Exodus_Communications https://en.wikipedia.org/wiki/Exodus_Communications
- pklausler 11y agoIt's "case in point".
- mathattack 11y agoMerci!
- pklausler 11y agoPrego!
- cperciva 11y agoThe reason Uber became so successful was because it became cheaper than a cab in most major markets with world class service I'm not sure that "cheaper than a cab" had anything to do with it. You're the first person I've ever heard to cite pricing as a reason why people use Uber; everybody I've spoken to has cited the quality of service as the reason.
- conanbatt 11y agoPrice is definitely the dominant factor for Uber's Growth. They achieved 2 things, the appearance of being cheaper(by putting a lower price, but making "surge pricing" look like a special thing), and eliminated price sensitivity from the customer. In a cab you are constantly reminded how much its costing, so you suffer the price every second. In Uber/Lyft you dont even know until you left the car, so you are willing to pay more. I think this is an unfair advantage to UBER, in detriment of the consumer.
- pgwhalen 11y agoEveryone live talked to feels the inverse. Perhaps its appeal is regional.
- joe_fishfish 11y agoIn London Uber is far cheaper than black cabs as well as having much, much better service. The better service probably guaranteed them some sort of market share there, but the price has given them a shot at permanent market dominance there too.
- gbersac 11y agoSame in Paris.