GOING WHERE THE MONEY IS...
Marc Andreessen has another great post on startups, this time explaining why their initial business plans don't matter very much. To illustrate the point, he highlights a wonderful story from the terrific biography of Thomas Edison, "The Wizard of Menlo Park".
The story has to do with how Edison almost accidentally invented the phonograph, while building better hardware for telegraph operators.
When I'd first read the story, what resonated the most for me, was how Edison almost missed the enormous consumer applications for the phonograph, while focusing on the enterprise applications for the telegraph. As Marc points out, the phonograph was
"the forerunner to what you kids know as the record player, the turntable, the Walkman, the CD player, and the IPod."
This focus on corporate vs. consumer markets, has happened constantly in the history of technology innovations.
IBM missed out on the significance of the personal computer, giving away the operating system and application business to Microsoft, while it focused on it's bread-and-butter enterprise business.
Marc's first success Netscape, in it's early years focused more on the enterprise market for internet software, with a lesser focus on the consumer opportunities around it's Netscape portal business. Other companies like Yahoo! went on to build businesses around consumer portals.
In a post back in June, I highlighted how Keyhole, one of the pioneering companies to commercialize satellite images, focused initially on the government market for it's products rather than the consumer market, which was non-existent before the ubiquity of the internet. It took Google buying it, and fusing it's core products into Google maps, to demonstrate the consumer market power of satellite-based online maps.
Throughout the nineties when I met technology startups in a whole host of sectors, the initial internal debate was always about whether to apply the company's product or service to the enterprise or consumer market opportunities.
And as you can imagine, in those days, the former almost always won over the latter. Startups could seldom pass on the relatively easy option to tap into deep-pocketed corporate customers, over iffy consumer-oriented applications.
It's only in recent "Web 2.0" years, that more startups can focus on the consumer market opportunity before the enterprise market opportunity. Part of this is the result of monetization offered by Google's AdSense/AdWords, along with other "Freemium" type business models.
In fact, one can almost argue that online innovations these days are developed first on the consumer side, and then "ported" over to the commercial side.
Thomas Edison would have been surprised.
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