Coffee morning and the business onion
17.20, Friday 20 Mar 2015 Link to this post
Hardware-ish coffee morning yesterday was weird… I missed a conversation about knitting. I got a short demo of Made By Many’s Hackaball - which has just blown through its Kickstarter goal CONGRATULATIONS - but missed the main discussion. Matt from Speakset was talking about their super simple videophone for old folks, but I got dragged off elsewhere halfway through that chat. Laura was talking about energy, and honestly I could have spend an hour rambling about how Apple could use their big solar farms to make a vertically integrated consumer power offering… but I got distracted about something else. And with Blaine, I think we were about to have a breakthrough moment figuring out how to put micropayments at the protocol level of the web, and what new features we could offer, but by then my head was too full.
So the gestalt for me is route to market.
It’s a bugbear of mine that we’ve ceded the future of the web to advertising. And you know, thinking about what would happen if we started to charge for content on the web… it doesn’t feel like it would work. Products on the web spread virally across social networks, producing random clicks that tease you into greater engagement. This is true for apps and articles.
And paying money inhibits virality. So there always has to be a free tier, to get as many of your eyeballs to infect as many more eyeballs as possible. Or it’s totally free and there’s indirect revenue – you sell the data, or sell ads.
This, it turns out, is the failure mode with “the product is the marketing” philosophy: Now we don’t separate out acquisition marketing into a different effort, we need every single one of our product users to be a shill. The route to market is right through your friends list.
Then I was looking at Hackaball which is
a smart and responsive ball that children can program to invent and play games – and this is great for a bunch of reasons, but primarily (for me) because behind it is the digital agency Made by Many (where Melissa is from), and that’s terrific, that they’ve got the capabilities to design, launch, and then manufacture a Bluetooth-connected product, because that means they can bring those capabilities to all their clients. Gosh.
But educational products always confuse me slightly, because kids use them, but kids don’t pay for me, and so the way the product is talked about isn’t targeted at them. Like, I remember being seven. On a good day. Mostly I don’t even remember being 30. But when I do remember being seven, I remember being into fun and cool and what my friends have… not learning. The route to market is not what makes the product good.
And with Speakset - which, again, is awesome - the customer is not the user. User: old people. Customer: Care providers.
So the way you design the product to best take it to market is not the same process to make it great for its users.
Is this a bad thing? Of course it isn’t. Speakset will improve the lives of its users. It can only do that if it reaches lots of users. The best way to reach lots of users is via care providers.
But but but. One of the reasons I like Apple is that the proposition is clear. I give them money for hardware. I am the customer and the user both. They pay - separately - for marketing to tell me about the hardware. There’s no misalignment of interests where they want to push the hardware into my hands so that they can make money out of selling usage data, or something.
Now I’m not going to claim that Apple are selfless angels, always acting in my interest. Far from it.
But when I’ve been sketching out business models for startups recently (which I have, a bunch), and those business models have been complicated with lots of actors having lots of different interests, I’ve been trying to draw them as a business onion. Where the core is a perfect knot of aligned interests of customer, user, and marketing, everyone acting in a way that supports revenue break-even, growth, and great product. Maybe not any profit yet. That’s the next layer of the onion: More aligned interests, but this is where the profit is. And then maybe another layer, with a more complicated ecosystem play.
Never making a tradeoff between layers. Never saying: Well, we’ll make a loss on product sales here because we’ll make it up by selling the data over the customer lifetime. Ugh. Misaligned interests. Dirty onion.
I’m rambling. Business onion.
Next coffee morning
Let’s do another coffee morning in 3 weeks… Thursday April 9th, same bat-place, same bat-channel.
I’ll send a reminder to the announce list nearer the time – you can subscribe here.