A cool feature or a collection of features that existing players don’t have aren’t enough to declare yourself a product and feel that is defensible. Most start ups that just have an interesting play on an existing products / services, fall into a trap thinking that alone can help them displace existing players and incumbent leader. I chose the word “feature” intentionally, so this does not include fundamental innovation or IP that goes deeper than just features.
When eGain started email support solution in 90s, most CRM applications only focused on the voice call centers. They believed it was enough to create a new sub-space. Over time it became apparent that email is just another channel for any CRM application and can be easily added by existing CRM providers.
Recently, there has been a lot of chatter about killing Google Search … because they don’t “real time” results or automatically “cluster” for narrowing search results or auto suggest keywords or wikisearch. The problem again is that in many ways they are just features that easily extend the Google Search as additional options. Granted the engineering associated with each of these features is more significant than cosmetic features. Now what will these Google killers do, as Google has now elegantly added views for real time results, multi-level filtering, auto-suggest, wikisearch etc.
The same story is now repeating itself with twitter … how hard is it for Facebook or Linked In to add public profiles and What’sUp updates … and take away the whole differentiation? No wonder Walmart.com is one of the top ecommerce sites in retail. I wrote in my predictions for 2009 that Social Networking will increasingly become a feature for every online site … increasing popularity of Facebook Connect, Google Friend Feed, MyBlogLog etc. all prove me right already !
Most start ups over estimate their products and under estimate incumbents because of poor appreciation of a few factors in the real world
– Market share and existing loyal user base … takes long time to build and once u have it makes it easier to launch extensions
– Brand value … consumers develop attachment and liking towards certain brands … certain positioning … so unless you create a completely new positioning (smart of bing to keep harping they are a decision engine and not a search engine … it’s a better bet than trying to become a better search engine) it’s hard to beat brand loyalty
– Not every one wants to learn new things … most people get comfortable having learnt somethings … openoffice could never beat office because a lot of people don’t want to learn office processing again … less than 15% migrated to the new Yahoo mail because who wants to learn the new mail … the next accounting killer app in India needs to reconcile the fact that most accountants grew up on Tally
– Experience and execution … there is a whole ecosystem of execution that takes time to build … and if some one is a leader, presumably they have already put that in place
– Cash … incumbents (hopefully) have more cash
(Yahoo – a company I admire – has in recent years worked contrary to this logic. Inspite of immense strength in terms of existing users, groups (social networking?) and content … they seemed to think every start up out there with cool features must be imitated !! That appears to be changing under the new leadership.)
So next time you think your AJAX-Enabled-UI or SOCIAL-ENABLED features will kill the incumbent … think openoffice … think eGain … think Google-Search-Killers (think Twitter?)