Through actual combat experience to tell you how startups "across the chasm"

Facebook started out as an Ivy League student, and ebay initially focused on collectibles, and Amazon used to sell only books ... Why do startups need to focus on a niche market first and then, as time progresses, to attract a broader consumer? Andy Rachleff through his own online financial consulting management platform for people in the field of science and technology Wealthfront the actual experience tells us how to find the initial users, and then "across the gap" to the mass market. Wealthfront was founded in 2011 and has now completed a total of $65.5 million trillion in financing, and the founder Andy Rachleff is the founder of Benchmark Capital.

20 years ago, this "crossing the Chasm" is a must-read for every tech company. Not many people today know the book, but the idea still applies to today's market.

The idea I learned from books is important for Wealthfront's rapid success. To get a clearer picture of this, it is necessary for me to introduce the background to explain exactly what is "crossing the Chasm".

Across the chasm

The assumption of this book is that the adoption of any technology has a lifecycle (Marvell adoption life cycle). At first, startups ' products will attract "innovative consumers" (innovators) who decide to buy just to explore new product performance, but they rarely want to spend too much energy on products they're interested in.

The product then touches the "visionary" (visionaries), and as long as a new technology product is found to be effective enough to meet their needs, these "early adopters" will not hesitate to buy, they need only convincing proof.

After the "visionary", the "pragmatist" (pragmatists), their buying decisions are ultimately driven by a strong practical idea. No matter how the product fits their needs, they only buy it on the recommendation of a friend or colleague. In general, these utilitarian or "early masses" (early majority) are the largest market groups.

The "late majority" is the conservative person who will only wait until some established standards have been formed before they are considered for purchase. is relative to the "early masses".

The last is the "laggard" (laggards), the one who never buys.

The gap exists between early adopters and the early masses. An overall product (whole product) needs to cross this gap to be recognized and recommended in terms of function, interface, Third-party products and services, and push the product to the customers.

The author of the book, Geoffrey Moore, argues that startups must first acquire a handful of early adopters to accumulate the power of success. This proposal is contrary to the view of many entrepreneurs today, who now want to face the mass market from the outset.

Niche market is the key to the mass market

Entrepreneurs who aspire to success often overlook the lessons of history. In any event, a successful large technology company will find that they are surprisingly following Moore's advice.

Facebook started out as an Ivy League student; ebay initially focused on collectibles; LinkedIn's early target was the managers of Silicon Valley companies, which used to serve businesses that could not afford banner advertising; Amazon originally sold books. Instead of starting out with the public, these companies are gradually expanding.

I was one of the founders of Benchmark Capital, and in my long career as a VC, I saw that the most common mistake that entrepreneurs make is to skip the "early adopters" stage and jump directly to the "early masses" stage, after all, that's the main market, and founders want to grow fast. But the crux of the matter is that "early Volkswagen" trusts only friends ' recommendations, so if no friends recommend it, no matter how hard startups try to promote them, they are unwilling to buy.

Unfortunately, the founders thought they were on the road to a successful enterprise that they respected. What they do not know is that every successful enterprise will gloss over history to a certain extent, making the company more attractive to the mass consumer. These companies have not lied about their past, but they have deliberately overlooked some unnecessary details that prevent consumers from buying. Consumers are willing to believe that the product is tailor-made for them, which makes them more comfortable and more willing to pay.

Weakthfront and early adopters

I think the only way to succeed is to find the people who love your product, the "early adopters" who are willing to recommend your product to people around you.

When Wealthfront started his online banking business in December 2011, we faced the question of "chicken, Egg and chicken": If you don't have any money in your name, how do you attract people to manage your assets here? The traditional way to measure the level of financial advisers is to look at how much assets he manages, not the quality of the assets. Therefore, we believe that the customer's mutual recommendation can be equivalent to the assets we manage.

One of our investors suggested that we focus first on young people who work in technology companies, because they are more concerned about the user experience than the amount of assets they manage. Our 5000 dollar start-up package is nowhere to be found, and general financial advisers require at least 1 million dollars.

It turns out that this is really a great suggestion.

We first focused on Facebook employees because we thought they would be more willing to spread if the service was good enough, and Facebook was on the verge of an IPO, and they had more money in their hands, but the amount was less than the standard of traditional financial advisers.

We offer investment advice to Facebook employees without mentioning our services, because we know they'll leave immediately when they hear about it. Fortunately, our early and tireless efforts have finally worked wonders. The assets we manage are gradually increasing.

After Facebook received a good result, we looked at LinkedIn, looking for influential people, and eventually we found Adam Nash and now he's our CEO. The early success of Facebook and LinkedIn has created a reputation for attracting users from other top technology companies, including Amazon, Apple, Dropbox,google, Microsoft, Palantir and Salesforce. We aim at technology companies, and these customers are inviting people outside the tech circle, mainly their parents.

2.5, 1 billion dollars.

After 2.5, we manage 1 billion dollars, of which less than 40% work in internet companies (60% are under 35 years of age). In contrast, we can better see our growth rate: The famous investor Charles Schwab spent 6 years to reach the 1 billion level, and reached 1 billion U.S. dollars, the growth rate further accelerated. 1 billion dollars is like a chasm that Schwab across, starting to move to the mass market.

We believe that the knowledge learned from bridging the divide is essential to our success. Of course, we have also been a lot of ridicule. The new entrants, who have only a small fraction of our assets, scoff at our focus on niche markets as if we don't know what we're doing. Industry experts believe that if we focus on bigger markets, we will be more competitive. I'm sure none of them have read the book.

Successful entrepreneurs can't follow the rules, but make sure they do the right thing. The former bestseller is now considered to be out of common sense. But I think the book "Crossing the Chasm" is as consistent with market discipline as it was when it was published in 1991. In the history of a successful company, its two-step expansion laws have worked:

First you need to focus on a small number of users passionate about the product;

Then with the advance of time, and then develop a complete product, to attract a wider range of consumers.