Silicon Valley is a long way from Whangarei, but there are certainly lessons to be learned from that hotbed of innovation. The MySpace story demonstrates that dominance today doesn’t necessarily translate into success tomorrow. Who remembers MySpace, the company destined for stardom that Rupert Murdoch purchased for US$580 million not so long ago? Who now has a MySpace account? And for those who do, who regularly uses it? Exactly.
Now ask the same question of relative newcomers FaceBook, YouTube or Twitter? The answer is very different – see my point.
Who could have forseen that MySpace would have been so unceremoneously dumped by tens of millions of users defecting to FaceBook, YouTube and Twitter?
What went wrong for MySpace? Of course, there would have been an element of fickle consumers chasing the latest cool application. But really it boils down to MySpace’s failure to remain relevant to its massive user base while the new competitors emerged with offerings that more exactly met those user’s needs.
So what? Here we are in New Zealand – and a Kiwi venture is unlikely to emerge as the next Twitter, right? Well that probably is true, but there are broader lessons which are encouraging for startups everywhere. Even where there are encumbants who dominate your industry and appear to have a stranglehold on the market, there are likely to be opportunities for a disruptive newcomer who is prepared to listen to what the market actually needs and to tailor their offerings exactly to that need.
I would even argue that the more dominant and comfortable the existing players are, the greater the opportunity to enter the market and fill a niche that is currently being underserviced or ignored.
So how do you identify the opportunities? Simple. Talk to the market. Make phonecalls, knock on doors, attend functions. Talk to everyone you possibly can in that market and ask the questions. What keeps them awake at night? What are their frustrations with the current products or services on offer? What could the incumbents do better or differently? What might motivate them to change to a new product or service that better meets their needs? What barriers might prevent them from changing suppliers? Talk to hundreds of people if you can – before you spend a cent on developing your new offering. Even if you THINK you know the industry inside out, the answers will probably surprise you.
Armed with this intelligence, you will be in a great position to plan an offering that will disrupt the comfortable dominant players. And once you have planned your offering, talk to the market again. Would they buy? How much would they pay? What’s wrong with your planned offering?
If you follow this process, with rigour, you’ll have a very good idea of whether you can successfully roll out an offering that will disrupt the “MySpace” which dominates your industry.
Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.