An extremely important part of any early market is the chasm, and crossing the chasm. I want to talk about this in a little bit more detail in this lecture. Geoffrey Moore was the first person to popularize the idea of an early market having a chasm. And he drew a picture that looked something like this. It's a bell shaped curve of the kind of people that buy in a market. The most of the people are in the middle of the bell shaped curve and they fall in to two categories. There's early majority and there's late majority. These are people who buy whenever everyone else buys and they buy when the market's ready. On the early side are two kinds of people that quite important for an early market. Of the very bleeding edge are people called innovators. Innovators are technology enthusiasts. We'll talk about them in a second. And they are followed by early adopters. Early adopters are also technology enthusiasts, but they don't buy for technology, they're buying for business reasons. And then finally at the back end of the market are the laggerds, who will be the last people to buy just about anything. Innovators will buy anything that's cool. They just want to have it, and I'm sure we all know innovators in our personal lives. Innovators in any market are people who just want to get the first of anything. They get reputation out of knowing about the new things that are coming along, it's not necessarily a business case with them, it's just enthusiasm. Early adopters as I said before, buy not just for enthusiasm although they tend to be enthusiastic people, they buy for a business case. They see a way that even though the technology's not complete, if they get to it early, they'll be able to get advantage from it. And so they're willing to tolerate difficulties in order to gain advantage. The early majority are people who want to see Joe debug it. They want a proven solution, they won't tolerate difficulties, they wait until other people are doing it, and then they pile on. And finally the late majority, really want Joe to debug it. They're not going to adopt until they're sure the thing works, they're sure it's running smoothly etc. And laggards as I said, pile on at the very end. The chasm is the gap between early adopters and the early majority. And the chasm is important because it's the first point where the product needs to solve a real business need, and going across it is going from one business need to a bunch of business needs. It takes business model development to know how to cross it. And many a startup has lost its way and floundered in the chasm. The problem with having a chasm is that because it's a difference between how the early majority adopt and how the early adopters adopt, it's going to take time to win over the early majority. Their not going to be won right away. So your sales are going to start to look pretty good as the early adopters begin to buy, but then they're going to flatten out as the early majority does not buy. If it's wide enough, it's going to take you a long time. And time of course, in a startup is money. Your business model needs to take this into account. One of the biggest mistakes that early startups make, which we'll talk about in a subsequent lecture, is stepping on the gas. They sell to a few customers, they say wow this thing sells like hotcakes, let's ramp up marketing and sales. Let's spend a lot of money, let's have a big launch and let's go. Well they go, only the early majority's not ready to adopt. Their sales and marketing efforts may be ramped but their results do not ramp. And they burn money like a house on fire and they run out. You just need to have some estimate of how big the gap is, how long it's going to take you to cross, so you have to be realistic about it. And you have to plan to conserve your cash and have a more conservative business model until you get across the chasm. In order to cross the chasm, you need a complete solution for at least one part of the early majority. Geoffrey Moore talks about this at great length in his book, Crossing the Chasm, and I hope you'll all take a chance to read it. By the way, a lot of people confuse this chasm with another chasm. At the very beginning, remember our enthusiasts, these are people that'll buy anything, there's also a chasm between them and the early adopters. You got to remember that enthusiast will buy anything that's cool. If it's got a nice snazzy domain name and it sizzles and it's got a nice user interface, they'll take a look at it. They don't even need to see a business advantage in it, they'll just do it. The early adopters are not that way, they need to see a business case. Might have warts on it or difficulties, but they need to be able to gain advantage from it or think they can gain advantage from it. Just as you shouldn't confuse early adopters with early majority, you should not confuse enthusiasts, innovators, the very first people with the second people, with the early adopters. You'll get in trouble if you confuse them too. So the main points here are there's a chasm that separates early buyers from later buyers. Chasms takes time to cross and time means money, and your business plan needs to reflect how much time it's going to take you to cross your chasm in your market and how you're going to conserve cash during that time interval. Takes time and plan ahead. Thanks.
