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Crossing the Chasm
                 vs.
         Spinning Up the Web




Berkeley >Play
October 29, 2011
Venture Agenda:
High-Tech Market Development Models

      B-2-B Markets
       – Crossing the Chasm


      B-2-C Markets
       – Spinning up the Web


      Comparing Critical Success Factors
       – Chasm vs. Web




1
Crossing the Chasm
B-2-B High-Tech Market Development




                            2
Technology Adoption Life Cycle

                Pragmatists:                             Conservatives:
                Use it when it’s ready!                  Make sure it’s ready!

       Visionaries:
  Be the first mover!                                          Skeptics:
                                                               Never happen!

 Techies:
  Try it!



   Innovators        Early   Early Majority   Late Majority    Laggards
                    Adopters
                Pragmatists’ view of whole product maturity
                   drives the adoption of new technology.
The Whole Product


                      Outsourcing   Hardware



                Application
                                           Software
                Engineering
Complementary                   Core                    Complementary
  Services                     Offering                   Products
                Installation
                                          Peripherals
                and support



                          Design    Databases




           Minimum set of products and services
          to fulfill target customer's reason to buy.
Market Development Model
Offers Evolve with Whole Product Maturity
                                                Proven systems for cost-
  Standard products for                         conscious conservatives
 pragmatists with budgets         Main Street

                  Tornado



     Early
     Market

                Chasm

                        Bowling    Segment-specific
Custom projects for     Alley         solutions for
    Visionaries
                                   pragmatists in pain
Crossing the Chasm Framework
       A Playbook for B-2-B Market Development

       Pragmatist in Pain        1. Target Customer
                             2. Compelling Reason to Buy   Broken m/c process
       Complete solution          3. Whole Product
                                4. Partners and Allies     Ready to fill in the gaps
Can manage complexity             5. Sales Channel
                                      6. Pricing           Rewards for all parties
      Current alternatives         7. Competition
                                    8. Positioning         Differentiating focus
 Next growth segment               9. Next Target

                  And that’s how you grow a B-2-B market!
  6
Spinning up the Web
B-2-C Digital Market Development




                              7
Identity Modification Life Cycle

                      Engagers:                           Reluctants:
                      Check it out!                       Wait!

         Evangelists:
         Believe in it!                                           Rejecters:
                                                                  Beware!
  Enthusiasts:
  Be 1st to try it!



   Innovators          Early   Early Majority   Late Majority   Laggards
                      Adopters

     Engagers create the dynamics of digital market development
Brand/Identity Interactions*
Levels of Engagement & Commitment

              Level of Commitment                          Level of Engagement

             I will camp out all night                     I never imagined this was possible.
  to be first in line when you open.             D         You are reshaping my identity.


              I will go the extra mile                     You express my dreams, and I want
        to play a part in your world.            C         to do more to help your cause.


     I not only purchase your offers                       You are part of what I am.
          but display them proudly.              B         By choosing you, I express myself.


     I select your offers over others                      I respect what you do, and
       whenever they are available.              A         believe what you say.


 * Model developed in collaboration with Schireson Associates
                                                                 9
Spinning Up Volume Operations on the Web
Running Experiments in Tandem



              VIRALITY                    ACQUISITION




                           Starter
                           Motor




            MONETIZATION                  ENGAGEMENT




                                     10
Spinning Up the Web
Metrics that Will Drive Your Programs
      Grow Acquisition
       – Rate of gaining new users (velocity & acceleration)
      Grow Engagement
       – Average length, depth, and frequency of user engagement
      Grow Virality
       – # of new customers coming from existing customers over time
      Grow Monetization
       – Percentage & amount of participation, plus rate of change
      Increase Promotional Productivity
       – Yield relative to acquisition, engagement, virality, monetization
      Reduce Churn
       – Rate of losing existing users (velocity & acceleration)
      Increase Lifetime Customer Value
       – DCF value to date, plus rate of change

        And that’s how you grow a B-2-C market!
11
Critical Success Factors
Crossing the Chasm vs. Spinning up the Web




                             12
Critical Success Factors
What Venture Investors Look For

        Crossing the Chasm           Spinning Up the Web

      Disruptive technology        Distinctive cool factor

      Compelling reason to buy     Leveraged access to market

      Customer domain expertise    Web-tech expertise

      Whole product focus          User experience focus

      Agile services-led offer     Agile data-driven product
       development                   development

            Different horses, different riders—same trail!
13
Thank You
     gmoore@mdv.com

     #crossingthechasm




14

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Geoffrey Moore Slide Set from the Berkeley Digital Media Conference

  • 1. Crossing the Chasm vs. Spinning Up the Web Berkeley >Play October 29, 2011
  • 2. Venture Agenda: High-Tech Market Development Models  B-2-B Markets – Crossing the Chasm  B-2-C Markets – Spinning up the Web  Comparing Critical Success Factors – Chasm vs. Web 1
  • 3. Crossing the Chasm B-2-B High-Tech Market Development 2
  • 4. Technology Adoption Life Cycle Pragmatists: Conservatives: Use it when it’s ready! Make sure it’s ready! Visionaries: Be the first mover! Skeptics: Never happen! Techies: Try it! Innovators Early Early Majority Late Majority Laggards Adopters Pragmatists’ view of whole product maturity drives the adoption of new technology.
  • 5. The Whole Product Outsourcing Hardware Application Software Engineering Complementary Core Complementary Services Offering Products Installation Peripherals and support Design Databases Minimum set of products and services to fulfill target customer's reason to buy.
  • 6. Market Development Model Offers Evolve with Whole Product Maturity Proven systems for cost- Standard products for conscious conservatives pragmatists with budgets Main Street Tornado Early Market Chasm Bowling Segment-specific Custom projects for Alley solutions for Visionaries pragmatists in pain
  • 7. Crossing the Chasm Framework A Playbook for B-2-B Market Development Pragmatist in Pain 1. Target Customer 2. Compelling Reason to Buy Broken m/c process Complete solution 3. Whole Product 4. Partners and Allies Ready to fill in the gaps Can manage complexity 5. Sales Channel 6. Pricing Rewards for all parties Current alternatives 7. Competition 8. Positioning Differentiating focus Next growth segment 9. Next Target And that’s how you grow a B-2-B market! 6
  • 8. Spinning up the Web B-2-C Digital Market Development 7
  • 9. Identity Modification Life Cycle Engagers: Reluctants: Check it out! Wait! Evangelists: Believe in it! Rejecters: Beware! Enthusiasts: Be 1st to try it! Innovators Early Early Majority Late Majority Laggards Adopters Engagers create the dynamics of digital market development
  • 10. Brand/Identity Interactions* Levels of Engagement & Commitment Level of Commitment Level of Engagement I will camp out all night I never imagined this was possible. to be first in line when you open. D You are reshaping my identity. I will go the extra mile You express my dreams, and I want to play a part in your world. C to do more to help your cause. I not only purchase your offers You are part of what I am. but display them proudly. B By choosing you, I express myself. I select your offers over others I respect what you do, and whenever they are available. A believe what you say. * Model developed in collaboration with Schireson Associates 9
  • 11. Spinning Up Volume Operations on the Web Running Experiments in Tandem VIRALITY ACQUISITION Starter Motor MONETIZATION ENGAGEMENT 10
  • 12. Spinning Up the Web Metrics that Will Drive Your Programs  Grow Acquisition – Rate of gaining new users (velocity & acceleration)  Grow Engagement – Average length, depth, and frequency of user engagement  Grow Virality – # of new customers coming from existing customers over time  Grow Monetization – Percentage & amount of participation, plus rate of change  Increase Promotional Productivity – Yield relative to acquisition, engagement, virality, monetization  Reduce Churn – Rate of losing existing users (velocity & acceleration)  Increase Lifetime Customer Value – DCF value to date, plus rate of change And that’s how you grow a B-2-C market! 11
  • 13. Critical Success Factors Crossing the Chasm vs. Spinning up the Web 12
  • 14. Critical Success Factors What Venture Investors Look For Crossing the Chasm Spinning Up the Web  Disruptive technology  Distinctive cool factor  Compelling reason to buy  Leveraged access to market  Customer domain expertise  Web-tech expertise  Whole product focus  User experience focus  Agile services-led offer  Agile data-driven product development development Different horses, different riders—same trail! 13
  • 15. Thank You gmoore@mdv.com #crossingthechasm 14