September 2008 Archives
A plug for a new company with a cool application and technology. A simple social gesture such as tipping hasn't been explored much on the Internet. I think it's an interesting area and filled with opportunity.
Check out their latest announcement and help with hurricane relief!
In their brand new offices, a delight to the senses, courtesy of our favorite startup furnishings store, IKEA:
This year's Ycombinator did not disappoint me in seeing smart, young people crank out new business ideas. But I was struck by the number of repeated ideas in this class's mix.
In past classes, Ycombinator participants came up with truly innovative ideas and prototypes to illustrate those ideas. They were really new and concepts that I had not seen before.
In this class, I saw many that were remakes of old ideas, either from previous Ycombinator classes or even just improvements on products/services that were already out in the marketplace. All of them were better though; their user experience was markedly better and most people agreed that the Ycombinator teams produced better versions of existing products.
It brings up the question of what I would call "follow on innovation," which is to take an existing idea and make it better and then customers should adopt the new product because it's better, faster, easier to use,....right?
One of my favorite business books is The Innovator's Dilemma by Clayton Christensen. The book describes the classic case study of the hard drive industry. Established hard drive manufacturers would create one version of it, and either be unincentivized to innovate on the technology or miss seeing the opportunity of a smaller hard drive. Smaller more nimble incumbents would develop a faster, smaller hard drive while the established manufacturers missed the opportunity to develop the newer versions for fear of cannibalizing their existing business. This happened over and over again as hard drives got faster and decreased in size.
At each stage, the existing company would somehow miss the opportunity to jump into that new space. They would research and research and find that no customers would ever want smaller, faster hard drives. Their financials would always say that the new product versions would cannibalize their existing businesses and create harm to their companies. They were smart people doing the right thing and that right thing told them they should not innovate and that there was no proof in the innovation being good for their bottom lines. Their own analyses created an opportunity for new incumbents to enter the market and steal large amounts of share from entrenched, already-established companies.
Here we see follow on innovation clearly overtaking existing, established businesses. If it can happen in the hard drive industry, couldn't it happen with one of these Ycombinator companies in the Internet?
In Digital Dreams: The Work of the Sony Design Center by Paul Kunkel, Sony's Design Center looks at their products through a life cycle from "sunrise" to "sunset". "Sunrise" is when the product is first introduced. The product is a completely new entrant to the marketplace. Competing products introduced into the marketplace from competitors compete on features and technology, and features are added until differentiation is no longer achievable through either features or technology. This is when the product starts crossing from "noon" to "sunset" and competing on design becomes ascendant.
Sony stops adding features as a main focus and starts creating new designs around the features and technology. Products are created in different forms and colors, appealing to every consumers' taste in the way it looks and feels versus on features alone. According to the book, it is heaven for designers because now they are the important resource to which product teams must turn for further competition.
For Sony products like the Walkman, "sunrise" to "sunset" takes years, if not decades. Physical product development cycles usually take about 6 months to a year to complete back then; now they are faster given advances in manufacturing technology and the lack of need to innovate on basic technologies. Still, they take a long time to plan and build and for consumers to buy and experience and, ultimately, replace to try a new product. On the Internet, products and services move from "sunrise" to "sunset" in a matter of months. The pace of innovation is incredibly fast and a high percentage of the basic technologies enabling a product or service can be implemented very quickly. Products rapidly reach that point at which design and the user experience quickly becomes a differentiator between competing services who essentially accomplish the same thing.
In the beginning of an Internet product, engineers' importance supercedes that of other disciplines. Basic technology must be developed, implemented, and tested. As other entrants emerge, they too develop similar technologies and then there are many competitors in a market where formerly there was only one.
As an internet product reaches "sunset", the user experience becomes more important. Basic technologies have been developed and now you need to deliver the benefits of those technologies as easy as possible. Retention of users comes from clear, simple designs and hard-to-measure metrics like branding and emotional satisfaction from using one service over another. It's the designers' dream time because their discipline comes to the forefront for product development.
Or is it their nightmare?
It's never as easy as saying that a great user experience is all you need, when other basic technologies have been developed, and all other things like marketing, funding, etc. are held equal. User experiences can be copied; they are near impossible to protect via patents. Branding can be mimicked. The more aggressive the design, the higher the risk that you attract some and alienate others. It also means that the more aggressive the design the more often you need to update the design because design can get dated and worn out.
And for early stage companies trying to enter into a market with entrenched competitors, you're trying to build a better product through user experience alone. You probably do have a better user experience when compared to your competitors, but trying to unseat a gorilla in a marketplace because there is so much inertia in current users is incredibly tough without a lot of resources.
As a person with a design background, I am a big proponent of design and its importance to product teams. But in looking at some of this last Ycombinator's products, I find myself wondering if a better user experience on top of a product that is already existing in the marketplace is good enough for it to compete and survive to grow to be a worthwhile sized business.
I intend on studying this further as I watch the current batch of Ycombinator companies and others attempt to gain market share through mainly innovation in design.