Monday, March 28, 2011

Women Talkers and Black Tires

The other day, I was having coffee with Steve Lynott, and was discussing my previous post about the near-failure of the company that created Angry Birds, the most popular iPhone app of all time.  Steve told me that was a common story, and sent me the following great examples:

by Steve Lynott

Inventors and entrepreneurs unwilling to challenge their basic assumptions face great peril.  Basketball and hockey players make moves that seem to defy physics; quarterbacks make changes for 10 other men in seconds on the line.  Yet, business people often have a hard time making adjustments to their ideas or preconceptions quickly enough to capture the market.  Those who do can win big, those who don’t can lose big.

The phone
At the dawn of the industrial revolution, the telephone was a revolution in business and at home.  It was such a huge revolution the company that is now AT&T had to fend off over 700 major attacks on the original patent of the phone – which clearly Alexander Graham Bell got right.  However, they completely missed on their early marketing strategies.

In the early adoption of the telephone, AT&T targeted white males (the executive) in big business, in big cities.  They ultimately found they missed the market completely.  The two most dominant users of phone were women talking to their friends down the street and farmers (35% market share for the first 20 years).  AT&T was ultimately able to weather this turmoil due to their patents and first mover position.

Black tires
Crayola, LLC was originally founded by cousins Edwin Binney and C. Harold Smith in New York City in 1885.  Binney & Smith was known for crayons, silly putty and many other children’s art toys.  What many don’t know was how they became a major force in the auto industry.

Auto manufacturers wanted  to change the color of the tire from the traditional white to black so the dirt from the road didn’t show up so prominently.  So they hired Binney & Smith to come up with a pigment that would work.  As it turned out the black pigment not only provided the right (black) color, but it also ended up making the tire more durable, which in part is why we now have all black tires.

Franklin computer
In the 1980’s dozens of computer companies sprouted as “PC clones”: Dell, Compaq, Acer, and many others.  However, Apple made it very difficult for anyone to clone the original Apple and Mac products.  Franklin computer reverse engineered the Apple DOS and began to manufacture an Apple IIe clone and was quite successful for the first two years.  But as the legal and marketing pressure mounted from Apple, Franklin knew it had to reinvent the product or die.

Over the course of the next five years Franklin shifted to providing language translation devices, and then electronic calendars.  They ultimately became very successful publishing electronics as well as paper based calendars and notebooks for professionals, finally merging with Covey in the mid 90’s.

The Pointe becomes Groupon
Groupon has pioneered a whole new marketing channel for local business, and recently was valued in the billions of dollars.  Many people see this success as yet another overnight internet success.  However, as chronicled in the blog ‘The Daily Bones,” it turns out Groupon was almost a huge failure story.  The founders had an idea about leveraging groups to get tasks done that could not be accomplished by an individual.  After realizing this idea was too unfocused - and running out of time and patience from their board and investors - they went back to the drawing board. Within short order they had come up with the seeds of what is now one of the fastest growing internet businesses in history.