Why Companies Fail

by francine Hardaway on February 17, 2007

Will Price’s VC blog has a wonderful post on how sometimes even a great team executing well can fail because the market doesn’t care about its product. One of the comments asks the question “how can you tell the difference between the first mover advantage of a disruptive technology and a market that doesn’t care?”

That is a very fine line. I think the answer is that the market does care if the first mover really hits a pain or a pleasure nerve. Look at the iPOD. Look at YouTube. We really didn’t know we needed those, but they sure became viral in a hurry. They hit a pleasure nerve.

On balance, if you have to educate the market too much, it’s best left to a large company with deep pockets to do so. If the pain is obviously cured by your solution, you won’t have to educate the market at all. Quicken didn’t. TurboTax didn’t. Each of them hit a pain nerve. TurboTax especially, because it keeps your old information for you, tells you the new tax rules, and helps you avoid an audit. There’s a market for that :-)

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