Starting Greatness

Why Geoffrey Moore's Crossing the Chasm is a must-read for Ambitious Startup Founders

Episode Summary

Crossing the Chasm by Geoffrey Moores is the most influential book on technology go-to-market ever written, and for good reason. In this episode, Mike Maples Jr from Floodgate talks to Geoffrey Moore about how startup founders can apply its core principles to building great startups, as well as how to avoid critical mistakes.

Episode Transcription

Geoffrey Moore:

So we have this book, and the first six months it sold 3,000 copies and the next six months it sold 6,000 copies, and the next six months is sold 12,000 copies, and then went to 24 ... I went to a show, you know how you're talking, always introducing, hi, I'm Geoff Moore, blah, blah. And the guy says to me, "Oh, you're the chasm guy."

 

Mike Maples:

That's the voice of Geoffrey Moore, author of Crossing the Chasm, the most influential book on technology go-to-market ever written. He's been cited by many of our guests, and for good reason. His book is an absolute must read for startup founders. This is Mike Maples Jr of Floodgate, and it's go time with Geoffrey Moore.

 

If I could name one book that every startup founder should read, it would probably be Crossing the Chasm. Geoffrey Moore released it in 1991, and it was an instant classic. When I read it, it literally changed my point of view on technology marketing. Geoffrey's book pointed out that in the case of disruptive innovations, a major gap existed between two types of audiences, the early adopters of a product and the pragmatist customers of a product. He called this gap, the chasm.

 

Why is this the case? Well, it turns out the motivations of innovators and pragmatists are just really different. Visionary customers like to try the newest thing for it's own sake. They like to be the first on the block with the latest, but pragmatists don't like products they haven't been conditioned to like. They need lots of social proof before they will consider changing how they do things. So the trick in tech startups is first to find a group of early adopters, solve their problem, and get awesome word of mouth before targeting the pragmatists.

 

Geoffrey's book offered different techniques for capturing the early adopters and then showed how to cross the chasm. I'm super excited to spend time with him today. Let's talk to him.

 

Mike Maples:

Alright, Geoffrey Moore, welcome to the podcast.

 

Geoffrey Moore:

Great to be here, Mike. Thanks for having me.

 

Mike Maples:

I've been a fan for a long time; probably longer than you realize and so I think what might be a fun way to get started is just, how did you even get into the tech industry in the first place?

 

Geoffrey Moore:

Well, it's interesting, I had my own chasm to cross, because I was an English professor. Marie and I were raising our family in Michigan. She's from Palo Alto, I'm from the East coast. It wasn't a good fit. We needed to get back to California. There were no jobs in academics. So I ended up at a job at a software company as a training director, and I knew nothing about software and I told them that, but they said, no, you'll learn it.

 

It was a company called Rand Information Systems. It was way back in the early mainframe days when IBM was the standard and everybody else was competing with them.

 

Mike Maples:

So then how did you get connected with Regis McKenna?

 

Geoffrey Moore:

So I went from that company to two other companies, and the middle one was a company funded by Kleiner Perkins, and Kleiner Perkins put the company in touch with Regis McKenna. By that time, I had wrangled my way into sales and marketing. I was not a very good sales guy. I was great at opening, I wasn't good at closing. I think that's bad for a sales guy, but it turns out it's pretty good for a marketing guy. So when I got put on the project with the Regis McKenna team, I think it's fair to say that Regis effectively invented high tech marketing. At that time that Regis came on the scene, Proctor and Gamble was what people thought of when they thought about marketing, and nobody thought about that you'd have to educate your customer, because nobody had a product that you had to worry about compatibility, you had to worry about a bunch of standards, all that kind of stuff.

 

So Regis really taught the piece that you want to use PR not advertising. It was a public relations agency. He went from being in advertising to public relations. And then from the PR thing it came, well you really need to be more consultative in terms of how do you develop the market. So we got into market development strategy. That's kind of where I got dragged in.

 

Mike Maples:

Okay. So you're hanging out with Regis McKenna. How did the germ of the idea for Crossing the Chasm come about?

 

Geoffrey Moore:

Well, so Regis had written a book called The Regis Touch. In that book was the technology adoption lifecycle. For me, reading Regis Touch is what a lot of people said when they read Crossing the Chasm. It changed my life. It was like I understood things in a way that I never understood them before. So I'm at Regis, and I'm looking around thinking, we have all these startups that have these great starts, they're phenomenal, and then they kind of go off the radaR. I was like, what the heck is going on? So that's where the chasm came from, because what we realized was they'd get these early starts, and what we came to realize was that was the early adopters, and they were saying yes, but the mainstream market was not as enthusiastic. The way the technology adoption life cycle model was originally presented, it just looked like you could go smoothly through the life cycle at each stage, you just sort of transitioned to the next stage. And the chasm said, no. Big, big gap.

 

Mike Maples:

So you come out with this book, Crossing the Chasm. How many copies did you sell?

 

Geoffrey Moore:

So we have this book and I asked the, and my agent, he said, "Well we're going to ask for an advance of $50,000," and I said, "Great. Fabulous." And Harper's came back and said, 10.

 

Mike Maples:

Okay.

 

Geoffrey Moore:

And he was really ... Because he gets only 15% of whatever this thing is.

 

Mike Maples:

He's like, "You're lucky I'm publishing this to begin with."

 

Geoffrey Moore:

Exactly. And so I said to the person who is sponsoring at Harper's, we had a meeting and I said, "What does success look like?" Oh gosh, anything over 5,000 would be like-

 

Mike Maples:

Just home run.

 

Geoffrey Moore:

Home run, home run. And what's the royalty? And the royalty is 12% per copy. And I said, "Well look, $10,000 advance, fine. If I ever sold more than like 7,500 copies, could we up the royalty?" They said, "Sure."

 

I get my first box of books and I go to the software publishers association meeting, and literally I buttonhole my friends and I just sell them right out of the boxes. You've got to buy this book and I'm going to sign it for you, whatever. So the first six months it sold 3,000 copies, and the next six months it sold 6,000 copies, and the next six months it's sold 12,000 copies, and then it went 24 ... So now I'm thinking, well, this thing is starting to really go. I'm also thinking, maybe I should go out on my own. Because at some point you ... I went to a show and you know how you're talking, always introducing, hi, I'm Jeff Moore, blah, blah. And the guy says to me, "Oh, you're the chasm guy." And I go, "All right." So that's when I knew I could leave.

 

Mike Maples:

When did you feel a palpable sense that the book had achieved product market fit?

 

Geoffrey Moore:

You'd give a talk about this thing and people would start elbowing the people next to them, and they'd start laughing and they'd point across the room at each other and you just thought, this one is just-

 

Mike Maples:

It's just resonating.

 

Geoffrey Moore:

Yean, this one just resonated. Inside the Tornado was the second part of it. They're really kind of the same book. You start getting more and more invitations to give this talk and all of a sudden your dance card is getting filled up. And I never made a sales call in the history of the chasm book, ever.

 

Mike Maples:

Wow, that's amazing.

 

Geoffrey Moore:

It was all inbound. All inbound. Now I gave speeches. That's where they came from. But yeah.

 

Mike Maples:

So let's step back for a second then. If you had to summarize the big ideas from Crossing the Chasm, what would they be?

 

Geoffrey Moore:

The technology adoption life cycle idea itself says when you introduce a disruptive innovation into any community, it will self-segregate into different adoption strategies. And the model had five, and the first one, what we call them the technology enthusiasts, this is what they live for. They're geeks. So they want to see the demo, they want to figure out how it works. They usually don't have any money, but they're very influential at the beginning of a market because everybody else looks to them to say, is this for real or not?

 

Mike Maples:

And they talk a lot.

 

Geoffrey Moore:

And they talk a lot and they're fun. The next group also talks a lot, but they talk more, in a much bigger language. So we call them the visionaries and the visionaries are the people that fund the early market. So they put big bucks behind it, not because they're technology enthusiasts, but because they think, this could change the world. So Marc Andreessen was more of a technology enthusiast at the beginning. Jeff Bezos was more of a visionary. He just wanted to change the world. So those two guys both go early and we call that the early market. And the key to the early market, if you had to put it in one sentence, is when the customer says, we believe what believe. So they don't need a lot of evidence, there's a shared belief in you're both kind of working together.

 

Mike Maples:

One term that we like is, you're in on a secret. So it's almost like when you pitch them, there's this, where have you been all my life reaction.

 

Geoffrey Moore:

Absolutely. Yeah. Or an epiphany as our friend, Mr. Blank, would like to say. It's kind of a religious experience. And by the way, they also want an exclusive. Keep a secret, and by the way, I want this to be my secret.

 

Mike Maples:

Would it be fair to say that this is one of the things you really need to think about when you sell? Because these people already have your secret. They're already kindred spirits. So if you're focused on selling, you won't focus enough on noticing.

 

Geoffrey Moore:

Well that's what happened. That's where the chasm came from. We felt we had such immediate success, they were so, and by the way, they weren't price sensitive. We had bugs and they would forgive the bugs and they'd say, how can we help? It really was like they were part of your company, by the way, they sort of thought they had a seat on your board if they wanted to influence your roadmap, but all of that was good. So you think, well, let's just scale up the sales force.

 

Mike Maples:

Yeah. Let's go big.

 

Geoffrey Moore:

Yeah, let's go big. And then boom, and the boom was because the third, fourth and fifth strategies, the remaining strategies are led by a group called the pragmatists. Pragmatists have a very different buying decision process. They say, I'll do it when I see other people doing it.

 

Geoffrey Moore:

By the way, at this point you don't have a lot of other people doing it, and the one person you really love the most is not ... The pragmatists look and said, "That person's crazy."

 

Mike Maples:

Yeah, that guy never gets anything done.

 

Geoffrey Moore:

He never gets anything done.

 

Mike Maples:

He just wants to get his picture taken.

 

Geoffrey Moore:

Yeah, I just clean up his messes after he leaves. Right?

 

Mike Maples:

Yep.

 

Geoffrey Moore:

So the chasm was this kind of loss of momentum. What we realized is that the next group, and in any other group, you're going to get together and align with them, but it's not going to be on the basis of, we believe what you believe. So the crossing the chasm idea-

 

Mike Maples:

It's like, what's in it for me?

 

Geoffrey Moore:

And so the crossing the chasm idea that we said, well if pragmatists won't go until they see other pragmatists go, it's kind of like a junior high dance problem. How do you get the dance started? And the idea was you target a niche of pragmatist customers who we called pragmatists in pain. So these are people who are saying, "Look, normally I wouldn't be talking to a new technology, but I've got a business process that I run. It's broken, I'm in trouble, I'm getting a lot of pressure to fix it. I've tried everything I have in my bag. It doesn't work. If you guys will sign up for fixing the process, I will do that." So the key idea there was, this isn't a person who says, we believe what you believe. This person says, "We need what you have." But you've got to have 100% of the whole product.

 

So that was very strange if you were an entrepreneur, you kind of go, well, I didn't sign up for this niche problem. I want to change the world. I remember Steve Jobs, and Steve Jobs when the Macintosh came out, it wasn't a computer for the rest of us. Well whole bunch of people bought it because we believed what Steve believes. The rest of the world was going, no. They were on IBM PCs. It turned out that the graphic artist department in enterprises had a problem they couldn't solve, because we were still doing presentations on 35 millimeter slides. They would change, you'd have to go back to ... It was a mess between Adobe Postscript, Aldus PageMaker and the Macintosh, you could do an incredible presentation on a desktop, desktop presentations. And by the way, every corporate graphics arts department in the country bought it, and they bought it almost immediately.

 

Mike Maples:

So I've heard a story about this, and I don't know if it's a myth or reality, but I heard a story that Regis McKenna was in a meeting with the Mac team and the Mac folks were kind of like, what are we going to do to overcome this deficit that people think we have against IBM? And we don't have as many good spreadsheets yet or a lot of other programs, and how are we going to get market share against them? And supposedly Regis said, "Well how would we define our market if we owned 100% of it?" And it was kind of like this idea that we have this WYSIWYG display, but we also have the laser printer and we have PageMaker and we have illustrator. So what if we said we can own 100% of the category of desktop publishing or desktop presentations, at least for the time being, and that's the niche that you then rifle shot.

 

Geoffrey Moore:

Regis was great by the was at creating things like desktop publishing as a concept or phrase and then rallying people around it. That was really key. The only person who hated that strategy with Steve Jobs, he hated it.

 

Mike Maples:

Because he wants it to be a bicycle for the mind.

 

Geoffrey Moore:

Exactly, exactly. He hated it. So I'll try to close with this lifecycle, there's two more things I want to put on the table and then we'll get back to our other conversation. After these niche markets, these penetration markets, where you have pragmatists in pain, it's typically one use case. Then you find adjacent use cases. You sort of build that. We called it the bowling alley, and what that meant was just you go from use case, to use case, to use case. When you were at Silicon Graphics, same kind of idea with the movie makers and whatnot.

 

Geoffrey Moore:

But eventually what you're trying to do is get back to horizontal, get back to the idea of this really is a bicycle for the mind. So we want to be infrastructure. We don't want to just be a specialist use case. We want to be for everybody. If and when that happens, you get this third state, it's still the pragmatist. But now these are pragmatists who don't say, we believe what you believe. They don't say, we need what you have. What they say is, we want what they have. Everybody is on the dance floor. I want to be in the dance floor too. So when that happens, you get this incredible sucking a vacuum effect where everybody wants it all at once. That's why high tech stock prices go through the roof. That's where you get these absurd multiples, because I've grown it 150%.

 

Mike Maples:

So one of the ways I internalized it when I was an entrepreneur, and I'm not sure I have this right, so I would love to get your opinion here. I learned that a lot of the early customers were really kind of just more interested in getting the latest gizmo, and I'm not sure they were even really planning to go live. So although they probably wouldn't have admitted it, and they furnish great quotes and press releases and stuff like that, they were kind of going rogue within their organizations. So the trick was to price it at just an amount where they themselves could approve of it, and then it's like you get four or five of them and then the early adopters say, hm, maybe something's going on here, because a few people are trying it. But is that kind of what you see or am I a little bit off here?

 

Geoffrey Moore:

Okay. So I might want to I want to rewrite your history just a little bit.

 

Mike Maples:

Okay.

 

Geoffrey Moore:

Basically, remember those first two adoption strategy, the technology enthusiasts and the visionary. You were describing technology enthusiasts. So technology enthusiasts want it, by the way, they really like it. They really believe in it, but what they don't have, they're not in a position in their enterprise to make a big business bet on top of the technology. What the visionary does is the visionary shows this technology can change the world. So it's not just that I bought it, it's that by buying it, I got a huge jump in competitive advantage. I can do things other people can't do. And the technology enthusiasts, even if they had that vision, they don't have the power, they're in the wrong place in the organization.

 

Geoffrey Moore:

So you got to be careful in the early market. You can see often, by the way, freemium let you give it to the technology enthusiasts before you sell it to the visionary. But don't mistake the technology enthusiast for somebody that can actually create a reference account.

 

Mike Maples:

So with the innovators or the very earliest adopters then, would you say watch out for them and maybe don't sell to them at all? Or is it more that they're great for generating buzz but just don't believe your own BS when they say good stuff about ya?

 

Geoffrey Moore:

I think the key thing about those guys, two things. First of all, they really are friends of the firm, so you definitely want them involved. Second of all, they are the technology crap detector for the enterprise. So if they try out your stuff and don't like it, you're in trouble.

 

Mike Maples:

Yeah.

 

Geoffrey Moore:

So it's important to win them over. Just don't confuse that with an economic event, which is getting that first big deal. I really would like hundreds of thousands, if not millions of dollars to be in a deal. And you say, well, why would anybody do that? And the only reason they would do it is because it's an executive who says, I want to make an impact. I am in a hurry. You could be the key to my next big leap in life. I'm going to make a bet on you that's really early, but my intuition says we connect. And by the way, I trust you or I look at you and I go, we're bound at the hip, you will do kind of whatever I need.

 

Mike Maples:

You better tell me the truth with no tricks.

 

Geoffrey Moore:

Exactly, and by the way, you're committing your entire company to this outcome. And you kind of do. When you're a founder, you're building a product. We're talking mostly right now about product companies, so you're building a product, but that first customer is really a project. You're selling them a product, what they're buying is a project. Meaning you've put your entire company as a project team in service to their agenda. And that's a better deal for them than going to Accenture, because basically you're cheaper than Accenture and you know more about this thing than they do.

 

Mike Maples:

You can do the job.

 

Geoffrey Moore:

Yeah, exactly. Exactly.

 

Mike Maples:

A lot of stuff happened in the early 2000s. A lot of consumer products just blow up right now, so you have things like Facebook and then you had Twitter, and you even had the iPhone, and so did that start to impact your thinking about the technology adoption life cycle?

 

Geoffrey Moore:

Yeah, it sure did. Because [inaudible 00:18:14] said, "What chasm? What are you talking about?"

 

Mike Maples:

Yeah. Book is obsolete, this Geoffrey Moore guy ... Yeah.

 

Geoffrey Moore:

He's a nice man. My father I think knew him. What I did realize is, that's where the insight about not everything has to start at the very beginning of the life cycle, so the whole consumer model broke a bunch of the chasm dynamics. So the retreat that I made at that point is I said, "Look, crossing the chasm is still a B to B model." I think that's 30 years in, that is absolutely correct.

 

Mike Maples:

It's still holding on pretty well. Yeah.

 

Geoffrey Moore:

The Facebook world, if you think about it as a complete end to end system, it's B to B to C, meaning Facebook sells ads to somebody who then gives it to consumers. This chasm model you can sort of force fit consumer into it. It's not the right model. We ended up doing something called the four gears that we think was better about consumer adoption. But to be fair, going back to the chasm model, when Facebook had to go from saying we're a PC oriented, remember that was their whole success, then mobile came into their world, and they had to migrate their whole ecosystem from PC to mobile, and mobile first. That was a chasm crossing problem.

 

Mike Maples:

When I started investing in the early 2000s and I started to see these companies, I'd spend time with people like Reed Hoffman and other folks who really understood network effects, and I'd be curious if this resonates with you, but I started to believe that a world of ubiquitous broadband penetration connected computers meant that in some categories, word of mouth transmission went from person to person, to machine to machine. So if you're Facebook, yeah, they start out at Harvard and then they went to the Ivy leagues and then they went to all colleges. But what felt different is that people didn't have to speak manually to each other to spread the word. It was just like, bam. It could just blow up and go viral, and so it was almost like a timeframe where it's just hyper compressed.

 

Geoffrey Moore:

I think this is the key. This is where the chasm dynamics, you start saying, I'm going to look for a second framework. Chasm dynamics apply for slower situations where you have to have considered purchases and you've got to get more than one constituency to agree before you can go forward. If you look at all the things we're talking about in social networking and all the consumer apps, first of all there is one decision maker, and second of all you could take the barrier to that decision down to virtually zero, and then as you point out, the network effect of digital is that you can scale it.

 

Mike Maples:

It's insane.

 

Geoffrey Moore:

We've taken friction out of the system dramatically.

 

Mike Maples:

Yeah.

 

Geoffrey Moore:

Look how long it took to move the spin from the analog world, it's now there. It's clearly that the analog guys are now behind, they're way behind. But there was a whole decade where people were, you had the whole MarTech, every MarTech company was in the middle saying, you've got to go digital. The digital advertisers were saying, well yeah, but I'm doing a big product launch so I'm going to run a Superbowl ad.

 

Mike Maples:

So you've talked about sort of an augmentation of the chasm model as it relates to consumer, the four gears model.

 

Geoffrey Moore:

I'm really just stealing from the network effects guys because this was not my expertise, but guys like Reed and others, they kind of explained it as going forward. So my way of internalizing that was to say the four gears were acquire, engage, monetize and enlist. In some cases you even put monetize to the side and you just said, no, forget about monetize. Acquire, engage, enlist, acquire, engage enlist. So acquire is connect digitally. So just get the traffic going both ways. Engage is, okay, so it used to be come to their website, now it's or download the app, or do whatever, click on the link, whatever you want them to do. But you've got to get them to do it enough times. So, that's that whole issue of engagement. Systems of engagement became really important.

 

Geoffrey Moore:

And then enlist is make them viral. So they actually sell you part of the viral network. That's where the network effects start. And then you can monetize it. If you think about Google and a lot of these models, Facebook, late monetization. So they just basically did acquire, engage enlist, acquire, engage enlist. And eventually then they said, okay, now we have enough volume, we're going to monetize. The danger of monetizing too soon would be you'd slow down the network effect. So you wanted to use the network effect to get as broad a reach as you could with a loyal base, and then filter it. Kind of like putting in the clutch and a clutch car for those of you who've ever driven a clutch car. But anyway, don't pop the clutch. Let it come in slowly. But then the monetization effect would work. In a B to B world, if you're selling a real product like a Nest or an Alexa or something, you said, no, I have to monetize. I can't afford to just freemium everything. But then you'd say, okay, acquire, engage, monetize, enlist. But, but at any given point, one of those gears is slowing down the other three. So the strategy with the four gears is, which gear is the slowest gear? Let's speed up that gear.

 

Mike Maples:

This reminds me of a metaphor in this book called The Goal by Eliyahu Goldratt, where there's this chapter with a bunch of Boy Scouts hiking and it's a mess. There's people way out in front of everybody. There's clumps in the middle, there's people way behind and they want to get the troop to kind of be back in control. So the scout master says the patrol leader, "Your patrol is out of control." So the solution ends up to be, find the slowest hiker, and in this case, his name is Herbie, and they put Herbie in the front of the line. So now the line all marches smoothly because it can't go any faster than Herbie and still stay organized. So then the solution becomes, how do you make Herbie go faster until Herbie's no longer the slowest. So in this case, they take items out of his backpack so that he can keep speeding up.

 

Mike Maples:

But to me that's a great metaphor for these gears or for startups in general, there's this tendency to try to be exhaustive in all the things people do right, But usually there's kind of one thing that slows everything else down, and wasting time fixing things other than that thing is just wasted ergs of energy and time you just don't have.

 

Mike Maples:

With a lot of startups, what happens all too often is people get advice, but the advice they get is too exhaustive. They try to get too many things happening right rather than one critical right thing that has to go right, right here, right now. And since a startup isn't really a company yet, figuring out your Herbie and eliminating that as a bottleneck often becomes way more important than exhaustively doing a whole lot of other things right.

 

Geoffrey Moore:

Yeah. That's a great example. If you think about it, for example, we're thinking about examples, like in the case of acquire, so at the time I was doing that model, Kiva is a kind of micro loan thing. So they had this incredibly engaging thing. They could monetize it, they could enlist people, but they didn't have a big thing. So their gear was acquire. LinkedIn at that time, hell you got invitations from LinkedIn from people you've never met before. So they had no problem with acquire. They had no problem with enlist. They had a monetization model, because the HR guys were paying for it. But nobody wanted to go to LinkedIn. They had no engagement.

 

Mike Maples:

Yeah.

 

Geoffrey Moore:

So all that stuff, they had to build their engagement gear. And then you have other people who said, well I've got this incredible flywheel of enthusiasm, but I can't monetize. So it's interesting. It turns out that the slowest gear isn't just an obvious. It's often company specific or segment specific. But to your point is whatever's the slowest gear or whatever is the Herbie, if you're working on anything else-

 

Mike Maples:

It's wasted energy.

 

Geoffrey Moore:

Yeah.

 

Mike Maples:

Yeah. The reason that The Goal came out as a book is it was about manufacturing, and there's a story of a plant manager and his factory is screwed up and he's about to lose his marriage and his job, and he's frustrated. This guru comes in and explains to the person how to make his factory better. The author's name is Eliyahu Goldratt. The theory of constraints was the theory that he proposed. It's this way you solve a problem, and the way you solve a problem is not to do everything better, but you find the one biggest constraint and focus all your energy and power on that constraint and then turn it so that it no longer becomes a constraint. And then you go to a new constraint, because it migrates to another machine or another bottleneck. So making the machine before the bottleneck machine go faster actually not only doesn't solve the problem, it makes things worse because it builds up work in process inventory and waste.

 

Mike Maples:

So I've always felt that that was a really good metaphor also for advice for startups. A lot of people give advice and they want to be helpful and they want to have good ideas and they want to say, have you thought of this? Have you thought of that? But what I've learned about startups is you just don't have enough time and money for you to waste any ergs of energy. So a lot of creativity needs about figuring out what's the most important thing, what's your Herbie?

 

Geoffrey Moore:

Often your Herbie, You don't have the talent inside your team to solve that Herbie. So then the other thing I think that venture board members have to, and founders should ask for from their board is, can you find me the Herbie solver? Because I don't, and maybe it's my job, I know it's my job to find a way to solve it, but maybe I could get some expert advice.

 

Mike Maples:

What I like about this gear thing is I guess as you're starting to grow, you can think of your growth agenda as you want to grow the company with a certain amount of burn, a certain amount of time, and you have all these gears operating in harmony so that they spit out the type of value that you're trying to create, and any gear that's not operating in harmony with the others that is slowing the other gears down, you have to be super attentive to addressing.

 

Geoffrey Moore:

And by the way, my version of that was power and performance. So when everybody talks about companies, they tend to use performance metrics as the way they celebrate the success of the company. But you got to realize that incredible performance is a trailing indicator and incredible power is a leading indicator. What venture is all about, the reason why large companies don't do anywhere near as well at venture as venture capitalists do, venture capitalists understand power, and they invest in power and they're willing to lose money in order to gain power.

 

Mike Maples:

Yep.

 

Geoffrey Moore:

And the problem is once you're a public company, you've shown a lot of performance. The public investor says, "Yeah, give me some more of that performance stuff." And eventually you want to say, "I can't do this forever without the next generation of power." Well yeah, but just don't lose any money.

 

Mike Maples:

Yeah.

 

Geoffrey Moore:

Well that's when it gets hard.

 

Mike Maples:

So there's a lot of entrepreneurs out there listening to this, and they're wondering if they even have the right idea or wondering if they could start the movement that they're starting. What's the single piece of advice that you would give them?

 

Geoffrey Moore:

Well, it's interesting. As I spend time with high tech companies, I see two different cultures. So I think that I've got two pieces of advice depending on whether you want to be maybe a mammal or a reptile. So the two cultures, I call it competition culture and a collaboration culture. A competition culture gets up in the morning to beat the competitor, like Microsoft would be a great example of that. A collaboration culture gets up to serve the customer, so maybe an Airbnb would be a good example of that. If you're a competition culture, you probably will actually want to start later in the life cycle. You want to take on a good idea that somebody has executed, but frankly, you know you can do it better.

 

Mike Maples:

Big fastball.

 

Geoffrey Moore:

Exactly. And just kind of take that market away. You're not trying to break new grounds so much as you're trying to just re-engineer a market that didn't get quite the right start, but you know that there's market demand, you're not taking market risk, it's all about execution and you're just going to out execute the competitor.

 

Geoffrey Moore:

If you are a collaboration culture, and most of the companies that I spend time with are collaboration cultures, then you wake up every morning to serve the customer. So then the issue is, instead of getting too obsessed about this incredible technology that you're very excited about, you really do want to design from the customer back. So the design thinking idea, the whole idea of start with the customer experience and work backwards. There's a time in every entrepreneur's life which thinks like, I have no idea what I'm doing, I'm failing and my spouse is about to leave me. And it's like, maybe I should go get a real job. That whole thing, and you want to say, no, but at that moment, reorient. So either go out and shoot a competitor or go out and serve a customer.

 

Mike Maples:

I hope this doesn't come across as schmaltzy or anything, but I just wanted to thank you. The is stuff that you came up with in the early '90s had a really big impact on my career and success and thanks for everything you've done and thanks for coming on the podcast.

 

Geoffrey Moore:

It was a lot of fun, Mike.

 

Mike Maples:

Thanks.