During the initial stages of irrational exuberance about the dot.com phenomenon, number of “clicks” changed to attracting “eyeballs,” which changed to “page view.” Many investors got caught up in the false metrics. Those who survived the NASDAQ crash of 2000-01 understood that dot.com survivors would be the ones who executed transactions. Number of customers, amount of the transaction and repeat transactions became the recognized standards.
From New Venture Creation, 2004, by Timmons and Spinelli, page 91.
Sometimes the market may be plenty deep, but not broad enough. Researchers at Hampshire College in Massachusetts developed a corn oiler to protect corn against destructive pests without the use of harmful pesticides. Preliminary market research indicated that New England farmers were willing to pay about $1000 for such a device. $1000 was an adequate selling price to make production of the corn oiler profitable for the manufacturers. The problem came in the breadth of the market: New England doesn’t have an infinite number of organic corn farmers. Once every organic corn farmer in the region bought the corn oiler, sales would screech to a halt.
Here’s the story of how a small, niche market, high-tech company made it big by identifying market needs and molding the product around them.
The company is Silver Lake Research, a fifteen-person biotech firm based in Monrovia, California. They developed Watersafe, an at-home tap water testing kit sold in 3,000 retail stores nationwide. The science behind the product was brand new, but even more revolutionary than the product itself was how the company took a specialty store product and transformed it into a lowest-common-denominator supermarket product.
The technical challenges that Silver Lake had to tackle to bring about the identity shift bordered on the existential. For starters, US geography dictates that a mass-market product be multifunctional. “A person in Manhattan might worry about lead in their water, while a person in Omaha worries about agricultural pesticides,” explains Tom Round, Silver Lake’s vice-president. “We designed our product so it would have equal appeal in urban and rural areas.” At the same time, Watersafe had to be fast-acting, because consumers demand quick results. It had to be compact enough to fit in the tight shelf space reserved for impulse buys at the supermarket. And it had to be simple and easy to use.
Watersafe met all those requirements. It can detect seven types of contaminants, from chlorine to traces of bacteria like E. coli. Yet the box it comes in is unintimidatingly small—about the size of a DVD. All the tests can be conducted in ten minutes, and all render their results in an obvious, color-coded way reminiscent of a standard at-home pregnancy test.
Silver Lake plans to take advantage of the growing mainstream acceptance of what was once a niche trend: consumer interest in the purity of consumables.
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