The recent notice that Metaplace.com is going to shut their doors and refocus the company is an all-too-often refrain where very big visions are not realized in their first or even second incarnation. I expect we will see the same from another big vision play, Trion, in pretty short order.
The phrase is a takeoff on the old enterprise sales mantra “Market the Vision, Sell the Product” which allowed sales execs to compete in an over-hyped market (remember E-Bricks?). Legitimate software companies could communicate big stories but sell much simpler products. We all know what happened to those who sold the vision.
Customers wanted to hear that you had a big vision — that your products would be around forever and that they would continue to benefit from your big, gamechanging vision.
But the second half of the charge was super critical if your sales exec and firm wanted to avoid unhappy customers and potential lawsuits. Customers expected your stuff to work. If you sold a vision, you had to install that vision. And who could do that?
Customer expectations were often very poorly set, lots of confusion reigned in the sales cycle and implementations became disasters of the first order. You can guess the rest of the story. Many, many companies fell from the sky because their ability to sell real product was completely lost. One of the best examples was I2 Technologies which once boasted a market cap of over $22 billion during the bubble and now has a market cap of less than $500 million after numerous reverse splits (last one was 1 to 25. ouch!!).
Fast forward to today’s startup market.
Replace the word customer with VC and you get the new problem that startups face. Startups need to communicate a big vision to suggest a big market, which VC’s expect. But if entrepreneurs try to build that vision day 1, they will die. The trick that is often missed is to craft a big vision and lay out a road map (somewhat ill defined, of course) that indicates that day 1 will be a very simple product that is a mere nub or spec of the larger picture.
Look at any of the successful plays on the web, including social gaming, to understand that big visions are not built day 1. The most successful these days is Zynga, who started out with Texas Hold-Em Poker on Facebook. From the beginning, Mark made a concerted effort to be profitable, which meant that he had to ship a real product right away that consumers would buy. Despite his dreams of a big company, he practiced the art of marketing the vision and selling the product. Then over time he began to realize the vision.
Metaplace suffered from the reverse — trying to build the vision from day 1. While it was exciting to see the demos and prototypes, the product vision was too big to build quickly and get customers to use it.
Candidly, I suffered this same fate with the first incarnation of Hangout. The vision for the concept of socializing online the way friends socialize offline is a big vision, but it could not be built as release 1. We understood that the big vision expected a community, but what we did not appreciate was the cost of generating that community. “Build it and they will come” would not suffice here. We learned that in order to have community, you need to have concurrency. And concurrency could only come by providing enough for people to do — by themselves — so that community could happen. We learned that lots of little products need to happen first in order to get the critical mass to enable this kind of vision.
This time around, our team built our first product (Fashion City) and the first tidbits of the big vision, in one half the time and cost it took to attempt to build a shaky first version of the big vision.
We are learning faster and cheaper from our users while keeping the VC’s excited about the downstream potential.
So as you the entrepreneur pitch VC’s, it is wise lay out a product roadmap that can achieve results right away and evolves over time to the larger vision. Market the vision, Build the Product
We all know what happens if we try to build the vision. In this market of capital efficiency, its a recipe for failure.