If you’d asked me on Monday I would have told you that I’ve posted on this blog every working day bar one for the last four and a half years, but annoyingly I had a technology failure yesterday and the number of times I have failed to post is now up to two. I tried to blog from my iPhone and discovered this morning that the post never went live.
I’m back in the office today and what you see below is a fuller version of the post I wrote yesterday.
On the back of the news that Google is asking partners to delay launches of Google TV enabled products MG Siegler wrote a post on Techcrunch which charts Google’s struggles in the TV, mobile phone and music industries. In all cases Google was optimistic that they could effect a rapid disruption based on a clever model and in all cases they have struggled because they under-estimated the ability of industry incumbents to resist change. This isn’t to say that Google isn’t making progress in these areas, with the possible exception of music, they are definitely making waves, just not as rapidly or as radically as they would like.
The clearest example is in mobile. Siegler put it this way:
The other big example of this is with Android. Sure, the platform is a huge success now — but at what cost? Originally, Google had a grand plan to reshape not just the mobile OS market, but the entire mobile industry. They were talking about a future in which phones were given away for free, subsidized by search. That quickly changed to cheap phones subsidized by search. And that quickly changed to $199 phones subsidized by carriers. In other words, nothing changed. Why? The carriers.
Google seemed to think they could go around them and sell phones on the web directly to consumers. The carriers didn’t like that idea too much. They pulled their backing of that plan. And Google had to pull the plug.
When apps and smartphones started exploding, Google envisioned an open environment where consumers dictated to the carriers and hardware manufacturers what they wanted on their devices. That was until Google realized they needed Verizon’s help in pushing Android devices and sold their soul for bundled Blockbuster apps. Ones you couldn’t delete.
In my experience more startups fail after misjudging the pace of market adoption than any other non-execution related reason, and the mistake is often the same one that Google has made – failing to appreciate the extent to which industry incumbents can resist change. It is an easy mistake to make, both as an investor and as an entrepreneur – it is easy (and seductive) to think that customers will see the overwhelming benefits of the proposed new order and will steam roller the old guard. As Google has learned, it doesn’t always happen that way, even if you have massive resources to throw at the problem.
The lesson for startups is that you can’t spend too much time thinking about the mechanics of the disruption – i.e. how it will happen in practice – and if at all possible find ways to make the old guard benefit from the new order – as Google has with Verizon.