Time to Market?

Many years ago I was in one of those perennial meetings where the senior vice president stands up before the entire division and takes questions. These meetings often are nothing more than a study in power politics. Young turks with nothing to loose ask questions that bait the leader. Sycophants ask questions in support of what ever this weeks messaging seems to be.

Occationally someone naive about the stress in the room will ask one of those questions that goes right to the heart of the problem. In this meeting a young engineer asked “How important is time to market?” This was on all of our minds. The product we were working to release was more than a year behind schedule. We were all having a tough time making trade-offs between schedule and creating a virtuous product.

At that time in my life I was working with a very witty coworker who was full of very amusing one liners. For example he’d say “Here at YoYoDyne our leadership toggles betwix avuncular and asshole.” During this interval we were in an avuncular phase.

The senior VP tackled the question: time to market. He stated that he really didn’t know, but that in all his experience first to market was worth a substantial amount. I remember thinking, hm that’s not a very strong answer to what’s our #1 ethical issue around here, but I certainly respected that it was an honest answer.

Today I think we know the answer. It’s not a pretty picture. Capturing users is much more important than creating a virtuous product.

We know this because we know that power-law distributions will arise whenever the new users arriving in a marketplace exhibit a preference for the market leader. We also know this behavior is extremely likely in an emerging market. Consider this scenario. New users show up in the new marketplace. They thrash around trying to decide which vendor to hook up with. They thrash seeking some reasonably rational basis for making their decision. Now recall that this is an emerging market. Almost by definition that means that expertise is very thin on the ground. Users have a very hard time finding any source of expert advice. The user looking for some measure of product quality is left in a bit of bind. The market, because it is new, doesn’t have any mature sources of information about product quality.

At that point the user has to fall back on proxy measures of quality. That users then select the product to buy entirely on the basis of what other users already selected. It’s a fall-back onto almost the only information that user has available. The user is behaving rationally. Meanwhile, the market rapidly locks into a power-law distribution. The few early winners gain huge market share.

Hopefully, over time, markets will mature institutions, people, and collective knowledge to measure product quality in more accurate ways. At that point the early market leaders might start to be displaced. Of course how quickly that happens depends on how sticky the product offerings are. Software products are particularly sticky because of the training costs, and the way they capture the user’s data in ways that, by default, make it hard to switch.

Some markets never get the chance to mature. They evolve too fast. The entire stack of industries that stand on top of electronics revolution are like this. As the cost of computation, storage, and communications all fall, at large multiples each year, new markets keep emerging. Each time one of these markets emerges we get the same story repeated.

Large numbers of new users enter the new market, they thrash around for a measure of quality, they settle for using the behavior of others as a proxy for quality, and that assures the entire market grows up with a power-law distribution of vendors.

So the answer to the question? Time to market is everything when you are dealing with a newly emerging market that lacks matured ways to measure quality. This is doubly true if the customer relationships your capturing are highly sticky.

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