Start with Why by Simon Sinek

Author:Simon Sinek
Language: eng
Format: mobi
Publisher: Penguin Group US
Published: 2011-12-08T10:00:00+00:00

Refusing to Consider the Law of Diffusion Will Cost You

In 1997, TiVo was racing to market with a remarkable new device. Few would debate that from the time the product was introduced to the present day, TiVo has had the single highest-quality product in its category. The company’s PR has been extraordinary. They have achieved an unaided awareness that most brands can only dream of. They have become more than generic terms, like Kleenex, Band-Aids and Q-tips. In fact, they have been able to achieve more than generic status; they are a verb in the English language, “to TiVo.”

They were well funded with venture capital and had a technology that could truly reinvent how we consume television. The problem was, they marketed their technology directly to the middle of the bell curve. Seeing the mass-market appeal of the product, they ignored the principles of the Law of Diffusion and targeted the masses. Compounding that bad aim, they attempted to appeal to the cynical majority by explaining WHAT the product did instead of stating WHY the company or the product existed in the first place. They attempted to convince with features and benefits.

They basically said to the mass market:

We’ve got a new product.

It pauses live TV.

Skips commercials.

Rewinds live TV.

Memorizes your viewing habits and records shows on your behalf without your needing to set it.

Analysts were intrigued by the prospects of TiVo as well as its competitor, Replay, a well-funded start-up backed by venture capital. One market researcher estimated that these so-called personal TV receivers would reach 760,000 subscribers by the end of the first year.

TiVo finally shipped in 1999. Mike Ramsay and Jim Barton, two former colleagues who had founded TiVo, were certain the TV-VIEWING public was ready. And they may have been if only TiVo knew how to talk to them. But despite the excitement among analysts and technophiles, sales were hugely disappointing. TiVo sold about 48,000 units the first year. Meanwhile, Replay, whose backers included the founders of Netscape, failed to gain a following and instead became embroiled in a dispute with the television networks over the way it allowed viewers to skip ads. In 2000, the company adopted a new strategy and a few months later was sold to SonicBlue, which later filed for bankruptcy.

Analysts were stumped as to why the TiVo machines weren’t selling better. The company seemed to have everything going for it. After all, they had the recipe for success: a great-quality product, money and ideal market conditions. In 2002, after TiVo had been on the market nearly three years, a headline in Advertising Age summed it up best: “More U.S. Homes Have Outhouses than TiVos.” (At the time, there were 671,000 homes with outhouses in the United States, compared with 504,000 to 514,000 homes with TiVo.) Not only were sales poor, but the company has not fared well for its shareholders either. At the time of the initial public offering in the fall of 1999, TiVo stock traded at slightly over $40 per share. A few months later it hit its high at just over $50.

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