Consumer technology can find a mass market when it saves us time, or money. Every person has their own preference for how they spend time and money. While some people would prefer to save time by spending more money (for example paying to avoid a queue at an airport) others prefer to save money by spending their time (for example going down to the venue to buy a concert ticket to save money on booking fees). Sometimes technology can save us both - for example how at launch Amazon saved both time and money when purchasing books.
If you plot this out on a chart it seems that start-ups can successfully enter a market in one of three quadrants - saving time, saving money, saving both. The logos correspond to my understanding of the proposition that the initial users of these services were compelled by:
So for example Priceline offered a cheaper airline ticket if you were willing to be more flexible with your time. Uber offered SF residents a way to spend more money but save time by waiting for a cab. In both cases users traded time for money or vice versa. On the axes, Groupon saved their first users money without requiring extra time, and Google saved their users time by getting them to information faster, but without costing more.
In the ticketing space, the launch of TicketMaster (over 30 years ago now) offered a step change in convenience by saving you the time it took to go down to the venue, providing you were willing to pay a new service charge. Continuing this trend, Stubhub offered the ability to skip the onsale process entirely and buy from the resale market at a higher price later. Most of the concert goers I’ve spoken to who prefer to buy tickets from Stubhub are clear that they are deliberately spending more money to save time.
It would seem that to get initial growth a start-up needs to save users time, money or both. (That is unless you can solve some next level Mazlow need and get us all self-actualised a la Snapchat :-)
What surprised me is how these value propositions can shift over time as network effects develop. I’ve been thinking about this a lot recently as Uber has grown. When it first launched I saw it as somewhat similar to Stubhub - a service for affluent consumers to save themselves time in exchange for more money. What’s been fascinating to watch is how over time as more drivers and riders join the network it has become a multi-tiered service that can save both time and money with the introduction of UberX, greater taxi utilisation, and soon, ride-sharing. So over time you see:
The big takeaway for me is that a start-ups initial time/money proposition isn’t always a predictor of its eventual market impact. A service that started with “We just wanted to push a button and get a ride…And we wanted to get a classy ride. We wanted to be baller in San Francisco. That’s all it was about.” might end up reducing transportation costs and saving time for the mass market.