Jeff Bussgang, a co-founder and unstipulated partner at Flybridge Capital, recently wrote an Extra Crunch guest post that argued it is time for a refresh when it comes to the technology adoption life trundling and the chasm. His treatise went as follows:
- VCs in recent years have drastically underestimated the size of SAMs (serviceable addressable markets) for their startup investments considering they were “trained to think only a portion of the SAM is obtainable within any reasonable window of time considering of the chasm.”
- The chasm is no longer the windbreak it once was considering businesses have finally understood that software is eating the world.
- As a result, the early majority has joined up with the innovators and early adopters to create an expanded early market. Effectively, they have defected from the mainstream market to navigate the chasm in the other direction, leaving only the late majority and the laggards on the other side.
- That is why we now are seeing multiple instances of very large high-growth markets that towards to have no limit to their upside. There is no chasm to navigate until much later in the life cycle, and it isn’t worth much effort to navigate it then.
Now, I stipulate with Jeff that we are seeing remarkable growth in technology adoption at levels that would have astonished investors from prior decades. In particular, I stipulate with him when he says:
The pandemic helped slide a global appreciation that digital innovation was no longer a luxury but a necessity. As such, companies could no longer wait virtually for new innovations to navigate the chasm. Instead, everyone had to embrace transpiration or be exposed to an existential competitive disadvantage.
But this is crossing the chasm! Pragmatic customers are stuff forced to prefer considering they are under duress. It is not that they buy into the vision of software eating the world. It is considering their very own lunches are stuff eaten. The pandemic created a flotilla of chasm-crossings considering it unleashed a very real set of existential threats.
The key here is to understand the difference between two ownership visualization processes, one governed by visionaries and technology enthusiasts (the early adopters and innovators), the other by pragmatists (the early majority).
The key here is to understand the difference between two ownership visualization processes, one governed by visionaries and technology enthusiasts (the early adopters and innovators), the other by pragmatists (the early majority). The early group makes their decisions based on their own analyses. They do not squint to others for corroborative support. Pragmatists do. Indeed, word-of-mouth endorsements are by far the most impactful input not only well-nigh what to buy and when but moreover from whom.