Hidden Miracles

January 23, 2017

In a previous post, I wrote about one technique I use to analyze startups. Namely, I look for how many “miracles” exist in the business plan. In this post, I elaborate on the idea of “hidden miracles.”

In 2001, Dean Kamen unveiled the Segway. In terms of startup miracles, this was a big one – a self-balancing personal transporter. He, and many others, believed that the Segway would change the world. Unfortunately, the plan was built upon many “hidden miracles.”

First, the company needed customers. But potential customers didn’t care; their problems were already solved by cars, bicycles, and feet. The $5k price tag didn’t help here. Second, the company needed friendly transportation laws and regulations. Unfortunately, the laws and regulations didn’t anticipate the existence of Segways. At 12 miles per hour, a Segway was too slow for the road, too fast for the sidewalk, and too motorized for bike lanes.

Many startups face similar hidden miracles that lurk in the grass beyond the initial big breakthrough. And the typical first-time startup founder – often a software developer or engineer of some kind – can be especially blind to these miracles because they habitually undervalue marketing and psychology. “I invented something new and amazing!”, they think, “Of course people will want it!”

In my experience, startups with new technology always face at least one hidden miracle.

Usually, the hidden miracle is related to customers and customer behavior. If customers could survive before your product was invented, then they can continue to live a perfectly happy life without your product, no matter how new and amazing it is.

This often comes down to social norms. I like to think of clothes washing machines here. The household clothes washing machine wasn’t invented until around 1937, and wasn’t popular until the 1950’s. Before then it was just socially acceptable to wash your clothes less. The “solution” to the problem of slightly dirty clothes was that society just accepted slightly dirty clothes.

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