Yesterday we looked at the use of historical context/parallels.
Today we explore the use of an analogy and the big picture.
The world of tech seems inundated with ideas of breakthrough products and services.
There are of course 'established' products such as laptops. Smartphones. Wireless earphones. Monitors. Smartwatches.
And then there's the brave new world of leading-edge tech. GPT-3. NFTs. VR headsets. Self-driving cars. Gene editing.
How do we make sense of the opportunities created by the confusing mass of tech products and services?
a16z has a framework.
Rick Tetzeli (one of the interviewers): This seems like a confusing moment in terms of technology. It’s been 15 years since the introduction of the iPhone, which defined a new era. But it’s unclear what’s coming next. Do you think we are in a transition? And if so, what should companies be doing when things seem this undefined?
Marc Andreessen: The framework that we use was defined by my partner, Chris Dixon, a while back. We think about it like this: at any given time in the tech industry, there are two primary modes.
One is what we call search mode. You are wandering around through unfamiliar territory, and you’re searching for new hills to climb. You’re searching for new technologies that will work and that will capture the imagination. People will become interested, and new markets will open up.
The second is hill-climbing mode, which is basically when you exploit the new opportunity or market. As you climb the hill, you refine the products and proliferate them to a mass market. Of course, every market has its “S curve” of adoption, but it might take a long time to top out, and the plateau might be really big. Smartphones are plateauing, but they’re plateauing at a run rate of hundreds of millions of units a year and billions of users. That’s turned out to be a really big hill. At any point in time, there are companies in both modes.
That framework - of 'search' mode and 'hill-climbing' mode - is a useful analogy to describe the ongoing activities in the startup world.
If you are in search mode (think of it as the pre-Product-Market-Fit mode), you should not be stressing about scaling your business or driving profitability. The focus would be to experiment, adopt an iterative, fail-fast mode and solicit constant feedback from users.
But once you have found a worthy, hill to climb, then you transition to running-at-full-tilt expansion mode.