How to Use the Hype Cycle For your Startup
In 2008, a total of eight people bought an iOS app called I Am Rich, before the Apple managed to officially pull this product from their app store. The cost of download of this app was an astonishing $999 US per unit. The functionality, however, was none. Allegedly, after downloading this app, it would present a red ruby on your screen, letting people know that you are, in fact, rich.
Although this story may sound like a hardly believable anecdote, this was the actual case. An app developer called Armin Heinrich disclosed an official information about this circumstance, expressing his discontent with Apple for not paying him his part of the money. But how did Armin manage to sell a basically useless app to those, obviously, extremely rich people?
The answer is hidden in the description of this app. The developer made it very clear that by purchasing this app, you are reminded that you are rich every time when you look at your phone, and others will consequently know just how much you are rich since you’ve purchased a completely unusable app just because it has a shiny representation of your status. Armin Heinrich didn’t even attempt to deceive anyone, he was perfectly honest about the purpose of this app. The phenomenon, of actually making a substantial profit from this venture, is closely related to the hype that we will discuss today. The eight purchases of I Am Rich app, for example, were made in the peak of inflated expectations of the Gartner’s Hype Cycle.*
Riding the Hype Cycle
For those less familiar with the term, The Gartner’s Hype Cycle simply depicts the pattern that technological innovations create when they first appear on the market. Not as a product, but as a concept. Since automation is a crucial feature of agile development, understanding the characteristics of the hype, and the disappointment behind it, is an insight that can help you organize your startup’s marketing strategy and tweak it to perfection. So let’s break down this Cycle into individual elements, present some examples, and see how you could implement the following formula on your Startup’s Hype Cycle.
Relating to the Innovation Trigger
By offering your product on the market, you are starting a brand new hype cycle. The most important thing in this step is to understand that your product needs marketing, no matter how good or bad your product may be. Far too many startups fail to market their product correctly, just because they believe that their innovative solution is good enough by itself, and that they will reach desired numbers through word-of-mouth referral. In the year 2016, this is simply not the case. The market is overcrowded with more or less innovative products and startups, and getting lost in that massive numbers certainly comes easy.
Addressing the Weaknesses of Inflated Expectations
According to the Gartner’s latest Hype Cycle report, concepts like Internet of Things and Google Glasses are at the peak of their hype. When you reach this moment in your cycle, you will certainly want to sell your product to investors and venture capitalists. If you have the opportunity to sell your product in this stage, when the hype is at its peak, sell it. However, this is easier said than done. Since most investors are well aware and possibly have some experience with purchasing at the very peak of the product’s hype, they will probably come prepared with a set of questions.
Get familiar with the Hype Cycle in order to design a bulletproof marketing strategy. If you decide to sell your idea, be aware of the fact that your hype will be put to the test. However, there is also one other way and that is hanging in there and bracing yourself for the next stage.
The Burden of Disillusionment
Bitcoin is the best example of what happens once the hype wears off. This initial cryptocurrency is currently facing a real struggle for survival, now that the prominent Bitcoin developer, Mike Hearn, officially declared the currency as a failure and abandoned it. The price of bitcoins plummeted that very instant for an astonishing 15%. While the question remains what will happen to the cryptocurrency now, there is one extremely important lesson in this section of the cycle that every startup should know.
Your idea will be put to the test. Expect that. Once your product fails to live up to the hype, (whether because it isn’t scalable, or you failed to notice something on time) you will be faced with a breaking point. In this case, if you’ve played your cards right and you’ve prepared your startup accordingly for this point in time, you should do fine. In that case, you are entering the Slope of Enlightenment.
The Slope of Enlightenment
The fact that Oculus Rift is being sold for an astonishing figure of $599 raises the question if Virtual Reality is a piece of technology that is still underdeveloped; at least when it comes to scalability and technological requirements that are dictating this sort of a price for a VR headset. Oculus’s Palmer Luckey is forced to continuously answer accusations, defending the pricy figure of the Oculus Rift.
It is impossible to make everyone happy, but Oculus will always do what makes VR successful in the long run, at the high end and low end.
— Palmer Luckey (@PalmerLuckey) January 7, 2016
However, once the hype wears off, once people accept the limitations of your product and move on to focus to the practical side of your innovation, it’s time for the utilization. This is what happens in the Hype Cycle when your product actually has some potential, and you’ve done your math right.
Doing Your Thing (Pursuing Productivity)
At the very end, you might just be one of the lucky ones that survive the hype and surpass it. By focusing on your revenue, your vital points and your actual productivity, you can establish a steady stream and grow your company. From this point, further utilization of your innovative product should continue to increase, and you will have a proof that the Hype was real.
The best thing about this new-found stability is that you will finally start attracting new investors. Even better than that, you will be able to sell your product/idea for a great price as well.
These are the crucial elements of a Hype Cycle. I challenge you to find a company that will break this cycle. Once you become aware that this pattern is solid, study it thoroughly, prepare for some rough times and Believe the Hype.
*Although this concept is primarily associated with technological innovations, the resemblance with the development and marketing of a startup models is uncanny, and we can’t miss out on an opportunity to explain this in comparison, to help you ride your personal hype cycle.
