Cameras from Platform to Stealth to Drag Race

It is incredible sometimes to watch how some fields can completely change due to a technical revolution.

The digital camera business is clearly one of these. For decades mechanical cameras were similar and dominated by a high end duopoly of Canon and Nikon with Minolta as the dark horse.

They were standards built on the great platform of their lenses. In razor and razor blade fashion, you could spend $30k on lenses and then be trapped forever more as a Canon or a Nikon person. A lense would last literally for decades.

Then came the digital revolution. It meant that the initial digital models looked just like their mechanical film brethren. I had a Nikon f80. (I need to find it again) bought incredible Nikon glass like their incomparable 70-200. And it was painful to switch to Canon.

With these digital cameras came TSE who realized that they didn’t have to follow the dimensions of the big cameras. In particular the so called mirror-less cameras came out.

In the beginning these were point and shoots with very small sensors that couldn’t hope to match the quality of a 35mm film. But silicon moves ahead and with digital came the replacement of optical viewfinders with touchscreen a and displays ripped out of high volume mobile phones. The first players were stealthy. They were adjuncts to the prosumer cameras. Like my first canon point and shoot. It was 3 megapixels and no match for a film camera.

The platform leaders responded with their strengths and built a whole digital line around their lenses. But the upstarts kept coming with higher quality and more important none of the size limitations of having to be optical.

Today the world is again Balkanized. Nikon and Canon don’t have competitor systems because they need to defend their high end turf so instead the prosumer is switch en masse to a whole set of players.

Sony, never a player at the high end, acquired Minolta and then built a whole family of Mirrorless and digital cameras around their new E-mount. These cameras were light and small and had quality very close to their bigger brethren. Moreover they shared technology with dedicated video cameras.

Two smaller vendors Olympus and Panasonic joined forces to create a micro-4/3 mount which is much smaller but therefore much lighter. And image quality was very close because lenses could be designed with less cost and more importantly they out big processors in their cameras to do everything from image stabilization to correction of know lense defects. Fuji innovated on sensors and also created their own mount system.

In the end we now have a drag race for the next set of prosumer standards. Nikon and Canon still don’t complete while my four best camera buddies have evenly divided into a Olympus fan, a Fuji fan. A Samsung dabbler and me. I’m just dithering away looking for a market leader.

In the end the cycle has begun again but this time focused on lenses for these new mounts. Who will win, well that’s what a drag race means. It isn’t clear.

Startups and Drag Races

I get to go hear the presentations of both large and very small companies just about every Monday in my day job.

I’m always struck by the number of folks with less than six months of cash left who are running a drag race against competitors who have a billion dollar in cash.

While it is true that most of these companies have a better mousetrap. As the Russians used to say, “Quantity has a quality all it’s own.”. Or if you are a true aficionado of the Cold War there is this famous cartoon of two Russian generals sitting in a Paris cafe saying, “so who did win the air war over Europe?”

The point of course is that the fancy aerobatics don’t matter hen you ate staring down 20,000 tanks headed your way.

We may have our own opinions about Groupon and so forth, but let’s face it, they a billion dollars in cash so they have won this round. Trying to beat them now is just much harder. In the same way that a decade ago Amazon went public raised lots of money and this let it survive that great valley of Ecommerce death (anyone remember pets.com?) to be the leader.

So what is a startup to do? Well three pieces of advice

1. Think stealth play. Is there a segment that is protected? Taking that hyper local example. Are there places we’re you are not competing coupon for coupon.

2. Profitability. If you can spend as much money as the other guys, where in your customer base are there profits. Even if you have 10 customers, it’s often interesting to do a by customer cost analysis. I’m amazed how many companies could shrink 10% in revenues and double profits. Thats because customers are different. The substrategies here are typically selling another product to an existing customer (very cheap, like burglar alarm companies selling fire extinguishers too), cutting unprofitable customers (you know who you are) or lower costs on introduction (why go coast to coast before you make a city profitable ten use those profits to fund the next one)

3 Double your share by delighting. If you have small share, the easiest way isn’t to convince people they ate wrong selecting the market leader (the default choice of probably 80% of decision makers) but to find anther customer who look like someone who already loves you. The big guys ironically usually don’t need to worry about customer satisfaction because they are the default choice but as a small player you have no choice but to delight usually.

Finally just one more word. This is a good case where you can’t compare yourself with the leader or their strategy. I once saw a slide showing that if a $10m startup was valued the same way as the market leader, it would already be worth $500m. That’s not the point. Kind of like the corner coffee shop wishing it was Starbucks. It just isn’t. Not will leader strategies usually work for small players. That’s like me thinking I just adopt a Olympic weight lifters training strategy to get in shape. Sadly it’s not the same body I’m trying to get in shape.

Anyway enough said, the drag race isn’t for everyone. It’s the easiest to do but the least likely in most cases to work. Think stealth!