3D printing, virtual reality, smart AI… Every so often, a technology emerges that is said to be the future. And not soon after, lots of start-ups are popping up that are going to use this fantastic new technology in revolutionary ways. But over time, these start-ups often fail one by one. Why is that? Expert Yan Ketelers talks about the pitfall that many start-ups overlook.
Gartner Hype Cycle
Doing groundbreaking things with a new technology that is suddenly the talk of town: it sounds like the starting point of many start-ups. But such start-ups should be aware of the danger behind them. Before we explain exactly what that is, we need to outline the life cycle of hype. And what better way to do that than with the Gartner Hype Cycle?
The Gartner Hype Cycle is an invention of the research company Gartner. It is a measurement tool that allows you to track the life cycle of new technologies. In a nutshell, it has five phases:
- Technology Trigger: a new technology suddenly gets a lot of (media) attention, but is not really viable yet. There are often proof-of-concepts, but no usable products.
- Peak of Inflated Expectations: there is a (often exaggerated) hype surrounding the technology. There are the first success stories, but just as many failures.
- Trough of Disillusionment: the technology can’t live up to the high expectations at first, so the interest disappears.
- Slope of enlightenment: second and third versions of products using the technology are brought to market. The teething problems have been resolved, making the product more usable. The interest is coming back.
- Plateau of Productivity: the technology is widely adopted and it is becoming clear which companies can benefit from this technology. Technology has become relevant.
Pitfall for start-ups
As you can see, the Gartner Hype Cycle gives you a clear view of the phase a hype is in. But where is the pitfall for start-ups? Yan is happy to explain: “The pitfall is that start-ups, but certainly also other companies, dare to think that a certain technology is going to conquer and change the world like a storm. That’s why they’re betting everything on that technology. They think that peak you have at the Peak of Inflated Expectations is going to continue to grow. But after that peak, then, a valley follows, the Trough of Disillusionment.”
“The best example of this is VR. People thought VR was going to completely replace video. In retrospect, we see that this is not the case. VR exists alongside video. But many companies and start-ups reasoned as follows: “VR is going to replace video, so the market for VR is as big as video is now. But VR has remained a small market.”
So when is the time to go for it? “Start-ups have to start betting just after the peak. Because after that trough, you’re going to see a nice growth of that technology. Then the time is right to start doing something more with it.”
Moral of the story? Don’t just go all-in on that cool new technology, but proceed rationally and make a correct assessment of the viability and market opportunities of that technology – and when the hype storm has died down, then it’s time to take your chance!