After Jeff Bezos took a ride on what he believed was one of mankind’s most amazing inventions, he told the founders, “you have a product that is so good that you’ll have no problem selling it.”
The product he was referring to was the Segway.
To his credit, the Segway was indeed revolutionary. It is incredibly hard to build a self-balancing two wheeled vehicle. But the Segway founders were brilliant inventors. And they found a way.
However, in today’s day and age, almost any product can be built with enough time and resources. The question is, will people buy it?
Despite the marvel of innovation accomplished through thousands of hours of work by some of the smartest people on the planet, the target market for the Segway just didn’t care.
Think about that. There were millions of dollars and thousands of hours spent on a product that no one really wanted.
It may have been a better use of time and money if the whole Segway team simply spent those years on a beach. At least they wouldn’t have wasted so many millions of dollars that way. Unless it was one fancy beach party…
However, before we turn our noses up and believe we would never make the same mistake, we must understand why this happened.
The Segway founders fell in love with their product. They believed it would revolutionize transportation. And they wanted to go as fast as they could to get it to market.
On some level, isn’t that what any entrepreneur with a vision to change the world is supposed to do?
Yes. But it’s not the products themselves that change the world – it’s the way people use those products.
And in the process of trying to create the perfect product, the Segway founders completely neglected the people who would actually be using it.
How the Segway’s Failure Could Have Been Avoided
To avoid failure, all the Segway founders needed to do was get out of the building and learn from their customers.
When would people actually use The Segway? What specific products would it replace?
Well, people might choose to use the Segway instead of a bike.
So they could have compared the price of the average bike, say $500, and put that up against the $7500 price tag of the Segway.
That is quite a steep price for an alternative way to get from Point A to Point B.
Would people be willing to pay for that increase?
Maybe they would. So what the Segway team could have done is given a prototype to potential customers who were currently commuting to work via bike.
If those customers used The Segway for a month and they still didn’t think it was worth the price increase, then the team could’ve tried another market.
What about those who commute to work via train?
Unlike a bike, most train systems charge people around $100 per month to use their service. That means that, in addition to benefit of not waiting or dealing with crowd, the Segway could potentially be paid off after communing with it for about six years.
Would those benefits be enough to convince training commuters to buy the Segway?
Again, the Segway team could have got out of the building, put the Segway prototype in the hands of people currently commuting by train for a month, and learned whether these benefits were enough to justify the $7500 price tag.
In that process, they would have also learned what customers liked about the Segway, what they didn’t like about it, and would have been able to tweak the product to their ideal customer.
After a few rounds of testing various markets, the Segway team would likely find that tourism companies are their ideal customer. Because tourism companies could buy a Segway at $7500 dollars and see a return on that investment over time.
Starting with this niche, they could have grown their company more organically as more people had a chance to try a Segway for themselves.
Instead, the Segway team didn’t find this market until after they completely missed the mark with commuters. So rather than a solid market to start with, the tourism market was a last ditch effort to make some cash.
A Better Way
Customers don’t buy products. They buy solutions to problems.
This Segway was, and still is, a brilliant product. But it is far too expensive for middle class workers to use it as a solution to the problem of getting from Point A to Point B.
Thus, the Segway founders never realized their vision of revolutionizing transportation.
As a comparison, let’s look at a company that has been able to revolutionize transportation–Tesla Motors.
The Tesla Roadster was also a revolutionary new transportation product. It was also much too expensive for middle class workers to use as a solution to the problem of getting from Point A to Point B.
However, unlike the Segway, Tesla didn’t market to that customer base. They marketed the Roadster to extremely wealthy individuals who were willing to pay top dollar for a luxury car that came with a clean, green conscience.
With that customer in mind, Tesla went all out to create a product that was unlike any electric car that came before it. It was sleek, fast, beautiful; the perfect status symbol that Tesla knew their customers were willing to pay over $100,000 for.
How did Tesla know customers would pay that much?
Because once they had a prototype, they started selling. In order to buy a Tesla, you had to put tens of thousands of dollars down in your pre-order. Not only did their target market happily pay this price, but they paid people ahead of them in order to move up on the waiting list!
Now that is proof of customer demand.
Since coming up with the Roadster, Tesla has slowly expanded into larger markets. But they would never have got there if they had not fallen in love with their first set of customers, and created a product exclusively for them.
The Segway is one of the biggest wastes of talent and money that I have witnessed in my lifetime.
Hundreds of the most talented people in the world spent hundreds of millions of dollars creating a product that barely made a dent in the transportation industry.
The founders had a great vision, but the wrong focus. Rather than solving real problems for people, they focused on building a great product.
People don’t buy great products, they buy great solutions to problems. That is why, despite their best intentions, the Segway never revolutionized transportation.
To avoid their fate, fall in love with the customer and build a product that solves their problems. This customer likely will not be the mass market that the Segway aimed for right from the get-go.
Like Tesla, you want to find a small niche and build a product that solve their problems perfectly. Then, with a solid foothold in one niche market you can think of expanding to new ones.
That is how you really change the world – one problem at a time.