Not sure if you get Security Systems News, but one of yesterday’s headlines grabbed my attention. The article described the death of a leading technology innovator, Steelbox. To summarize the already short article, Steelbox had an amazing technology solution (see their website – they have some cool overviews and the obligatory technology awards – even a recent Frost & Sullivan product innovation award) but had no market so ran out of cash, were forced to let all employees go, cease operations and had their intellectual property seized by their lendors.
I know both their bank and their equity investors so I can definitely imagine how hard it was for them to come to this conclusion and take these drastic steps. So what’s the lesson here? I am not close enough to Steelbox to armchair quarterback their specific situation. Let me just generalize from it a bit. A key measure of a company’s success is whether there are enough customers willing to buy the service at a price that makes the company’s investment worthwhile (says Captain Obvious). If you have a tremendous product technology that is absolutely unique, incredibly differentiated, and drives tremendous value to a target market of 10 companies, then you had better hope that you can charge them a fortune and that those industries are doing well so your customers don’t go out of business.
The article reminded me of the last ASIS show I attended where I think Steelbox had a rather large booth and a lot of cool marketing material. There were probably a hundred other companies there also showing off the latest technologies around facial recognition, object detection, megapixel cameras etc. Many of them had very clear value propositions and I could understand their markets. Others were less clear to me. Cool technology for certain, but I couldn’t get my head around who would actually use it.
Innovators in the video market will be successful if they innovate in ways that are valuable to a meaningful market. If you try to go too narrowly down the needs of a specific market or a specific user group, you had better be confident that it is a big enough market. If you are looking at the emerging technologies in the video world right now (as customer or investor) and are overwhelmed with all the PR and marketing hype around the latest and greatest, just make sure you see some customer wins in addition all of the technology awards.