Want to go straight to the mainstream market? You'll probably fail

A new product is coming for Bitshares: HERO, an asset that will become 5 % more valuable every year.

It's a really interesting idea, but I'm afraid it will fail like Bitshares projects usually do.

@stan published the vision for HERO yesterday. It is a great and grandiose vision, but that's not enough.

What I'd like to see is a systematic approach, where hypothesis are made and tested. If a product is fully designed before any contact with the real world – in this case, cryptomarkets – it's highly likely that it doesn't succeed. Why? Because it's not made to answer a real demand. It's made only to answer an imagined demand that's in the head of the designer.

Statements like this are anything but convincing to me:

Here's the key point. Nobody in cryptodom has put a product together that matters to the mainstream public. Most don't care about cryptocurrencies and still trust the current system. But if they could earn 5%, that is suddenly speaking their language.

Mainstream public doesn't care about cryptocurrencies because they are too new thing. They need to see that everybody else is using them before they will even try.

Geoffrey A. Moore has written a great book on this topic: Crossing the Chasm – Marketing and Selling Disruptive Products to Mainstream Customers. He explains that there are several different groups in the market: innovators, early adopters, early majority, late majority, and laggards. The chasm is a gap between early adopters and early majority. Many times it's a huge gap. A new product might be able to find lots of early adopters but totally fail the mainstream market. Crossing the chasm it not an easy job and that's one of the biggest reasons why so many startups fail.

I've been pretty skeptical about the claims that some startup companies made. "There is a huge demand in the mainstream market for our product." Well, maybe, but that doesn't mean people will actually buy your product. Reading Crossing the Chasm explained why my intuition was right: a company needs a certain kind of strategy for going to the mainstream markets – and a lot of work. Most startups don't have a clue how to do it.

The problem of mainstream market adoption for cryptocurrencies is not that there hasn't existed a product based on a certain formula before. The problem is that majority of the people are still very skeptical about cryptocurrencies in general and are not interested in using them unless they see that everybody else is using them.

A random guy in the street will agree that a financial product that gets 5 % more valuable every year is a great thing. But that doesn't mean he will buy it. First he needs to trust the platform where the product exists. But do ordinary people trust Bitshares? No, they don't. When there is no trust, nobody will put any meaningful sums of money to the system. They might try it with a few bucks but that's all.

When the goal is to get to the mainstream markets, the strategy is to first convince innovators and early adopters that the product is worth something. Early majority needs to see that early adopters are pleased with the product, otherwise they are not interested in it. They want to see social proof.

After the early adopters like the product, it's needed to identify a niche market that will be conquered first. A small market is much easier to dominate than large. When there is a solid business in a niche market, it can be used as a showcase for other potential customers in other niche markets.

After a few niche markets are dominated, people in the early majority might start to consider using the product.

In the case of HERO, majority will need to gain trust for Bitshares. They need to trust that when they buy an asset that exists in the Bitshares network, the system will continue to function for years without any doubt. Very few are willing to make long-term investments to a platform they don't fully trust. And most of them want to have a lot more potential upside than only +5 %.

If the Bitshares community takes this project seriously, they need to start identifying potential niche markets that might need and could accept HERO. It's important to understand that the demand in a particular niche market has to be verified in the real world instead of imagination. You have to go and actually talk to people. You have to find out how much they are willing to put their money on this. You have to show the Bitshares wallet and teach them to use it. You need to explain how MPAs work.

All in all, the tone of @stan's vision for HERO reflects pretty well the failure of Bitshares. A lot of hype but no real work. Bitshares has been developed mostly without confirming if there is a real demand for the services.

Successful business is like scientific method: you form a hypothesis ("markets want this kind of product") and then you test it to see if you were right or wrong. It's better to find out as soon as possible if you are wrong! That's why initial tests should be as cheap and quick as possible. One of the simplest way is to actually talk to people and ask what they think about the product that you are planning. And remember to be honest when you listen to the feedback – it's a common mistake to not care about negative feedback and only hear what you want to hear.

So... I'll suggest that you go and try to find out enough people who could be your first niche market. My prediction is that it's not easy. The biggest problem is that potential customers don't trust Bitshares. And if you convince them to trust it, why they would buy HERO instead of BTS? If Bitshares is so great, it makes much more sense to invest in BTS because the potential upside is a lot more than 5 %.