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Subject:  Re: Ariba vs CommerceOne Date:  6/21/2000  11:14 AM
Author:  snsraymond Number:  3063 of 8780


"Could someone please offer an objective criteria of when a category has crossed the chasm and the market cap can be considered?

The Tornado phase is 100% growth Y/Y isn't it?"

Be careful not to confuse the symptom with the cause. I'll explain.

A category crosses the chasm when a single complete product captures a niche market. For example, a new software technology captures the dental insurance transaction market. If and when that technology moves to adjacent functions within the same industry and/or the same functionality within an adjacent industry, we say that it is in the bowling alley -- knocking down new pins. An example of the former would be capturing the dental patient records market. An example of the latter would be capturing the medical insurance transaction market.

If the technology continues to knock down pins, capturing enough niche markets, the mainstream buyer suddenly becomes aware of it and comfortable enough with it to buy it. Futhermore -- and this usually happens very quickly -- the mainstream buyer suddenly has to have it. A number of factors go into this sudden need to use the technology. One is visibility -- he has seen the technology work. Another is risk of falling behind -- everyone else is beginning to use it and if "I" don't, then I'll be left behind.

So..... as a result of this (nearly) instant demand for the technology (or category, as you put it), YoY growth increases dramatically as the suppliers try to meet the demand created in the Mainstream market. So you see that 100% growth is a symptom of this demand. Thus, the tornado has formed.

Be careful not to use YoY growth alone.

If I am off base or have mis-represented Moore's books in anyway, I hope someone will correct me. Thanks for the chance to share.

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