The Gartner Hype Cycle offers a valuable tool in understanding where a startup company’s value proposition stands relative to the maturity of a particular market. According to Gartner, there are five stages of the Hype Cycle.
- Innovation Trigger
- Peak of Inflated Expectations
- Trough of Disillusionment
- Slope of Enlightenment
- Plateau of Productivity
As an entrepreneur, this Hype Cycle can help in determining the appropriate time to start a new company, determining a relevant Go To Market strategy, and/or when to start executing on a liquidity event plan.
Let me share my experiences with my last two companies relative to this Hype Cycle.
ZeroDash1, which started in 2007, was a Web Analytics consultancy. As brands relaunched newer, more modernized websites, marketers wanted tangible ways to measure the effectiveness of these sites. We were at the tail end of the Peak of Inflated Expectations and rapidly moving to the Trough of Disillusionment. Omniture had sold to Adobe. Google Analytics was commoditizing the industry, and Webtrends was losing market share. We sold to a fast-growing digital agency that wanted to have analytics capabilities. Had ZeroDash1 not been sold to Ascentium, we may have gone out of business within six months as our industry was falling into the Trough of Disillusionment. A few other larger Web Analytics consultancies fell into the Trough of Disillusionment and went through some difficult years of stagnant growth without any suitors for their companies.
In 2009, I started Lift9, a social media monitoring and insights company. At that time, collecting and analyzing social media conversations (data) was at the Peak of Inflated Expectations. Radian6 sold to Salesforce for a generous multiple. Soon thereafter, there was a run on such companies. Lift9 (changed name to Intrepid) also got gobbled up in the hype by the London-based public company, SDL. It wasn’t long after that the market soured on social media monitoring and listening companies and many of my competitors went into a long period of Trough of Disillusionment, which resulted in some fire sales and closures. For example, Bellevue-based Visible Technologies, which had raised $79.5 million in funding, was sold in a fire sale to Cision in 2014 in the tail end of the Tough of Disillusionment.
My newest company, TenPoint7, is in the best position of all my previous companies. Machine Learning is still 2-5 years from becoming mainstream. We have a unique cloud solution that brings valuable predictive insights to the mainstream. According to the Hype Cycle, there should be a lot of different kinds of future opportunities for our business for some time to come.