It is hard to imagine a world without WiFi. It is, literally, everywhere. In a conversation I had about 2 years ago with first-class VC Fred Wilson, I asked him how he thought the wireless carriers – the beasts everyone loves to hate, the 21st century version of cable companies – would be disrupted. His answer? “WiFi”. Eventually WiFi will be nearly everywhere, and one will be able to use mobile devices (he didn’t say phones) to make broadband phone calls. The same way that one can use CallCentric or OnSip over their broadband Internet to avoid legacy carriers, one will be able to make phone calls over WiFi on the go by tapping into different hotspots.
But just over a decade ago, WiFi was not everywhere. It wasn’t in everyone’s homes, it wasn’t on every laptop – most still had RJ45 network jacks and RJ11 modem jacks – smartphones and ipods and tablets as a mass market simply didn’t exist.
The technology existed – in 2002, I seriously explored a startup doing embedded VPN-style wifi security for corporates – but it had a chicken and egg problem. Until it appeared on a critical mass of laptops, driving demand for access points and hotspot services, or a critical mass of hotspots existed, driving demand for embedding it in laptops, it would not take off. Apple was a major driver as an early adopter in their iBook line, but it was still a niche market.
Enter Starbucks. While most coffee shops, at least in the United States, were built around people coming, ordering drinks, and leaving, and while bookstores existed where people were expected to sit and read, Starbucks wanted you to stay, and for a long time. The longer you stayed, the more you ordered, starting with a coffee, maybe a second a few hours later, followed by a lunch. Further, they understood that if you hung around enough at the same spot, it began to feel like home, and it became your place to go. As every businessperson knows, the cheapest customer to get is the one you already have.
But many of these people needed to work, even while away from the office. And Starbucks was not about to wire up every table with network drops. The timely coincidence of teleworking, Starbucks’ “linger” business model and the expense of network wiring, created a sharply felt pain point, and hence opportunity, to drive wireless networking. Starbucks installed WiFi, initially as a trial and eventually aggressively in all its stores, and made a splash of it. To this date, every single Starbucks store has a large sticker on the front window indicating that it is a hotspot. Starbucks experimented with various partners and revenue models, some more problematic than others, but today, Starbucks is the office away from home for many professionals, and many a startup has been launched from within a Starbucks. None of this could exist without their adoption and driving of WiFi.
Ten years later, one of the cables has been cut. Very few people ever plug their device – laptop, smartphone or table – into a network cable, whether at home, at work or at Starbucks. They simple wirelessly connect and go.
And yet, the second cable still exists. People carry around chargers everywhere. People choose airplane seats based on the availability of power ports. Walk into any Starbucks and observe for 10 minutes; you will see at least 3 people walk around and look under tables and against walls for unused power sockets. The second cable, the one that provides power, is the remaining pain point.
The near-standardization on USB charging has reduced the complexity, although the mix of micro-USB, mini-USB, iPod and lightning limits the benefit. Some companies have come up with solutions that mitigate the carry problem, either by creating compact dual-USB chargers that have enough juice to handle a tablet and smartphone simultaneously (when traveling, I live by the Innergie mMini). In the end, though, these are all reducing the pain of a problem, not eliminating it.
A number of promising wireless charging technologies, mostly by magnetic induction, have come to market, centered around a few key alliances, primarily Power Matters Alliance (PMA) and Wireless Power Consortium (backer of Qi). Both have strong backers and tout their benefits. Actually, it sounds quite a bit like VHS/Betamax or HD-DVD/VluRay redux. But the same check and egg problem exists. No one wants to risk putting it in too many devices, especially if an alternative standard dominates and makes your product look like a has-been. At the same time, no one wants to invest too heavily in charging pads until at least one type has reached a critical mass.
Once again, enter Starbucks. According to AllThingsD, Starbucks will be running a pilot to install PMA charging pads in some of its Silicon Valley stores. The conjunction of lots of people at an offsite location for hours, not enough power sockets, and a proprietor interested in keeping them there for as long as possible creates a strong enough pain point along with a single party, the proprietor, with enough cash to invest, minimum reputation risk if they get it wrong, and enough presence to swing the market.
This is classic marketing, but one that eludes many executives: no matter how large your market, first find the entry market, or beachhead, where a few key customers suffer real pain, are willing to invest in a solution, and will go on to influence others. Success comes from execution, but you need to think through where and how you want to execute first.