Tuesday, August 12, 2008

Marketing Power

As engineers we tend to underestimate marketing--we don’t understand it well, and at a minimum we merge it with sales. Something that always surprises me about venture backed tech startups is how little they emphasise marketing. There is a lot of lip service, but look at the org chart of most tech startups going into their series B, and there will be a bloated engineering organization, one or two sales people, and no marketing. Now this can be good for burn rate; marketing can burn a frightening amount of cash, and often the CEO is the marketing person (showing at least that it’s a priority).

To give an example of the strength of marketing--Coherent, when they had a medical division, launched mixed gas lasers that made yellow light for ophthalmic applications. They could just as easily have made green lasers, but they realized that others could do that too. If you look at the absorption spectrum of hemoglobin there are two peaks in the visible, one in the yellow and a slightly smaller one in the green. From a theoretical perspective one would conclude that yellow is better--i.e., less power for more energy absorbed in same volume. So a great marketing campaign was launched to promote yellow as the magical wavelength for photocoagulation, and Coherent dominated the market.

Even more than 15 years later, most doctors, and surprisingly many engineers, still believe yellow is better and wont buy anything else--researchers still struggle with ways to create yellow, but in clinical applications the differences are barely distringuishable and from an economic perspective cost differences not justified. Just like Brand, it's an almost unbeatable argument based on belief. Whether nurtured from science or religion, the end result is additional value captured for years. To quote an oft misrepresented and misunderstood compay, dear to the hearts of all laser jocks--Novalux, making laser TV--what could be cooler than that!?!

As a quick aside to my “Is it a feature, product, or company?” Blog, Novalux could have been a company for sure, but they never managed to control the whole product solution. However, they did engineer the first ever TV solution with a hope of meeting the grinding wheels of consumer electronics (rather like CMOS, actually). They had the laser chip but they lacked the optical chip.

I am personalloy very proud of being able to acquire this company and merge it into the optical chip company to create the whole product solution. Novalux did a simply outstanding job of marketing, they convinced even the most cynical laser jocks (including me!) that laser TV was viable, they convinced the brands, and their OEMs, and darn it, they built the best looking TV I’ve ever seen. Classic marketing (not surprising for a group of ex Coherent guys ;-) ).

So at several Photonics Forum presentations I have predicted that laser TV will never happen. I am officially wrong as Mitsubishi is shipping these TVs. In fact, if Novalux could have gotten to market faster by say a year, I believe that several brands would be shipping these TVs now.

Novalux did a stellar job of marketing, which is why Arasor acquired them. The thing missing from Novalux was true partnership (see another Blog on this), which could have given them the missing piece to deliver a whole product solution to the market. The fundamental problem was they relied on third party OEMs who currently supplied the brands with product to manufacture the new laser TV product using a Novalux lisence. If Novalux could have gotten control of laser manufacture or a true partner to supply complete lasers, they could have driven the market.

Easy to say, much harder to do--one of the perks of being a VC ;-)

2 comments:

Anonymous said...

You article tends to intimate that Novalux are the tech provider for Mitsu??

Andrew Simms said...

Interesting you mention brand, belief, religion and science here, Larry.
Martin Lindstrom in his newish book "Buy.ology" brings brand, belief and religion together in a scientific way.
Very interesting research using MRI and other scanning techniques to measure people's reactions (some in real time) to different stimuli such as advertisements, in terms of their effect on different parts of the brain.
As we know, industries like cosmetics and perfume are masters at crafting 'beliefs' about product efficacy etc in their marketing.
The research quantifies this effect, and the role of things like mirror neurons and somatic markers in forming our impressions of different products and brands. And how these impressions drive purchase behaviour.