The Rise of The New Early Adopter

Live in the future, then build what’s missing — Paul Graham

Entrepreneurs in the Silicon Valley go to work every day to build products for that demographic –– which is usually homogeneous. Many  technology startups in the Silicon Valley go after the not-so-mythical tech savvy urban hipster. Although Silicon Valley is well known across the world for innovation and for creating groundbreaking businesses, there is a worrisome gap in understanding the domestic market and especially the tectonic demographic changes that are happening in the United States.

Things are shifting and folks in the Valley are missing it. They are not living in the future.

No firm has a good excuse for missing the biggest demographic trend in recent American history. (The Economist, May 11th, 2013)

Silicon Valley’s Early Adopter Profile Becoming Obsolete

The early adopter profile has been recycled and reused and it hasn’t changed much.  In a New York Times article about early adopters, professor Jay Pil Choi described early adopters as pioneers. “If all consumers are striving for value and take the approach of ‘wait and see,’” he said, “the new products will never be able to take off or take much longer to succeed in the marketplace.”  That is true and it will always be, but as a startup entrepreneurs should be looking to find that extra differentiator –– to find that you need to look at the actual composition of the market rather than the general market. The best entrepreneurs know this and their products reflect their focus.

But what happens when technology and barriers to entry are so low that design and technology are no longer a differentiator?   –– You need to dig deeper and find an underserved niche to test your ideas. The issue is that most niche markets support products with some proven success and not early stage concepts. Niche markets often lack early adopters.

The ideal would be a niche market big enough to take you to revenue and has early adopters that influence adoption. This is what entrepreneurs in Silicon Valley have been missing. The US Latino Market offers both; early adopters and a large target market. Below is a chart that shows the adoption of technology by Latinos in the US compared to the rest of the population. Latinos over-index in everything technology, yet they are not considered a primary target market for technology products.


Building Better Products For The Future

There are people with unmet needs and greater purchasing power in America than in all South America combined.

But how do you fix this? How do you you go about raising awareness about this new trend?  The first step is the most important. We need to get entrepreneurs in the Valley building products for the US Hispanic market. To make the transition easier, we need to look at this shift and compare it with the trends in emerging economies across South America.

Let’s take Brazil, a country that has grown exponentially.  The shift in Brazil started as a result of forward thinking policies that helped millions of low income people enter the middle class. Once Brazil happened, we had American VC firms and entrepreneurs flocking to foreign lands to try their luck in the new frontiers of business. US Venture Capitalists are investing more in South America than in the Hispanic US Market. Beyond the cognitive dissonance, we can simply look at the numbers that I’ve outlined before to see that this trend should be fixed.


Targeting Is Difficult – But They Are Distinct

Yes. But difficulty has never been a barrier for Silicon Valley entrepreneurs. A recent article in The Economist says that  “wooing Latino consumers is easier said than done, however. As they grow richer and more numerous, their tastes are changing, too. One sign of the shift is language. When Latino advertising was born in the 1980s, a largely immigrant audience could safely be addressed in Spanish. Today, most Hispanics were born in the United States and only 23% of young ones prefer Spanish to English. For years Univision, the biggest Latino broadcaster, stuck resolutely to Spanish, and advertisers had to follow. This year, in a joint venture with ABC, Univision will launch Fusion, an English-language news station.”

Where is the silver lining? The bad news is Latinos are difficult target. The good news is that Latinos are distinct. The same article goes on to say that “in some ways Latinos remain distinct. Their median age is 27 (a decade younger than the national median). They live in larger family units and are more likely to be found in certain places: 62% reside in California, Florida, Texas or New York, though the population is dispersing.” That is your target market with test geographies built in.





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