The year was 1990. Microsoft just released its first successful version of the Windows Operating System. The TCP/IP protocol went global and the internet was now within reach of users with a personal computer in their home. Prodigy just went public and launched a marketing campaign with a war-chest worth nearly a billion dollars and was backed by IBM and Sears.
By contrast, Steve Case of America Online (AOL) had 1 million in venture capital and knew he could not compete directly with Prodigy or CompuServe, the current leaders in the industry, so he looked for a better strategy. Most internet users during this time were tech-savvy early adopters. Rather than try and compete in that market, Steve made the decision to focus on people unfamiliar with computers.
AOL instead chose to spend its venture money to mail their AOL internet startup disks directly to people’s homes. Additionally, AOL struck deals with major airlines to distribute their AOL disks to passengers. This tactic worked and by the mid-1990’s, AOL surpassed Prodigy and CompuServe, becoming the leading internet service provider.
The lesson for the entrepreneur is that you don’t have to be the first or have a huge marketing budget to become the preeminent leader in your industry. All it takes is for you to look for a better path to the customer.
Are you stuck trading blows with your competitors or are you looking for a better path to your customer?
