What is the Sinclair C5, you may ask? It was a one-person electric-assisted vehicle released in January of 1985 by Sinclair Vehicles Ltd. Sinclair had planned to produce 8,000 vehicles a week. Still, the assembly line was shut down in October of 1985, a mere nine months later.
Now you may be asking why did it shut down nine months later? Look at a C5 through 2022 eyes, and you may think this would be a vehicle we could use today, considering we use short hire scooters and electric bikes in cities. However, in 1985 this was cutting edge and futuristic but failed due to product-market fit.
Before I explain how the product-market fit brought the C5 assembly lines to a slow and painful halt, we need to quickly discuss who Sir Clive Sinclair, the inventor of the C5, was. He was an inventor and entrepreneur, and you would consider him the Elon Musk of the 80s. Sir Clive created numerous inventions such as the pocket calculator and developed mini TVs and digital watches in the late 60s and early 70s. In the late 70’s and early 80s, he started selling personal computers. He sold almost 5 million of them worldwide, more than Apple and IBM at the time.
He was an inventor who had an excellent vision for the future. There are various interviews on the Internet where Sir Clive discusses how the Internet and personal computers will become an essential part of our lives. In another interview, Sir Clives discusses the state of electric vehicles and how we will have personal short trip devices available at a disposable throughout most major cities of the world.
You may be thinking Sir Clive Sinclair was ahead of his time and was trying to develop things at the wrong time. After all, they say that timing is everything, which is very true of products and start-ups. But that would only be partially correct. The product-market fit was the cause of the C5’s downfall.
Sir Clive Sinclair believed that customers didn’t know what they wanted and would develop products that he thought they would use and, as such, would follow a product push approach. He would create a product and push it onto customers, just as he did with the pocket calculator. His approach was
“If I asked customers what they wanted, they wouldn’t have known they needed a pocket calculator”.
The above quote seems eerily familiar to Henry Ford’s “faster horse” quote; however, this is a false equivalence to make. Henry Ford didn’t invent something new and pushed it onto people. He improved the process of creating vehicles and, as such, could create a more reliable and quicker assembled car. Sir Clive Sinclair was trying to develop a brand new product for a market that didn’t need it, the personal electric vehicle.
This approach of creating something very new and pushing it into the market seems like it happens everywhere, but it doesn’t.
I believe we have this thought because we can recall certain successful products, e.g. Uber, iPhone, etc., instead of others like the Microsoft Tablet PC of the early 2000’s. We can look back at these successful products and think, “that it is such a simple idea; why hadn’t anyone done it before?” These ideas hadn’t been successful earlier because certain iterations and leaps of technology had to happen before the specific idea caught on.
Take Airbnb, for example; if you asked anyone in 2007 who would they rent out a room in their house to a stranger, or ask any person would they sleep at a stranger’s house instead of a hotel? The majority of people would have said NO. However, after the events of the 2008 GFC and the need for people to make extra income, we saw the emergence of the Sharing Economy. This idea could take root and grow. A similar thing happened with Uber. You can see similar ideas emerging but tackling different verticals because the connections are there to be made. It is very rare for a unique idea to happen in isolation, making multiple leaps without the specific iterations occurring.
Back to C5 and Sir Clive Sinclair’s approach, he didn’t perform any market research on whether or not the product would be accepted by customers, after all, they don’t know what they want. All their tests and demos passed successfully within their closed test conditions. They did not test the product in real-world conditions. The first time it was in the real world was on launch day. This is a classic example of a product being developed in isolation, effectively within a small bubble of influence. If Sinclair had performed some market research and conducted some real-world tests, the limitations of the C5 would have been made visible. This kind of testing would have afforded them feedback to adjust, tweak and improve the design and potentially develop a product that the market was actually interested in.
As we said above, looking at the C5 through the eyes of 2022 we can see how this product would work today, but that is because of all the incremental advances that have happened since then. We have the Internet, mobile phone devices, the rise of shared bike paths, more environmentally friendly thinking, the reduction in the price of electronics, the improvement of battery technology and the list goes on. It was a device for the wrong time and the wrong customer, but they tried to push it into a market that didn’t want it, even if they didn’t know what they wanted.
We’ve seen this happen with multiple start-ups repeatedly and not just with huge start-ups that you hear about it. At Aerion Technologies, we have worked with start-ups of all sizes and have seen the same thing occur. Some start-ups get an idea and begin developing or working on it, in secret, generally, as they don’t want anyone to steal it. Then they attempt to launch the product and believe that “If I build it, they will come”, but the customers never do. The start-up then has to shut down its development and close its doors.
Using the “If I build it, they will come” mentality is very dangerous for a start-up or business. This mentality generally leads down the path of failure. It’s very rare for a unique, groundbreaking idea that can take several iterative leaps at once to succeed, and it’s a gamble at the best of times.
First and foremost, when evaluating an idea, you need to assess your market and then determine will it be used and is it something that customers want. There’s also no point in looking at the total addressable market. It would be best to find the subset that becomes your total serviceable market. Can you develop a sustaining product and business around the number of serviceable customers?
Most pitch decks will just say the Market is X globally, based on some industry research report and then will take a conservative number approach e.g. if we only have 2% of that market we will be a multibillion-dollar business. This is not how it works. You need to understand your market and find the customers who need this product, the ones that will use it. To do this, you need to perform market research and understand that you are working on delivering a product that will be used and not sink to the bottom of the market like an early 2000’s Microsoft Tablet thrown into the ocean.
The other kind of market fit that we see businesses attempt is the “there is no competition so we can have the entire market”. If you really think about that statement, you will realise why there is no competition. It is because the market doesn’t want that product; that’s why no one is competing for it. It will be super rare to find a market with no competition, and just a simple Google search will show numerous competitors doing similar things. I’m sure any VC or Angel Investor who has been pitched to with the “We have no competition, so the entire market is ours” approach has never been pleasantly surprised to have never found competition…
Uber had Taxis, Airbnb had Hotels, Motels and Holiday Inns; how can your idea be that special unique snowflake and be the only one in existence.
Before you start sinking your own money into building and developing that brand new product take the time to start investigating the markets you can service, do customer surveys and talk to, who you think, is your target market. Take their feedback on board and work with prototypes and concepts. After several iterations via customer feedback, you will be pleasantly surprised to see how far a prototype can go.