Pick The Market With The Unattractive Business Model
When Box was deciding whether to go enterprise or consumer, the conventional wisdom was to follow the users. Box had both. Consumers wanted cheap storage and a narrow feature set. Enterprises wanted to pay far more but needed a hundred times more functionality. The fork looked like a product decision. It was actually a market selection decision, and those are almost never reversible. Levie's framing now, looking back: consumer and enterprise were not two segments of the same market. They were completely different markets with different business models, different teams you would have to build, and different products you would create. One customer paid five dollars a month. The other paid five million dollars a year. The companies that won consumer, Google with Drive, Apple with iCloud, Microsoft with OneDrive, were companies for whom bundling storage was an extension of a platform they already owned. Box was not that company. Trying to compete there would have been, in Levie's words, "a total death pit." The underlying framework he applies here comes from Clayton Christensen. Innovator's Dilemma, read alongside its less famous sequel Innovator's Solution, gives you one diagnostic question that cuts through most strategic fog: is this business model unattractive to the incumbent? If the answer is yes, the incumbent will not pursue it seriously regardless of the technology. If the answer is no, you have to assume they are coming for you with full resources. Consumer cloud storage was attractive to every platform company in the world. Enterprise content management for regulated industries was not. That asymmetry was the real reason to pivot, not the feature list.