Startup Growth — Blog for startups — The Titanic Effect, a book about the startup challenge

Industry Growth Patterns 3: Why Startups Should be Aware of the Hype Curve or Hype Cycle

So far, we’ve covered the Bass Diffusion of Innovation and the Crossing the Chasm models. There is one more industry or market growth model startups should know – the Hype Curve or Hype Cycle. Remember you may get either little or great traction, not just because of what you’ve done, but also because of what is happening in the broader market.

The Hype Curve or Hype Cycle is one of our more recent models, coined by research firm Gartner. In this model, markets experience initial dramatic growth. However, after the initial excitement or hype wears off, sales of the product drop as only enthusiasts and hard-core users in a niche market continue to purchase it. If competitors survive, the market settles into a lower volume than at peak. It’s smaller but still a respectable and sustainable level of sales.

Industry Growth Patterns 2: Why Startups Should be Aware of the Crossing the Chasm Model

Last blogpost we suggested that, in addition to all of the decisions they are making within their startups, founders should also track market growth. Most industries or markets go through typical growth patterns. Understanding if you are in the middle of the market’s growth stage or on the tail end is important. First, it helps in forecasting sales. But it also helps for appropriately planning the promotional efforts you will need to make. When a market has had limited growth, it often takes having multiple companies trying to educate the market. With low growth, you need more investments to offset competition.

We’ve already talked about the Bass Diffusion of Innovation model. A second growth trajectory was dubbed Crossing the Chasm by author Geoffrey Moore (1991).In these markets, the early growth and promise of a market stall until some intervention enters the picture…