Check Your Assumptions - a good decision not to enter a market
Ten years ago, two colleagues and I decided to create a start-up to create electronic academic transcripts. For various reasons, mainly involving the movements of the dominant player in academia IT, we decided not to pursue the venture. In the end, the dominant player did not move in that direction, leaving the market wide open. In the years since, several ventures have pursued this market, notably TranscriptCenter and Scrip-Safe. In the last half year, discussions have renewed as to whether we should venture back into the e-Transcript market. Of course, to succeed at this late stage, we would have to differentiate ourselves from the main players. We decided that the only way to do so is to take a different tack. The existing players are just automating the process. Whereas before a graduate would physically go to his alma mater's registrar, file a form, get a paper transcript in a sealed envelope and mail it to the new school, now the alumnus goes online to file the request, and the e-Transcript provider would retrieve the transcript and transfer it digitally. Nonetheless, the data is still owned by the old school.
Our perspective was to give ownership to the student upon graduation, creating a Personal Electronic Academic Record (PEAR). When the student graduates, s/he receives, by email, CD or thumb drive, an digital academic record (the PEAR), digitally signed by the institution. When applying to a new institution, the applicant would simply submit (on a Web site or by email) the PEAR s/he received as is. The admissions office could then check the original digital signature on this new venture's Web site (or that of the original school), validate it, and be done. At first blush, this seems great, as it gives control to the student, not the institution.
On deeper research, though, we realized that it did not make sense. The graduate applies to schools a maximum 4-5 times in their life, and for most once or twice. It is a very rare process. Given the choice between needing to hold on to and keep track of this digitally signed PEAR for the next several decades, or dealing with the fairly low digital pain of asking for a transcript online when it happens, nearly everyone will go for the latter. Carrying this PEAR for years is just not worth it.
This is a classic example of knowing your market. It is easy to come up with good technology ideas, harder (but not that much) for smart people to come up with good market ideas. It is way too easy to get entranced by what technology can do, and buzzwords (such as ownership of data, democratizing information, etc.) that speak to them. In the end, though, the ability to succeed in a venture means the ability to sell, and the ability to sell depends on human behaviour, psychology and sociology. In this case, everything pointed in the right direction, except what real, live people want to do.
We abandoned the venture; let the existing players have it.