Startups are small and have limited resources. Therefore, in most instances, it makes good sense to pick a market and build it out first before jumping into other markets, no matter how promising they may look from a far. A company like iRobot would be well served to pick the market that it views as most promising for near term penetration (both in terms of breadth of coverage and revenue generation) and stayed focused on that market for some time. If it turns out that the market you pick does not prove as fruitful as you had thought earlier, you can always change course and chase another market. But spreading your company too thin when it is still resource constrained can result in the inability to capitalize on the successes you may achieve and will make those successes less likely in the first place.
I cannot really argue with this statement. However, I can also understand the diffculty of making such a decision. Why?
I believe the reason iRobot is having trouble concentrating in just one or two verticals is two-fold.
First, their mission statement clearly says,
3 - Have Fun Building a great company takes time. By creating a business with a superior work environment, long term stability, amazingly talented coworkers, and fascinating projects, we remain fresh, creative, and determined.The challenging applications for the military are fun. Fitting that same application into a doll is fun. Finally getting a robot to serve you drinks is really fun. While the markets are different, the technology is much the same for all of them.
Secondly, I think that iRobot people realize that other teams are close to them in product development. Today they can probably make the most money with military applications, but then a chance to establish themselves in the consumer or toy market may be gone. In the long term, large payoff will have to come from retail, not the military, but they cannot really abandon the military market right now as it is fun, pays the bills, and lets them develop the kind of advanced technology they can later squeeze into a vacuum cleaner. Abandoning the military would mean losing their testing grounds and that is at a premium when your competition is Honda and Sony.