Fidelity vs Convenience
- As you decrease fidelity and increase convenience, you increase users and engagement
- Top-tier companies in the high convenience/low fidelity category have considerably higher valuations; Valued on future growth rather than on forecasted cash flows.
- High convenience/low fidelity companies compete using a volume operations model and High fidelity/low convenience companies compete using a complex systems model (reference: Geoffrey Moore, “Dealing with Darwin”)
For fidelity vs convenience, there is an optimal curve. I believe that it is a convex curve because it is most difficult to differentiate and make money when you are trying to offer both fidelity and convenience. However, it may be possible to make low fidelity look like high fidelity with service. For example, the coffee at Starbucks coffee is awful but very convenient. However, Starbucks offers over-the-top service to make you believe that you are drinking high-fidelity coffee. Trust me. The coffee is gawd awful and that is why the want you to order an espresso drink with lots of syrup. Also, you can shift this curve with data and analytics. Most high convenience companies are changing the game with the use of data and analytics.