Silicon Valley Will Never Conquer Brick & Mortar with This Thinking


Through the misty fog of a San Francisco evening to the crisp air on a San Jose sunrise, Silicon Valley stretches nearly 60 miles across Northern California. Since the late ’70’s the technological mecca has created household names like Intel, Apple and Google.

If there’s one thing that Silicon Valley has fetishized, it’s product. Products that solve problems. Products that make life easier. Products that move civilization forward. Product, if I may, is God.

And it’s served the Valley well. It’s produced billionaires and millions of jobs. Companies have Chief Product Officers, VPs of Product, product managers and product marketers. Everything is about the product. If you just focus on the product, the rest will take care of itself.

But Silicon Valley has struggled to make this work in brick and mortar.

Here’s a list of the top, public 150 firms in Silicon Valley. I know it’s a few years stale but the Mercury News site is no longer hosting this information. For those questioning what the private startup world looks like, I already went through the list of private Unicorns in a post several months back.

What you’ll notice is that there are no listed companies that sell to brick and mortar merchants. At least not exclusively. Intuit is arguably the only one that does, though it sold direct to consumer before releasing its business accounting tools.

It’s not as if there’s a lack of commercial opportunity. In the US restaurant market alone there are $700B in annual sales flowing through the doors. Taking 1% of that would earn you the #12 spot on the Mercury News list. And I have yet to find a restaurant that’s actually well-run. I can find parts of the operation that are humming along, but as a respected restaurant consultant once told me, “These businesses succeed despite themselves.”

In other words: there’s a huge opportunity for products to improve brick and mortar success

But ain’t nobody going to get that 1% of the restaurant business.

The people in Silicon Valley assume that logic prevails. They assume prospective business customers are evaluating products by running through financial numbers, computing value and then making decisions.

That’s the exact opposite of how many brick and mortar operators think. In fact that’s why Groupon was so successful: merchants were caught up in the hype, saw their competitors participating and so grew the fear of missing out. They didn’t understand their own business costs and only discovered the daily deal product was bad when the bank called to inform they were out of money.

Emotion, not logic, rules brick and mortar. Successful approaches have pandered to the reactive, reptilian brain from our ancestral past, not the new, logical brain forged in the fires of evolution.

I’m not making this up. Here’s a great video by Simon Sinek explaining how the brain works, and how successful companies with broad adoption appeal to the reptilian part our our brains.

That said, there’s no better way to tap that emotional, limbic brain than to use a trusted source to deliver a message.

Having existing service providers – some of which have years-long relationships – tell merchants about a product is a much better approach than trying to sell merchants on the logical merits of a product. Merchants will use something from someone they like, even if the product is total crap. That’s how objective outsiders can look at the products merchants use and see obvious opportunities for improvements… only to find that no merchants ever adopt their superior product.

Because in brick and mortar, product is irrelevant.

In brick and mortar, distribution is God.

Until Silicon Valley harnesses the reptilian brain, they will continue to fail here.