Michael O’Shea | Crain's San Diego

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Michael O’Shea

Background:  

Founded by Michael O’Shea in 2003, San Diego-based Abalta Technologies works with major suppliers like Pioneer to put the smartphone at the center of the connected car experience. Earlier in his career, O’Shea was instrumental in launching Honda’s first GPS system in North America with Alpine Electronics. He went on to bring more innovative infotainment solutions to the market during his tenure at mapping company HERE.

The Mistake:

I’m sort of living with the result of a business mistake. We’re learning that maybe we were naive getting into this, and didn’t think through how to penetrate the market or how difficult the competition was going to be.

We began developing a product years ago in a market with similar products, but we thought we could do better. We went in with two feet and ran very rapidly from there. But we didn’t think through how to clearly differentiate the product. Many pivots later we now have a clear view of what we’re trying to do, but it was rough.

The most significant problem we had with this product is when we found ourselves competing against Apple and Google. Anybody who finds themselves in that situation knows it’s very difficult obviously, because these companies have unlimited resources. But when we started out, they weren’t a factor in this.

We develop software for a car’s infotainment system, which includes the radio and navigation system. Years ago, after the advent of the app store from Apple, all carmakers wanted to develop their equivalent app store for the car to bring navigation and internet radio to the vehicle. Companies like ours came to the market and proposed app framework solutions to make it easier for third party app developers to develop for the vehicle. And that was fine until Apple and Google came in and extended their own ecosystems into the vehicle, which became a direct threat to companies like us who were providing proprietary solutions for this kind of thing.

It’s hard to compete against Apple and Google. Our approach was to look for areas where Apple and Google weren’t strong, and one aspect of that is geographic. We can provide solutions in markets where their brand isn’t as strong, such as China. Google is effectively blocked in China, and Apple has a limited market share. Our solution was quite viable in the Chinese market.

We also found that the Apple and Google solutions didn’t work as well in Southeast Asia and Eastern Europe—they weren’t providing the kind of content that those markets were seeking, so we were able to provide solutions for those markets.

Differentiation, having a big vision, and being separated from the pack allows you to hold off competitors.

The Lesson:

Think big and separate yourselves more from competitors in the industry.

Going back to the beginning, we could have anticipated that Apple and Google would enter the space. If we had given it some thought we would have come to the conclusion that it was inevitable that these companies would enter the market. We hadn’t given it much thought, even though the evidence was there to suggest it, but we weren’t reading the tea leaves.

We could have done a little better job differentiating our solution significantly enough from the solutions that existed at that time to offset the threats. We were fixated on making something that was a bit better than what existed, but we should have created something that was a lot better and to think much further out.

I’m always impressed by our colleagues in Silicon Valley. There’s no limit to their vision, they tend to think very big. At the time we started I went there and visited with several large companies to show them what we had. They liked it, but they saw that the vision was narrow, and they were correct.

Differentiation, having a big vision, and being separated from the pack allows you to hold off competitors. We weren’t sufficiently separated by the time Apple and Google entered the market, so we couldn’t retain our position, and we had to pivot multiple times.

Abalta Technologies is on Twitter at @abaltatech.

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