Don’t Confuse Product Knowledge with Market Knowledge

I frequently hear an in-house expert on a company’s product or technology described as a “market expert,” or as having great “market knowledge.”

As an investor, this is a dangerous thing to hear or say!

It conflates internal technical knowledge – the knowledge of how a proprietary product or technology works – with market knowledge – the knowledge of customer needs, market problems, and overall trends, and implies that existing product knowledge is a good substitute for market knowledge. It’s not, and conflating these can lead to overconfidence, poor strategic decisions, and lower returns (or worse).

Any software company is likely to have experts in the technology the company sells – at how to implement it, how to use it to accomplish different things, etc. But that knowledge is MUCH different than the knowledge a market expert or leader has, especially when selling a non-technical product.