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  • Vinod Jain

Crossing the Chasm

Updated: Jan 23, 2023

On October 15, 1997, San Francisco-based Charles Schwab Corporation’s entire management team, 120-strong, walked across the Golden Gate Bridge, each wearing a gold-trimmed navy blue jacket with the words CROSSING THE CHASM across the back—symbolizing the full-service brokerage firm’s changeover to an online, discount brokerage that allowed its customers to trade stocks online at $29.95 per trade. In the early years of the changeover, Charles Schwab adopted a hybrid model integrating its core full-service business with eSchwab, its online business. A customer seeking to trade stocks could visit one of Charles Schwab’s 360+ offices for a face-to-face meeting with an investment specialist, call a customer service representative on the phone, consult with one of the 5,800 independent, fee-based investment advisors, or trade online at eSchwab anytime, anywhere.

Charles Schwab has been a disruptor in the brokerage business ever since the launch of the firm in 1970. The firm became one of the first discount brokers in 1975, shortly after the SEC (Securities and Exchange Commission) deregulated brokerage commissions—switching commissions from fixed to negotiable. While some brokerages increased their commission rates, Schwab became a discount broker. In 1979, Schwab became the first discount brokerage firm to automate their back-office settlement processes, leading to the first ever online order entry system in the market. In 1989, the firm introduced TeleBroker®, an automated telephone brokerage service. Schwab introduced trading on the Internet in 1996 (a year before crossing the chasm), allowing customers to trade listed and OTC stocks as well as check balances and order status online. With technology in its DNA, Schwab continues to make industry-leading innovations, even disrupting itself on occasion, and reducing online trade commissions in 2019 to $0. (Currently, Charles Schwab charges zero commission for online stock trades, the same as charged by its competitors like E*Trade, Merrill, and Vanguard).

One of the largest investment services firms in the US, Charles Schwab now has over 300 branch offices with 33,400 employees, of which 1,800+ are dedicated to custody, trading and operations support, over 12,000 independent, registered investment advisors, and with $7.6 trillion in total client assets under management—more than any other custodian in the industry.

Since the dot-com boom of the late 1990s, millions of legacy companies worldwide have crossed the chasm as they began digitalizing their businesses—physical businesses treading cautiously, sometimes with only a hazy idea of what might work, into the digital world. Other companies have been pure play digital businesses from inception. Both kinds of players are creating hybrid ecosystems spanning the physical and the digital worlds.


The phrase “crossing the chasm” was popularized by Geoffrey Moore’s 1991 bestselling book of the same title, published by Harper Business. The book is about the marketing of a fundamentally new technology product, with strategies a company could use to present the product to the marketplace. Moore’s Technology Adoption Life Cycle describes five stages in the life of such a product: Innovators, early adopters, early majority, late majority, and laggards. As a product begins to gain traction in the marketplace, it comes across a big gap (the chasm) between early adopters and early majority. To succeed in its marketing efforts, the firm must close the gap (cross the chasm) by moving early adopters to early majority in product life cycle. The book offers strategies for crossing the chasm. Charles Schwab invoked the phrase to signal the company’s move to a digital business model, the chasm being the gap between the physical world and the digital world.

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