In many ways, there’s no better time to be an entrepreneur today. Industry faces the challenge of unprecedented technology disruption – indeed, the velocity of technology change is one of the highest in human history.
Megatrends that were on the horizon just a few years ago – Mobile, E-commerce, Social Media, Cloud and Big Data – have already become all-pervasive, touching almost every aspect of how we live, work, shop, learn, talk and connect.
Today’s megatrends are Artificial Intelligence, Machine Learning, Robotics, Blockchain, Internet of Things and so forth. By all indications, these will have a similar game-changing impact on industry and society.
The volatility associated with technology disruption poses multiple challenges for established organizations, but it also presents enormous opportunities for startups.
Big companies lack agility, and smart entrepreneurs are better placed to take bold risks on innovation. In many ways, there’s no better time to be an entrepreneur than today.
Entrepreneurs are typically passionate, audacious, talented and ambitious. But, these same attributes can lead them to fall into some common traps – resulting in fundamental errors in approach and strategy that prevent the majority of startups from achieving profitable success.
To capitalize on the great opportunities available within the technology industry, today’s smart entrepreneur needs to keep five key behaviors in mind.
Focus on innovation rather than “Me Too.” Too much of entrepreneurial activity today is replicative in nature. There was a deluge of consumer Internet startups in the last decade that were inspired by the success of a few stellar examples in e-commerce and digital payment platforms. Now, there is a staggeringly large number of startups in AI, machine learning, and IoT. In fact, building an intelligent chatbot seems to be the current trend with everyone looking for a way into the market!
The concern is that entrepreneurs often fail to be cognizant of the fact that most successful business models tend to be geography-specific, addressing a clearly defined customer base. Me-too models designed for a developed market will fail in emerging markets because the customer pain points are very different. One of the reasons for a high mortality rate among startups is the lack of focus on market-specific innovation based on deep customer understanding. The shift from copycat models to innovative market-specific business models represents a huge opportunity for startups.
Build deep tech capabilities. Technology leveraged by entrepreneurs is often shallow rather than cutting edge and there is far too little initiative visible in technology-led innovation. For those looking for inspiration, creative ideas can actually be found in the overlap of academia and industry and entrepreneurs should turn to these channels for ideas that hold business potential. The rise of innovation hotspots such as Silicon Valley or Boston-Cambridge is a great example of the strong relationship between academia and the technology industry.
Develop high-quality business models rather than obsess about funding. Funding is critical, but an obsession with just funding can be fatal. While it’s important to have a very sharp execution focus, a strategic mindset is also necessary. Entrepreneurs need to survive both in the short-term while also building for the long-term. And they need to provide outstanding customer experience and growth while also ensuring profitability. Excess capital can lead to lazy business models that bleed too much money, making it more challenging to scale up in the long run. Becoming tangled in the vicious cycle of achieving higher valuations for the next exit is a fundamental problem with many supposedly successful startups.
Form a team of pioneers rather than depend on a ‘star founder’. Startups are fundamentally built on the founder’s vision and passion. There is, however, a concurrent risk that an inexperienced, overconfident entrepreneur will negatively impact the growth of the organization. Media frenzy around startups can give founders a distorted self-image and king-size egos that can trigger a death spiral. True success lies in humility and leaders should build a strong, diverse team with unique skill sets in order to thrive.
Entrepreneurs should bring in senior professionals and build a common purpose and strong culture that will bind the team together. Founders may even need to re-evaluate and step back from the CEO role. The business should take precedence over the person.
Ensure the right values and ethics to build a lasting institution. In a mad rush to scale up ventures, founders sometimes cut corners on values and ethics. Issues range from unacceptable interpersonal behaviors to lax regulatory compliance and dodgy financial practices. These organizations may shine like a meteor on the strength of their short-term success but are also likely to break down. Recently, some of the biggest names in the startup world have made the news because of cultural failings rather than poor business decisions.
Technology disruption and the strength of the startup ecosystem are among the biggest opportunities for entrepreneurial talent. In addition, these trends also hold out great prospects for emerging economies to grow exponentially through discontinuous growth.
However, there lies a huge chasm between potential and real impact, as well as hype and substance. The smart entrepreneur needs to bet on market-specific, technology-rich, sustainable business models rather than valuations and exit strategies. Success is about thinking the long road rather than the next stop on the funding cycle.