Tech Startups: More Art than Science?
Most new tech companies start up with a very explicit idea in mind. That is it say they innovate some technology for a specific market or (i hate to say it)“use case.” Seems to make complete sense.
Yet nine times out of ten startups never really find their big success where they start. Ultimately the market tells them, if they’re listening, where their technology is best suited. Understanding this, coupled with a willingness to quickly adapt and pivot is paramount to startup success IMHO.
Case in point. Just look at Alteon Web Systems, Aruba Networks or Ruckus Wireless.
Alteon, who ultimately sold to Nortel networks during the bubble for $7.8 billion, started out as a lowly chip company. They developed an ASIC that offloaded TCP header processing from servers, knowing that gigabit Ethernet would put a strain on these servers trying tokeep up with the large amounts of data they had to ingest. Their initial idea was to put this ASIC on a network interface card (NIC) that would go into servers to ease this pain. But that never panned out.
Instead, the company realized that a bigger, better opportunity they never imagined when an early customer that said “hey why don’t you do this?” The idea was to build a device that sat in front of a bunch of servers, offloading processing chores and load balancing the traffic intelligently to get the best performance possible for any given web session. This lead them into completely new territory– requiring a new go-to-market strategy, marketing messages and value-proposition. Lucky for them, everyone was busy building massive web sites with servers that needed to be as fast as possible. The key to their success was being agile, willing to take right turns, and take calculated risks. This is often counter-intuitive to founders hell bent on selling their technology into the market for which it was originally conceived. I call it the “not-invented here” (NIH) syndrome.
Aruba Networks’ is another good example. Aruba’s first idea was to build a device that could enforce firewall policies to an increasingly mobile enterprise workforce. THey really weren’t thinking about Wi-Fi as a business per se. They initially thought they’d market this technology as a “mobile firewall” box. At that time they didn’t make or market wireless access points. But soon it became crystal clear that controlling the interaction between APs and the network was key to making this technology broadly useful. The founders and engineers quickly realized this and pivoted to eventually define what is now the global wireless LAN market (before there even was one). In other words, they swallowed their technical pride, freed their minds and went for it.
Then there’s Ruckus Wireless. Ruckus started selling it’s fancy adaptive antenna arrays to carriers rolling out IPTV. The technology was developed specifically to stream IP-based HD video over Wi-Fi to televisions throughout the home. This meant carriers wouldn’t have to go into their subscribers’ homes and wire or re-wire them. Problem is, this market, while creating decent revenue, had lousy margins. So they made a sharp right, moving into the crowded wireless LAN market because customers were telling them, “there’s really no channel friendly, easy to use, wireless system for businesses.” Credit their CEO and founders for realizing that their technology was extensible to other markets. They just needed to experiment to find the right one(s) and had the balls to do it. This isn’t for the faint of heart for many startups burning cash and anxious to hit it big.
The net-net is that for early stager techs it’s important not be be beholden to the technology but rather to the market — and having the guts to move in different directions despite your preconceived notions and emotions.
Tech startups often wear blinders with a myopic view of how their technology should be used, why,and by whom. Good startups don’t give a shit as long as they are adding value to a market where there is big demand. Might seem obvious, but in the real world, it’s not — especially with 20-somethings and their religious beliefs about the technology they’ve invented. A lot of times it’s more art than science.
