Think like a tech start-up
10Jun11

Evan Williams from Twitter at Web 2.0 Summit

Evan Williams from Twitter at Web 2.0 Summit, San Francisco 2010

I live a secret life. By day I’m a mild mannered advertising agency exec (the manners might depend on who you ask) whilst in my spare time I am building a start-up tech business.

The start-up is NLYZR. Its been around for the last 2 years in various evolving forms but now we’re getting down to brass tacks as it’s large scale commercial release is nearing launch phase.

The interesting thing is that while we’ve been using our knowledge at Sticky to create NLYZR as a business, we’re actually learning more from NLYZR that is helping the agency and our other clients. We’ve learned to think like a tech start-up and its been incredibly liberating.

Tech start-ups require a totally different mindset to that used in the day-to-day running of an agency, or any business for that matter. In fact, tech start-ups are radically different from other (non-tech) start-ups. But, importantly, we’re learning that the defining characteristics of a successful tech start-up can be applied to most industries to create something much more exciting.

The big idea

Interestingly, most of the great tech start-ups of recent times aren’t really so much about the tech, but more about the big idea that technology can facilitate. In most cases its not a better or faster bit of hardware, but a better solution for human needs. Think of:

  • Hulu (better way to access TV),
  • Groupon (better way of buying and selling),
  • Netflix (better way of hiring movies),
  • iTunes (better way of buying music),
  • Twitter (better way of instantly communicating),
  • Zynga (better way of wasting time on silly games),
  • Facebook (better way of staying in touch with your friends, family or greater community),

In each case its about the idea first, not the chips and microprocessors. Fortunately we’re in an age where creating and sharing your big ideas has never been easier.

Competitive advantage

The great tech start-ups solve an existing problem or create a new category. Their big idea gives them a competitive advantage that allows them to look at an industry and totally disrupt or reinvent it. They turn existing models and conventions on their head.

Look at what Groupon is doing to retail, what iTunes did to the music industry and LinkedIn has done for business networks.

Speed

The nature of tech start-ups is that they tend to move at high speed. Quite often the space between initial concept and launch is short, then it’s a race to build audience or customer base before someone else moves in on your patch. The group buying land-rush that Groupon started is a prime example.

The need for speed often results in tech start-ups launching a raw version of the concept, attracting initial users and then iterating on the fly based upon real-time usage and feedback. This is totally contrary to traditional business models whereby a product is researched, tested and then launched in what is hoped to be its ultimate form. The traditional model typically then requires massive marketing budgets to gain customers quickly to pay for the initial R&D.

Adoption strategy

A tech start-up typically isn’t relying on a traditional marketing budget to grow, they develop an adoption strategy. The difference is significant. Early adopters spread the word and lead to the wider population opting in. An adoption strategy forces you to think about how people will first discover your product, how they might trial or test it risk free and finally opt-in and share it. There are so many ways to do this that it can lead to some excellent creative thinking.

Community

Ironically, technology is facilitating new forms of community around the world and quite often a community drives the innovation, content and marketing of these products and services. Factoring in sharing, ego, competition and rewards are all ways of bringing a community feel to your business. Think Twitter, Facebook, LinkedIn, Foursquare and even measurement tools like Klout and PeerIndex.

Scalability

Traditional business is one-to-one selling, one-to-many advertising which then results in one-to-one selling (customer and sales assistant), or time-based services (hourly rate). Even the largest of these models rely (one-to-many) generally rely on significant expense in advertising in order to drive large numbers of customers to expensive real estate (buildings, shops, many staff) in order to conduct the transaction. Its not what you call infinitely scalable.

Tech start-ups work on highly scalable models where millions of users or customers can be the result of the initial idea and development. They aren’t limited by geography or sales staff and don’t rely on advertising or number of retail outlets to make the cash-register ring. One-to-one transactions are not even on the radar.

Funding

Every business needs a level of funding to succeed and grow. Speed and scalability rarely come without investment. The traditional tech start-up model has involved a small team with a great idea who attract some angel investment to take idea to the next stage which then leads to more significant venture capital to facilitate speed and growth, and to allow the idea to reach its ultimate level of success (or failure).

Funding can also be derived from strategic partnerships or early licensing deals. Either way, this approach is all about leveraging your idea for maximum return. It forces you to think much bigger than you might have initially and can totally change your worldview. These investors or partners aren’t interested in your plans to dominate your suburb and a mild profit, they want big wins.

Thinking like a tech start-up is totally foreign to most businesses. We’re usually caught up in the preconceived limitations of our industry, town or peers. I know because I did that for years too.

However, adopting the thinking of a tech start-up can be totally liberating for your business. Suddenly, crazy dreams of double or triple digit growth, of national or international expansion or significant investment aren’t so crazy. Imagine what this sort of thinking could do for you? And if you’re in the creative services industry, imagine what this sort of thinking could do for your customers?

What’s your big idea? What’s your competitive advantage? How can you increase the speed of your business? What’s your adoption strategy? How can you build community? How scalable is your product or service? How will you fund growth?

It’s this sort of thinking that will create or revolutionize entire industries and lead to the real currency of modern economies; innovation.

Posted under Innovation, Start me up, Web/Tech

Written by Craig Wilson