Stan Reiss of Matrix Partners recently wrote a fabulous blog post about how technology still matters in startup land, despite media fixation on marketing and design. It is a really good read and I highly recommend it. It highlights the fact that having a core that is defensible and protectable is very important.
Of course, there are success stories in startup land that don’t have a technology differentiator – WhatsApp and its $19B sale to Facebook is a fantastic example. However, those are exceptions rather than the rule. For most mere mortals, the technology is the magic sauce.
Having said all that, however, I must make a different point: technology is a necessary but not sufficient condition for success in a startup. In fact, a startup that has an exclusive focus on technology usually doesn’t make it past the first product prototype.
At MIT, engineering students who love technology think that the universe looks like this.
What they don’t realize, often for years after they graduate, is that this world view applies only within academia and corporate research labs. For everyone else trying to make a mark in the startup world, the universe looks more like this.
Technology is a necessary but not sufficient condition for success. It is a core part of engineering development, which involves a lot more executional strength than technology exploration. Engineering is in turn a small piece of the puzzle in the broader challenge of product development, which includes primary market research, design and UX, and product strategy as key functions and activities, as well as interactions and close collaboration with many other functional disciplines (such as IT/IS for web-based offerings and manufacturing and operations for hardware offerings). Product development in turn is a small piece of the puzzle that supports the ultimate Main Thing: to build a viable, sustainable business model.
If you are a technical cofounder, it may be hard to break out of a technology-based mindset to think broadly about how you might build a viable business. You might be lulled into thinking everything will just click as long as you have a great technology behind a fantastic product. If that sounds like you, have a look at the Segway. It is a beautifully engineered product with incredible controls technology inside that is no less beautiful today than 13 years ago when it was first launched. Yet it had fallen far short of expectations for mass adoption and has become something of a cautionary tale for a technology driven strategy for product development.
If your ultimate goal is to build a successful business, you must look holistically at the business itself, and understand the key role of technology and what it can and cannot do for your business. Kiva Systems did this – they started with identifying a target market (warehousing) that is in need of innovation, developed a deep understanding of what’s necessary to win this market, then they developed a sophisticated technical solution to solve this challenge. And their $775M sale to Amazon was one of the greatest success stories for Boston area robotics startups.
Build a business, not a technology. That’s how you change the world – not the other way around.