It’s Better to Risk Boldness than Triviality
In 1999, unquestioned, grandiose visions of the future went unchallenged by investors. After the tech bubble popped in 2000, Silicon Valley dogmatically reversed its views on revolutionary ideas. Peter Thiel satirically summarizes a modern theme for business strategy in his new book, Zero to One :
“Anyone who claims to be able to do something great is suspect.”
The business culture of today can cast doubt on lofty goals. Instead, many investors flock to incremental and horizontal growth. This is well-illustrated on ABC’s Shark Tank. The investors on Shark Tank don’t buy into vertical technology. They really only buy cash flows from horizontal business models.
This was obvious when the startup, Amber, pitched on Shark Tank. Amber is a cell phone charging console for cafes and bars. It uses biometrics, geofencing and social technology in an effort to make mobile charging more intelligent. After their pitch on Shark Tank, investor Kevin O’Leary remarked,
“I hate this [business] so much, it’s incredible.”
Every other investor mirrored his enthusiastic “no.” But I don’t think the negative feedback was really due to Amber’s lack of viability. I think investors were hesitant to get back completely new and untested technology.
Amber can target a major pain point for bars, cafes and their customers. Businesses using Amber would benefit from increased customers, loyalty and even revenue through monetizing their Amber console. Even though Amber was still in the manufacturing stage, their pre-order profit margins were near 100%.
Vertical growth is unpopular- at first
Vertical technology can often face opposition in our current business culture. The tech can be clunky and initially impractical. Investors can feel uneasy in unchartered waters. It’s hard to go against the general consensus as a startup founder, but it seems almost necessary to create value.
I asked Bill Shuey, co-founder of Amber, “What important truth do few other people agree with you on?”
“The same truth that is critical for Amber’s success. Most people believe technological constraints should determine user experience, but the truth is that user experience should guide the use of technology.”
Don’t pivot at the first sign of problems
Promoting new technology requires founders to stick to their potentially unpopular ideas. Early pivoting, or changing business plans, because of negative feedback can help startups survive. But pivoting can also indicate a lack of vision. It can also be a huge distraction and time sink. Intelligence is uncommon, but the courage to carry out an idea is rare.
Amber is pursuing a funding campaign via Kickstarter and plans to launch a charging station at the 9:30 Club in Washington, D.C in Spring 2015.