Stop lying that you have a tech startup
With finite cash to burn focusing on the right activites is cricial
“Skim milk is water lying about being milk” — Ron Swanson
I love Ron Swanson. My favorite Ron Swanson quote is about skim milk: “skim milk is water lying about being milk.” The startup world has its skim milk analog: non-tech startups that lie about being tech startups. Of course, this is a IMHO column, so you should read this with a grain of salt — but in the consumer-facing space there are actually only a few true tech startups.
A non-tech startup is a startup whose primary innovation is not in technology
What I mean by a non-tech startup is a startup whose primary innovation is not in technology, that is, you didn’t invent a new technology or a new way to interact with technology. So for example, Dropbox is a technology startup because they developed technology to sync files across multiple devices and users. On the other hand, I would argue that Uber or AirBnB are not tech companies, despite them relying on technology to deliver their value proposition. Uber and AirBnB’s impact was on the service-side of their business (black car drivers and hosts) not the technology. This distinction may seem minute, but accepting it is crucial to your success because it will allow you to focus on what’s most important; and in a startup’s early days nothing is more important than focus.
In a startup’s early days, nothing is more important than focus
I co-founded a modest fashion startup. As a computer scientist, I came to age admiring great tech startups and, as a result, I subconsciously wanted to emulate such companies. But the reality is that the priorities of non-tech startups are fundamentally different than tech ones: sales cycles are longer, customers are more finicky, and iterations are more costly.
Paul Graham posits that a startup is a company that has the potential to become big very fast and in order for you to grow you need to know (and accept) what type of startup you are. If you are a tech startup, growth will most likely come from rapid iteration on the right side of the business model canvas. As a result, you will spend a lot of time honing your product, gathering user feedback, and focusing solely on figuring out which aspects of your value proposition people are willing to pay for. In non-tech startups, the value proposition is generally well defined and you are focusing on the left side of the canvas, namely: activities, partnerships, resources, and costs. The reason why you spend so much time on the left side, is because the market is generally well defined and you need to figure out if you can deliver your value proposition at scale and for a profit.
Lets work through two examples:
Tech company case study: Sunrise Calendar
I recently had coffee with my friend, Jeremy, who is the co-founder of Sunrise: a mobile-first calendar app that integrates multiple services such as LinkedIn profiles of attendees. For Sunrise to be successful and grow fast, they must focus on rapidly iterating on their application, talking to their users, and expanding into new mobile platforms. Those must be their #1 priorities — yes they could focus on partnerships (with Apple for instance) but that ought to be a minimum % of their time.
Non-tech company case study: Hometown
I only learned about Hometown yesterday, via a blog of their founder Waqas Ali, a Pakistani entrepreneur. Hometown is an e-commerce store that produces handmade/bespoke shoes made by Pakistani artisans. Unfortunately, Waqas refers to Hometown as a tech startup and applied to tech incubators such as Y Combinator and AngelPad. Although Hometown uses the Internet to reach customers, they are not a tech startup. Their focus must be on:
Key activities: connecting with customers in a “human way”, finding more artisans to produce the shoes, etc.
Key partnerships: Should they find warehouses closer to their customers? If so, should they produce without a customer order to have the items in the warehouse? Should you partner with other websites to increase distribution such as Fab or IOU project? Depending on how you answer these questions you will focus your partnership efforts accordingly.
Key resources: artisans to make the shoes, workshop/co-working space where you can host more artisans, raw materials, etc.
The key distinction here is that iterating and executing ideas takes longer and is more costly for Hometown than for Sunrise. Want to test a new Sunrise feature? Your developer will have it ready in the morning and you can roll it out to a control group in no time. Want to make a new shoe? You must talk to the designer, secure the raw materials, make the product, photograph the final product, put it online, and ship it before a customer gets to interact with your product. The speed at which you can test and validate your ideas will dictate how long you will survive as a startup.
The Internet is a powerful thing. Early on, embrace who you are. Focus on what matters: find what pains your customer and build something they’ll love at a profit. Once you’ve found the magic formula, use technology and all its tactics to scale your business like no one else has done before. But until then, tell the (wo)man in the mirror that you are not a tech startup.
Thanks to @ev and @meganparuta for post-publication typo squashing!
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