The power of an established industry
Counter-intuitively, startups challenging an established industry often needs the industry itself to be part of that challenge. Read about Ediswan, the importance of agility, how Keyhole challenges the established rental property sector, and what you as a large company can do to be part of your own industry transformation.
Companies within old and well-established industries often fall into the trap of giving customers literally what they ask for — instead of actually challenging the problem(s) at hand.
Really, you can not blame them, because they did challenge the status quo at some point. The problem is, the world around them, including their industry, changes exponentially. It might not be directly visible yet, but it is.
Looking at the history of the light bulb, it is in fact not as simple as often referenced. More interesting than the bulb itself, was the new distribution of electricity that essentially caused a massive impact on the gas industry.
Sir Joseph Wilson Swan’s successful incandescent light bulb would have been obsolete without Thomas Alva Edisons work on high resistance that made power distribution from a centralized source economically viable.
Together, after some patent disputes, Edison and Swan established Ediswan (Originally: “Edison and Swan Electric Light Company”).
In the meantime, the problem for Ediswan was, that there was an established and well-functioning gas distribution system, and gas lamps were working well. But after heavy investments into infrastructure and the invention of tungsten wired bulbs that provided better light and lasted longer, the electrical grid became a reality, and thus the gas industry experienced a massive decline.
At Keyhole, we want to be the tungsten wired bulb. We want to be the new and better user experience. Unlike Edison, we want to work with the existing industry to change the infrastructure. We want to be a part of generating the push for the industry itself to make that change. In fact, we believe this is how most innovation happens.
(Side note if you did not know: At Keyhole we want to replace deposits and prepaid rent from the home rental market by replacing them with a guarantee. Read more on usekeyhole.com)
The established industry can facilitate innovation
Traditionally innovation inside companies in large established industries will happen incrementally, or in some cases, remain untouched for years due to a successful business model. Companies within the various established industries also often find themselves restricted under increasingly difficult and challenging legislation. Simply keeping up with rules and regulations while maintaining a healthy business demands a lot of time and resources. So even with a present willingness to create the necessary innovation for new business endeavors, it can be really challenging to find the internal resources to do so.
Many, especially in the startup world, will talk about incapability and resistance from established industries to engage in change.
From our point of view, it is important to emphasize that while industries, in general, can be slow-moving and sometimes hard to navigate, companies can have a willingness and eager for innovation that can drive them to new business.
But whilst it can be hard for the large companies to drive innovation, they can do something else that startups cannot. They can provide infrastructure for it.
This is why we from the start have engaged with an established company, providing us with critical infrastructure, that allows us to focus on designing the perfect tungsten wired bulb.
A new era of tech
PropTech, InsurTech or FinTech are some of the terminologies that are created to describe innovative companies that take on innovation challenges in established industries. In Denmark, there are several of these companies, i.e. within the financial sector (Lunar Way, Pleo), the insurance sector (Undo) or the property sector (Brickshare).
Keyhole lies as a hybrid between FinTech, InsurTech and PropTech.
What is true for most of them is that from the start, they relied on established industry partners to take off from the ground. I.e. Undo partnered with Tryg Insurance, Pleo partnered with Mastercard, Lunar Way with Nykredit, etc.
As emphasized above, the power of a hungry for innovation and well-established company in a large and cumbersome industry can make room for an enormous potential in terms of a partnership.
The crucial ingredient is agility
To create the desired value at Keyhole we have partnered with Nordic Guarantee. This enables us to focus on creating the best user experience surrounding rentals, and at the same time have their expertise as the financial backbone of our business.
Nordic Guarantee = established industry player + innovative and agile mindset
For a partnership like the one between Keyhole and Nordic Guarantee to work, agility is crucial.
Per definition, a startup is “a temporary organization designed to look for a business model that is repeatable and scalable” (Steve Blank coined that).
But what is also the case is, that startups have very limited funds. This means they can only survive for a short period of time, and they need to find their repeatable and scalable business model very fast.
Therefore, it is essential, that the established industry players are ready to engage with the blitzing speed of a startup.
Just to give you an example of the speed we are talking about, it took exactly 3,5 months from we first engaged in dialogue with Nordic Guarantee until we agreed on receiving an investment from them, as well as establishing a commercial partnership along with it. This could not have been achieved without the agility of this established large company. It is one of the crucial keys to success in the collaboration between the established industry and startups.
At Keyhole we are now working at a blitzing speed on leveraging this collaboration to create an amazing “tungsten wired bulb” for the rental property sector.
We are very much looking forward to the journey that lies ahead, and we are a firm believer in the strength of joint forces between Nordic Guarantee and Keyhole.
