03 Jan The Most Important Thing Every Tech Founder Needs to Know…
(This helpful article, written by our FYELABS CEO/founder Suvojit Ghosh, addresses powerful insights, based on real-life experiences in technological innovation for startups, designed to help any new tech company.)
I’ve worked with just over a hundred startups. So now I consider myself somewhat qualified to express my opinion on an evergreen question, ‘What comes first, the chicken or the egg?’ Or, in startup terms:
“Which amongst these two is more important to tech-founders: the technology they are selling, or the customer they are selling to?”
In pursuit of this answer, I’ve discovered two types of founders. Just for fun, let’s call them ‘Type A’ and ‘Type B’. I will define these two types of founders as follows:
The ‘Type A’ founder(s) has very intimate knowledge of a real-world problem. They’ve made it their life’s mission to solve this problem. Often they’ve even experienced the problem directly and thus can relate to the customers that are willing to pay for such a problem to be solved.
The ‘Type B’ founder(s) have a great idea, and an exciting epiphany! Often they’ve invented a new technology that they believe will solve a problem. In this case, their opinion is that this technology must warrant a successful business. They feel there are people out there willing to pay to use this new technology. And so they make it their life’s mission to find the people who will.
This classification is as old as time itself. There are pundits who will tell you without blinking that ‘Type A’ founders have much better odds of success than their ‘Type B’ founders counterparts.
And their reasoning is infallible; if you know your customer well enough, it is much easier to build a business.
However, there is also a very strong counter-argument:
True disruptive innovation often requires an extraordinary level of ingenuity!
Thus, those in the pursuit of innovation, the ‘Type B’ founders, should not be throttled by worldly considerations such as revenue and customers. The latter are trivial considerations that can be appended to form a company later in the game.
However, the problem is that a prolific enterprise has developed around supporting ‘Type B’ founders, starting from campus-based incubators all the way up to certain venture capital funds. In fact, their impact on popular media outlets is so great that the misnomer of:
“If you build it, they will come” (Field of Dreams) is never challenged until it is too late!
Most of the aforementioned enterprises justify their existence based on a few outliers: the ultra-successful examples of seemingly ‘Type B’ founders.
Google is a classic example.
The famous Stanford duo envisioned that their PageRank algorithm is a must-have to navigate the ever-growing ocean of content on the world-wide-web.
However, what gets missed is that at some point in their journey, Google transitioned from a ‘Type B’ to a ‘Type A’ organization.
But their idea, that “people will pay for better search,” never quite panned out. (The entire story is a lot more nuanced than my oversimplification. Here is a good read on it: https://tinyurl.com/4cyutbau).
So Google transitioned to a ‘Type A’ value proposition: a market tested to see if people will pay to get their names in front of those looking for certain types of information. (In fact, did you know that initially these brilliant ‘Type B’ founders were quite publicly against advertising on search engines?)
If you are looking for instructions on how to use hammers, you would likely want to know that your local Home Depot is having a half-off sale on nails, so obviously, Home Depot would be very keen to get this information to you.
But such advertising was not new.
In fact, Google was later sued for infringing on patents that protected them. However, marrying it to their exceptional search algorithms was a match made in heaven! So much so, in fact, that they had enough funds to settle the lawsuits out of court.
Just like Mr. Page and Mr. Brin, I started my first startup NanoSpin while working on my PhD at Virginia Tech. This was over a decade after the Google guys, and startups were now quite fashionable on campus. We built an entire company based on a technology out of my PhD research. We were fueled every step of the way by the ‘Type B’ support enterprise.
However, about a year in, and thanks to the NSF I-Corps program, I was lucky enough to have a certain Mr. Steve Blank’s voice drilled into my head every single day:
“Get out of the building!” he’d say, over and over, again and again, to the point where I was hearing this in my sleep.
Soon, I realized what the remainder of the ‘Type B’ support enterprise failed to communicate:
‘I had to marry my ivory tower ‘Type B’ idea to a ‘Type A’ value proposition!’
(It was a little too late for NanoSpin, but I’ve used this skill countless times in my career since then.)
And so I try to tell my story to each and every single first-time founder (or student entrepreneur) who would care to listen. Some of them do listen, but oftentimes, most doubt me.
Those that doubt are enamored by the ‘Type B’ support enterprise that are egging them on to the noble pursuit of disruptive innovation: building professionally designed pitch decks and precise elevator pitches.
In the fanfare of highly popularized pitch competitions and startup showcases, these founders have no incentive to work on the one thing that matters above all: figuring out who they are selling to.
This brings me to the point I have been circling around this whole time: the most foundational element for any startup is their customer, and not their technology.
In my experience, as long as a founder is able to accurately identify a customer segment, everything else has a way of falling into place.
On the other hand, being able to create a brilliant piece of technology does not guarantee that there is a customer who is willing to pay for its use. Of course, it may still happen serendipitously, or as in the case of Google, through multiple pivots. But it’s often a rare occurrence and a very difficult journey to say the least.
So to summarize: the customer comes first, not the technology!
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