Long gone is the era of traditionally infant and agile tech companies sprouting up in Silicon Valley and NYC, to experience prolonged histories of success. There is now much more of a life-cycle and most of this doesn’t include staying a private company. Tech startups have gone corporate. Facebook, Google, PayPal and Tumblr are no longer just “cool” tech companies that would be “exciting” to join, they are now legitimate businesses that require structured corporate processes. Facebook, Google, Oracle and the like are our modern versions of Ford Motor Company, Carnagie Steel and Berkshire Hathaway. These companies and their execs have their finger on the pulse of innovation and their hands on the reigns steering the market. Much like the eras of manufacturing and finance, formerly small dorm room companies now pull the strings in the global economy and while their impact is seemingly significant right now, it is just beginning to become a staple of economic influence. This is big techs era of acquisition and monopolization.
Google, Facebook, Amazon and others have seemingly left the rest of tech behind, building the goliaths that will shape the future of technological innovation. They have gone from the originators of innovation to the acquirers and incubators of innovation. Nest, WhatsApp, Braintree and others like them are the innovative companies that have been gobbled up for these purposes. This is all in an effort to acquire the three most important items for the tech giants … innovative companies, users (most of the time they just mean impressions to drive data aggregation and marketing revenue) and engineers. Ebay, for example, through PayPal is arguably building a payment monopoly with Venmo, Braintree, etc. Are Dwolla, Stripe and others next on the list of acquisitions? If you build a company that develops an innovative solution with traction, has a devout following and an impressive engineering, there is a high-priced bulls-eye on your back. What seems like an arms race for companies, is really an arms race for people to either build stuff or profit from. I am interested to see if the Google’s of the world, currently leading the industry, eventually go the ways of former innovative companies like AT&T that are currently struggling to innovate and stay relevant. The question you now have to ask yourself is, where do I fit in that arms race?
What is a startup now? It is important to clarify that Google has not been a startup for many years … its a big tech company. Startups are in a stage where they should be producing solutions to promote efficiency and effectiveness for their target user. Startups must also focus on building a solution to a problem, instead of another layer to a problem because many companies claim to be a “game changer”, but few are even close. Lastly, and most unfortunately for the sanctity of independent innovation, you should be targeting acquisition by an existing titan. The industry is incredibly saturated with people building shallow personal brands and companies trying to launch half-baked solutions. Startups have become what finance used to be and manufacturing was before that, with every ivy leaguer and ambitious grad thinking they are the next Zuck. With that comes the smoke screens and facades you have to see through as the industry changes. It is important to innovate and differentiate because there is more smoke to see through than ever before.
How do you gauge what not to do? First of all, to all the hipsters trying to create the next Pintrest, just stop because you’re embarrassing yourself. Secondly, to all of the companies claiming to be building brilliant media technologies to help marketing agencies and brands be more engaging and attractive, just stop because you’re wasting everyone times. (Side Note – I see the majority of marketing personnel will be replaced by algorithms and other forms of lean tech in the next 5-10 years so plan accordingly.) To see this in something we can all identify with, look no further than CRM … tools that should be making your life easier and piling up into over-complicated and ineffective. The simple solution to this is Customer Development, know what your market problem is and what your target customers want before you try to figure out what you’re going to build. Educate yourself before leaping into building a company, because there’s nothing worse than costly (both time and money) hindsight that could have been avoided.
How do I startup smarter? This goes back to what I said earlier, startup innovation should promote efficiency, effectiveness and build a solution rather than a layer to a problem. If a startup isn’t focusing on a type of technology or service that is making a person more efficient or a company more profitable, then the chances of success are slim. You don’t have to try to build the next Amazon or Google, and by all means I don’t think most of us should even try. However, break the process and desired target down to a component of a business. What is a major problem that telco’s, commercial real estate companies, and other industries have that they are too big to solve and that you can be lean enough to solve? Take drones for example … you probably aren’t going to make a better drone because those lines are being drawn and the players are far bigger than a small startup is able to compete with. The opportunity for innovation is making that drone smarter, safer, etc whether it be a specific component or a specific software. That is a very specific example, but you get my drift and the same can be said of any industry.
Where do you fit in the arms race? Every entrepreneur has a goal, and they generally aren’t very different from one another. Some want to build a shallow brand for themselves and ride that wave, some want to become incredibly wealthy, some just want to be told what to build, and some are visionaries that see the opportunity to innovate 24/7 and want to significantly improve some aspect of human life. As I grow as an entrepreneur I could care less who knows my name, but I do want them to know what I build. My goal as an entrepreneur is to build brilliant and innovative solutions to make people more connected, effective and happy … while also making a very comfortable amount of money. That could lead to being recruited by a larger tech company, hovering around infant startups, or building a companies that is eventually acquired. The beauty of startups is that all of those outcomes are options and you have almost complete control over that path. Where do you fit in the arms race?