Startups, technology isn’t everything!

The Startups I have the opportunity to work with fall into several different groups. The most successful are those who can quickly find product-market fit. And they can build business scale. Another type are the teams that focus on technology. And they believe that by refining it, they will create a competitive advantage. It is the right approach. However, when it boils down to falling in love with technology and treating other business elements with neglect, it can be the nail in the coffin.

For several years, every year, I analyze over 1000 startup projects. With the interesting ones, I like to meet and personally verify the project during a conversation. Several dozen of such teams can count on receiving an invitation to the acceleration program. A few of the best get investment proposals. The most important factor that makes some startups successful and others fail isn’t the idea or technology. It is also not the business model. Nor access to external funding. The most important is the timing and the team behind the project. Hitting the market at the right time with your product and having the right people on board determines whether you succeed or fail. Below are some data from a study conducted by IdeaLab. The results show the percentage impact of a particular factor on your ability to succeed as a startup:

• Timing – 42%
• Team – 32%
• Idea – 28%
• Business model – 24%
• Funding – 14%

The history of startup projects is full of cases where lack of proper timing meant that the technology had to wait a while before it was worth delivering to the market. During my conversations with founders, they believe that they are doing something innovative. And technologically, they are much better than their competitors. After all, they have perfected the technical side project in the last few months or even years. Unfortunately, often also in isolation from real market needs. What is the value of a super technology that its founders cannot sell? Not to be outdone, I will quote the results of a study conducted by CB insights, which show the most common reasons for startups’ failure. These include:

• Lack of market demand – 42%
• Lack of financial resources – 29%
• Incomplete or inadequate team – 23%
• Competition – 19%
• Poor usability – 17%
• Product without a business model – 17%
• Poor marketing – 14%
• Ignoring customer needs – 14%

Technology is important. It builds a competitive advantage. But you can’t bet on it alone. Your customers will judge its usefulness with their wallets. Without them, your business will not survive. Startups that focus too much on developing technology often blame customers for not understanding its uniqueness. However, the problem isn’t the customers. It’s the lack of proper communication. It is because such startups are unable to explain the value they deliver. Technology in itself won’t be such a value for everyone. You will convince the customer by the fact that you solve their problem. If we start elaborating on our solutions’ uniqueness instead of getting into the customer’s perspective, we won’t achieve anything. Such a message will reach only a narrow group of technical people or enthusiasts. However, this is probably not enough to sustain the company. You have a problem with focusing too much on technology when:

• Customers don’t understand the uniqueness of your technology
• You fit a market problem to the technology you have instead of understanding the problem and using the technology to solve it
• Despite lack of interest from the market, you think that everything will change when you deliver a new, improved version of your technology in a year or two
• Your priority is to get grants to develop your technology, not to sell it
• The purpose of your startup existence is to build technology
• Product development is based on a technology roadmap instead of customer/user feedback
• You don’t analyze how users use your solution and what elements of it they use
• You think that all your competitors do not know the technology and will never be as good as you

Building technology can be advantageous. You can feel like a creator because of it. For many startup founders, focusing on technology is safer than building a business. In this case, you can stay in your comfort zone. However, the later you go out to the market, the more painful it can be. In that case, what you’ll regret most is the time lost on a project that no one wants or understands. You could have spent that time doing something that people need. Technology should allow you to get to your goal, not be the goal itself.

Author: Wojciech Drewczyński