Getting to "yes" in a world of "no"…

Archive for July, 2015

Who should be on the other side of the table?

I’m sorry to have to bring this up, but over the last few weeks it feels to me as though startups are reaching some kind of tipping point: they have become a kind of modern cargo cult. My son, emboldened by the descriptions of startups and pitching permeating the media, has occasionally begun trying to lecture me about New Business, innovation, invention and all the rest of the same sorry mess

Eskimos / ice etc.

I want to inspire him, sure: but how can I get across to him that even if you have an incredible idea, have a powerfully persuasive plan, and can demonstrably prove that you are utterly brilliant at executing such plans, pitching conceptual businesses is an extraordinarily poisoned chalice?

For when you go a-pitchin’, who is on the side of the table?

* Grant-giving organizations – I don’t think so. *choke*
* Angels – really? Really?
* Angel syndicates – hilarious.
* Crowdfunding – good luck with that hoverboard, matey.
* Banks – banks and conceptual business are like oil and water
* Peer to peer lending – interesting concept, but very hard to find a middle ground.
* Private equity – not unless you know all the partners really well, and can scale your concept up to a $5m investment round
* UK Venture capitalists – not unless you have appeared on Newsnight and can scale your concept up to a $10m investment round
* US venture capitalists – not unless you have appeared on Fox News and can scale your concept up to a $20m investment round

In reality, startups circa 2015 have to look at different tables entirely:
* spin-in (where you sell revolutionary ideas into large, late-lifecycle corporations that have become innovation-free zones)
* buy-back customer-funded (where your major customers own you for a period of time, but you have a performance-led buy-back option)
* customer-driven pitches (where you build up a pre-sales relationship with one or two large customers)
* supplier-driven funding (where you build up a relationship with a factory that owns moulds you are deriving your product from)
* etc etc etc

In short, conceptual business pitches now need just as much active innovation for the funding-to-market business model driving their business as any hardware, electronics or software innovation. In many ways, the Widget part of the business equation has become the easy bit: funding, building out, and selling in is where the real innovation bottleneck now is.

But how do you squeeze such a radically different worldview in a PowerPoint presentation deck? It’s really not about high-concept Tech any more, it’s more about having a genuinely integrated approach to business that sees all the parts of the business landscape and finding the precise ways they can all link together that gives all the parties what they are looking for. In short, starting up is now actually all about business configuration innovation, if you can accept that as a genuine phrase without gagging. 🙂