Innovations sound exciting … so what? (From Deb Dutta)
De la experiencia en “roadshows” internacionales, que estoy pasando en los últimos meses, sobre todo USA y Singapur, he conocido algunos “influencers” e inversores con un conocimiento excepcional sobre cómo poner en valor una startup, para que pueda llegar a su capitalización. Desde el seed capital, a la ronda series A, series B y IPO, todo ello es un proceso lento de muy alta exigencia y riesgo, que requiere mentes claras y valor probado.
Uno de estas personas excepcionales en su experiencia es Deb Dutta, es un claro "influencer" con base en Singapur que lanzó exitosamente dos compañía en Silicon Valley: Mcafee y Brocade Communication. He pedido a Deb que escriba en mi blog y comparta con nosotros sus conocimientos y sus ideas precisas.
Os presento a Deb Dutta,
Innovations sound exciting … so what?
Okay, so what does Innovation mean??
In the world of research, startups and venture capitalists the word ‘Innovation’ is tossed around frequently. Sometimes, rather loosely. As this realisation struck me, I took some time to search its roots and match it with my own perspective. The definition that came closest to my belief was - The process of translating an idea or invention into a good or service that creates value or for which customers will pay. (Source: http://www.businessdictionary.com/definition/innovation.html#ixzz392858C3N)
Double click the word, and you get two primary forms of Innovation. First, Sustainable Innovation i.e. ideas, process improvements or inventions that ushers small increments in Value from what is 'status quo'. These innovations though important, are fairly commonplace in most government or private funded research labs. That said, they are hardly much to write home about in a world mired in a gazillion distractions that customers, investors, analysts and anyone else who matters is exposed to. The sexier form of innovation is the ‘Disruptive’ kind. The one involving two young adults and their dog, slogging in a garage startup with a game changing idea and stars in their eyes. Hoping to change the world! This is the type of work that (only for a miniscule percentage of startups that spawn every day) make billion dollar valuations. Then comes a big ticket acquisition, even before the company celebrates its fifth anniversary. A fairy tale ending as our two founders barely in their twenties, end up with billion dollar net worth between themselves!
What does it take to successfully Innovate?
I have tried to study the characteristic differences between the very few organisations that make the cut to this ‘high valuation - big money’ club and the countless others who do not. There is a basic fallacy that lies within. You see, every game changing entity is usually built upon a single brilliant idea that spawns out of an engineering mind. Think Woz for Apple, Paul Allen for Microsoft or even Zuckerberg & Moskovitz for Facebook. The brilliance that incepts then evolves and undergoes metamorphosis - a viable proposition emerges. Then something happens (or fails to happen)! One among the two guys in the garage shows the sheer drive to spin that brilliant idea on the top of its head till it transforms into a value proposition that will lead the end user to not only ‘adopt’ it, but ‘pay’ for it directly and/or indirectly. That is the crux!
Steve Jobs did that to Apple, Bill Gates to Microsoft, Greg Reyes to Brocade and even Sean Parker to some extent to Facebook. These extraordinary sales and marketing juggernauts suggested, recommended, even brutally demanded tweaks to the initial proposition or the outcome that transforms everything! They are able to lend their commercial and business finesse to turn that brilliant concept that their engineering co-founder incepted into products and platforms that users around the world will sign up for, use compulsively and be seduced in some form of a designed plot that throws money into the coffers of the company. Think about this for a moment as an investor. Here is a company that starts demonstrating steady acquisition of customers/subscribers, shows growth in the extent of usage of the product or service and shows customer commitment by their willingness to pay directly or indirectly (through advertisers or other stakeholders). Profitability and positive cash flow is bound to follow. Assuming that the addressable market is significant, what else will you as an investor seek?
Easier said though! An engineering mind revels and thrives in the wonders it can weave. In the magic that it is able to create. It thinks that it knows what is best for the user. A commercial mind is contrarian in its approach - it needs to think for the paying user. What will it take to make the platform not only viable but valuable for the customer to put his money on the table. Solve a problem that really matters, or make things easier to do, or make it cheaper, quicker, or simply give them an insane amount of joy in doing things in a particular way. AKA - the user experience. Many ways to skin the cat here, depending on the product and the target customer.
Brilliant engineers are never devoid of ego and strong beliefs. Not a bad thing really - but when you shut out everything else and listen to your own voice over and over again, the brilliance of the initial idea starts to dilute, even dissipate due to lack of user feedback. The founding team gets lucky if one of them has the commercial smarts to tweak the model and create a commercial value prop while articulating the product’s value simplistically for the ‘not so smart’ outsider to grasp. This guy has to be, not just a contrarian thinker but with abilities to drive his beliefs to actions and results often in direct conflict with the other co-founders. Eduardo Saverin (one of the Facebook founders) is a representation of a contrarian idea bearer who could not muscle in his opinion (it does not matter whether he was right or wrong) against the dominant beliefs of Zuckerberg. Sean Parker was able to change this when he arrived in the company. Gates did this brilliantly in the early days at Microsoft and Jobs did it twice over during his two stints at Apple. These people shaped brilliant concepts into iconic products and services that built their billion dollar empires.
Do not forget your target customer - he is the final arbitrator!
My repeated mentions of the value add that the commercial guys bring to the table is not at the expense of the engineers. The start up team needs to first ensure that it has a variety of skills within - then remember to leverage all these competencies wisely. The success of the innovation and the company will depend on every internal skill being given an equal opportunity to view and drive its perspective. That makes the clock tick.
If you were launching a new state of the art clock, do not show its brilliance from your own perspective. The customer is the final arbitrator. Stand in the customer’s shoes as you pitch its virtues. An appealing design that matches the discrete elegance of the mahogany sideboard. The clock face that glows in the dark when the bedroom lights are off. The selectable digital and analog faces that switches between the retro and contemporary look instantaneously. The three time zone display for the convenience of the jet setting time lord’s family. The long battery life that saves cost. The time sync with your computer or phone that eliminates manual adjustments. At the risk of sounding like a timepiece salesman, I could go on for ever. These are virtues that the customer can associate themselves with. These are 'use cases' that make the customer to put down money for this clock for reasons beyond just showing time like the other clocks.
The brilliant engineers have built these capabilities into the product - the job of another group is to translate these capabilities into tangible, compelling benefits for paying customers. When I was running around with a bunch of brilliant engineers while we were building our startup Contrail Systems in 2012, my single mantra was to take the capabilities of our Software Defined Networking platform and convert it into benefits that our Service Provider, Cloud System Integrators and Enterprise customers could convert into tangible benefits - i.e. save cost, increase efficiency or increase revenue. At the end of 2012 we were acquired by Juniper Networks for many of these reasons. We continued that philosophy while pitching our product even in the new setting and have seen customer acceptance and its reward grow through the months and years that followed.
Think and build the next insanely cool thing that the world is yet to see! Make sure, that you wear the customer’s hat while you do so. Make it easy for the customer to instantly understand how he benefits from it. The more simple it is to understand - the larger the value it entails - the more successful your company will be in every measurable metric!
By: Deb Dutta.
Tech executive, Investor, Advisor & Author ( of “Success is an Exaggeration” - XlibrisPublication)