Post 20: Innovate. Differently. (Observations from “Circle One”)

Dear Friends,

When the term “Great Startup Companies” comes to mind, in the context of legendary Silicon Valley startup companies back in the 1970’s, we tend to portray a certain picture. We will most likely imagine Bill Gates and Paul Allen starting Microsoft (April 4th 1975) or a year later, Steve Jobs, Steve Wozniak and Ronald Wayne creating Apple (April 1st 1976). We will think of outstanding entrepreneurs, technology pioneers and market visionaries. Most likely, individualists, geniuses, or maybe young people who dropped out of some Ivy league university, because they did not think they really had to spend so much time on burdensome curriculum.

You’d think that these entrepreneurs saw something others could not even dream of, not to mention realizing, and they had to build great companies out of their clear vision or fulfill great dreams. Just like those other stories of “built to last” companies such as Intel and the creation of the micro processing world.

These startup companies were challenging incumbent industries and old ways of thinking. They would embark on a secretive program, working tirelessly under the radar screens, away from the crowd. In our vision, we see a small “garage operation”, in one of the little and quite neighborhoods in Silicon Valley, living and working around a start mission, challenging technology barriers against all odds. Even financing was a challenge and these entrepreneurs had to struggle in order to find a visionary seed investor, who would believe in them and maybe even understand the magnitude of what they had in mind. The alternative would be raise funds from a close circle of family, friends and fools (the famous triple “F”).

Their biggest challenge was how to “go to market” with their new product. They had to expose what they developed as they surfaced out of their garage operation, just to find out how hard it was to convince people that what they have built really works and teach the public what can be done with these great new products. They faced difficulties in raising follow on capital as their business model was questionable and doubtful; they needed to take care of scaling up the business – manufacturing or production, sales, marketing, distribution and more.

Their prime markets where concentrated in the U.S. Initially. “Go Local”, and then focus on scaling up and expansion in the entire U.S. market. Other markets were almost non-existent. It was U.S.  and the “rest of the world” (ROW).

But that was long ago, and those were different times. It was before the global rise of the startup phenomenon and before the age of the Internet. So much has changed. Think for a minute, what you have in mind when you envision modern Great Startup Companies nowadays.

Yes, there are still legendary entrepreneurs like the ones mentioned above and they even “think big” in terms of addressing global markets, solving great needs for the human kind. Many of them would like to be considered as “serial entrepreneurs” who did not settle for “just” one big company, but rather founded, built or helped create more than one great company.

In today’s world, almost everyone can become an entrepreneur. Even without a clear idea of what their startup company is going to develop. Before there was an idea and even before there was a general direction or vision. Many of them will not start their companies alone. In many cases today’s entrepreneurs start companies together with friends, as the startup concept became sort of a young generation’s “way of life”. In a world where jobs’ security declines and new jobs are created out of a digital world – the youngsters are the ones to carry the mission. This is why universities cultivate entrepreneurship programs; when it comes to the young students, it becomes more important than MBA programs. You want to be an entrepreneur? Drop-in! Join an “Entrepreneurship Program”. Incubate your idea. Accelerate your fund-raising efforts. Crowd source your product. Raise money from seed-investors / pre-seed-investors / Super-Angels / Micro-VC / crowed funders / Kick-starters. The cost of starting up is down and the funding sources continue to grow.

Do not look for a garage operation in Silicon Valley no more – go to one of the “Shared Work Spaces” in one of the main cities down town centers, following the creative communities of painters and artists. It could be downtown San Francisco, but could also be in Berlin. You do not necessarily need to build the next Apple; you can find the next “shared economy” new idea ahead of everyone, and run as fast as you can. Some of them will become great companies and others will perform incremental progress. You are not working against slow moving incumbents, but rather compete with other agile startups. And these are not only Silicon Valley startups, because innovation is done everywhere as “shared work spaces” are assembled around the world – in NYC, Tel Aviv, London, and China.

Startup challenges are different today. Exposing your compelling product is easy – you can leverage the Internet as your sales & marketing force and use it as a distribution platform. But you will have to show you can grow faster, and be differentiated from other startups. You will have to show growth by KPIs, and down the road you will have to figure out a business model that makes sense.

So we continue to innovate and build startups, bottom up, but in a much different way. And as we see these changes, we can be sure it will continue to change, and we will have to adjust to a new world of innovators every now and then.

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