Start-ups get a lot of attention. Their ecosystem is big and busy, with new products or services looking to disrupt businesses in every business sector. Where there is Financial Services there are #FinTech start-ups, where there is Medical and Healthcare there are #MedTech start-ups and in Agriculture or Marketing sector there are #AgTech and #MarTech start-ups also, all looking to challenge established businesses.
Technology has democratised how we can solve problems. Innovation is no longer owned exclusively by large incumbent businesses. Today, with a vision, focus and dedication anyone can build a a company.
But the sad truth is that many of these start-ups will fail. The numbers can be depressing, with some stats showing that nine out of ten start-ups will cease to exist after three years. This after they’ve burned through plenty of money and human-spirit. Being an entrepreneur is difficult.
Founders who decide on trying to make their vision a reality, scrape together all monies they can from themselves, friends or family. This before seeking funding from angel investors, seed, venture or private equity sources.
But failure comes for many reasons, a central one can be the self-belief and stubbornness of the founder, who can have a tunnel-vision in the product or service they are building. For many, the company ends-up becoming an extension of them and this creates a problem.
Let’s be clear, there is a big difference in designing and developing a product and building a great business.
For too many, this blind-faith leads many to assume that the market, the people, will just snap up the product they build. This might have been the case for some companies, but it happens only for the few.
Looking at the FinTech sector, BBVA Bank highlighted six issues that lead FinTech start-ups to fail, these being:
The founders blind-faith in their idea
The belief within start-ups that no marketing is needed or what it’s worse the belief in growth-hacking philosophy
Not appearing professional
Ignoring the power, strength and influence of the established legacy companies
Ignoring any regulatory issues
Not being able to adapt to a changing marketplace, call it blind-faith!
Start-ups work at pace. Once funding has been secured, the vast majority of the cash is thrown at the engineering, the development of the product. Because of the cult of growth-hacking and the view that engineering is everything, whatever is left, if anything at all from a round of fundraising, is spent on what actually are critical business related needs such as marketing, communications, promotional activities or influencer engagement.
Business disciplines that help grow a business, such as communications, marketing, influencer engagement are about the human, understanding them and prepping them to want a new product. And these areas of expertise that help build and protect a business cannot and should not be ‘hacked’.
Incumbent companies rarely do. In fact many established companies have an armoury of people in public relations, influencer engagement, public affairs and lobbying, marketing and much more. All of these focused on building and protecting the business.
So what should start-ups do?
Don’t believe your own hype. If you are looking to disrupt an industry sector, study and learn the competition. Knowing how they make decisions and influence people can help you.
Know your audience. People are fickle, they change their minds on a whim so study them too. Influencer engagement is marketing and carries a cost. Industry ambassadors don’t do things for free.
Know your product and make sure that the messaging around you relates to known needs of your audience. Messaging is everything and how the founders are perceived can be critical.
Branding is important. Established companies build, test and protect theirs and there is a reason for this. They want to be recognised.
Don’t get believe in the hype about Facebook help me scale. No, a great product grew because it was great and met a need.
Technology is transforming society, it is solving problems. But it is the understanding of user-needs that builds great businesses and it is these businesses that grow and sometimes get an multi-billion £/$ exit for the founders.
Growth-hacking is not about doing less or nothing. It’s about being efficient!