If you take a trip across the digital landscape, you will see self-proclaimed entrepreneurs cropping up left and right. Sprinkled across the infinite plots are solopreneurs, proudly self-declared unemployable. These iconoclasts are redefining what success means across entire markets—and not necessarily for the better.
As the story goes, confronted by a friction point, these enterprising men and women set out to fix—rather than complain about—their woes, sometimes disrupting entire markets in the process.
Technology is the Wild West of entrepreneurialism. Brave souls tell anyone who will listen about their bootstrapping and business prowess. Words like “innovate,” “disrupt,” and “digital transformation” are flung willy-nilly. The underlying belief animating this hubris is that technology is a panacea, and everyone—investors and customers—want in.
Well, that’s simply not the case.
Customers transform your product into a business. For all the opportunity seeking and bootstrapping, I see an equal lack of awareness. Creating a solution aimed at profitability and nothing else entirely misses the point of technology.
In my view, before even thinking about technology or solutions, customer discovery must be done in earnest. All tech solutions must solve an urgent and existent problem. The solution must address a real need.
The reason start-ups get around real solutions to legitimate problems is encapsulated by a single word: unicorn.
Unicorn start-ups valued at over $1bn without making any profit are sold to tech-hungry giants for a substantial profit, incentivizing a culture of tech gimmickry. For example, the Snapchat IPO valued the Firm at $24 Billion, despite losses of $515 Million last year. In fact, Snap itself said that it may never be profitable. That’s just strange!
Our love of technology clouded our business sense.
Mark Cuban, billionaire entrepreneur and Shark Tank investor, once said: “Sales cures all.” That’s because Sales are inherently customer-oriented and mission-driven. True, at one point sales were all about the bottom line. But that’s in the past. (Marketing, branding, and the Internet took care of that rub.) Yet, there are still start-ups that aspire to be acquired by tech behemoths without making any profit or innovating in the truest sense.
Nobody gets this more than Leon Emirali, a media entrepreneur, investor, and co-founder of marketing agency Crest.
In a recent article, he questioned those that apparently abandoned the core principles of business in preference of funding, increasingly clocking up losses with an unproven revenue model.
The marketing and media agency I co-founded likely made at least $1bn more profit than Uber last year. We also made $515m more than Snapchat and $450m more than Twitter. – Leon Emirali
It is dangerous to worship an unsustainable and unhealthy image of greatness. Tech start-ups that continuously prioritize investment over sales cause problems for themselves and the market culture.
Back in 2000 it was all about the stock market with hundreds of companies going IPO except for one major difference from today’s investment frenzy. Back then all the hullabaloo was focused around public companies, so even if they turned out to be terrible, investors could still liquidate them, given they were public stocks. The blister today is made up of private investors (Angels, VCs, Equity Crowd Funding groups etc) that are pumping in insane amounts of cash into apps and small tech startups with zero revenues. One must not underestimate the importance of this key difference.
According to the Angel…