Posted by: David Croslin
Funding, innovation, invention, Startups, Venture Capital
I have talked to thousands of startups over the last 15 years. And most of them make mistakes that dramatically limit their overall potential for success. An unbelievably small fraction of startups succeed and there are good reasons why.
The British were the first to fully exploit radar as a defence against airplane attack. And it had a huge impact on the outcome of World War II.
I am not a pilot. I have often dreamed of flying a fighter jet. Maybe someday I will get to fulfill that dream.
In all of the best modern warfare movies that include fighter jets, you will likely hear the line “They have locked on to us with their targeting radar!” Or you will hear the warble of a radar detection alarm. Man oh man. If I was a pilot and anything like that happened to me, I would have a really hard time not ‘punching it’ straight up and away. That radar warble would probably mean I am close to dying.
Startups don’t seem to understand that the existing competitors in the startup’s markets have radar. Unfortunately, there is no warbling radar detector to warn the startup. And once exposed to the radar, startups normally don’t stand a chance.
Initially, it’s not all that dangerous for the startup. Large companies are very bad at monitoring their radar. A startup can go undetected for quite a while. The period where they are not detected is generally the early growth stages of the startup when there are few visible signs of the existence of the startup. Some large companies never recognize the startup’s blip on their radar and the startup gains a leadership role in the market. This is pretty rare.
Once many startups get their product in place and get some funding, the first thing they do is challenge the existing big boys in the market. And do you know who monitors the radar systems at the large competitors? It’s the sales team. The minute that a customer or potential customer brings up the capabilities of this mysterious startup’s products, then all defensive forces within the big boy will begin to be focused on the startup. Those defenses will quickly shift to offensive attacks and result in direct confrontations with the startup through price cuts, discounts, lawsuits, etc. Nothing triggers the radar watcher’s deadly attacks faster than a potential impact on sales commissions! These aggressive attacks hit at the worst possible moment for the startup – when they have limited cash on hand, zero cash flow and desperately need to get a foundational sale.
I was contacted by a startup several weeks ago. They had a truly disruptive technology that they had patented in multiple countries. I saw huge potential for the technology in multiple markets. Then the startup’s CEO told me that they intended to compete head on against three of the largest technology companies in the world. I told them to fly under the radar. I told them they should target their technology into niche markets that were unserved or underserved by the giants. They didn’t get it. They told me I didn’t understand. We went our separate ways. I figure the odds of them winning are about as close to zero as you can get.
Don’t make a sales guy at one of your big competitors fear that he might lose the commission that he needs to pay his mortgage. As a startup, you will likely die in the dog fight that ensues. Fly under the radar.
I will be talking more about flying under the radar, targeting markets, etc. in other “Mistakes” posts.
This is #9 in a series of 50 mistakes that startups make.
I am looking for a company that I can work with on their road to success.
I am the former Chief Technologist at Hewlett-Packard and the Chief Product Architect at Verizon. I hold 25 granted patents that are referenced by over 400 other patents. I have started five companies and driven them to success. I have two startups in stealth. I was on the M&A committees at HP and Verizon.
Drop me a note or connect with me: firstname.lastname@example.org