Why Technology Based Disruption Will Always Prevail
It’s hard to calibrate precisely, but, when you review the past startups, successes and failures among tech companies, the overriding pattern to me is that of standard deviation. Along with the number of absolute releases by a given team, it’s easy to predict success or failure. By releases, I mean publicly accessible, no holds bared, open to everybody kind of releases.
This isn’t some closed release, invite only scheme. Standard deviation and the number of derivatives away from the norm will always be a moving target, of course. And the appetite of the investment community around how many derivatives from the norm your plan needs to be to compete will always fluctuate, even if the optimal number has been previously established.
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Given the atmosphere of competition, increasing tech savvy and related trends, it’s easy to see how investments will continue to play a major role in the digital landscape. The rare exceptions will be things like Craigslist or PlentyofFish where the business manages to grow and become something despite the crazy competition and massive resource inequality. When you raise money, it’s perfectly normal to start operating on the basis of the next monthly or quarterly meeting, and even out the personal style of the management team.
What are the commonalities among those startups who do well, or who are bootstrapped and achieve massive success?
There are a few keys in both of these situations, but, there is a primary key which trumps all others. I have seen so many companies win by simply having the most operational productivity, it’s a bit unreal. There are a few ways to measure this, from page speed when downloading the user interface to interacting with the application directly, the truth is, nobody ever wants a slow loading web page.
Despite the studies that showcase what the average customer experience may be, your business will never be at a disadvantage for investing in speed. Similarly, if your site is the only one in the category which offers 100% functionality with 25% less hoops, you will win over the long term, all else being equal.
The amazing thing about focusing on these features of a product is that you create sustainable competitive advantage with each release, forcing the market to follow you. Even a disruptive innovator, with two or more standard deviations ahead of your product, will only be able to maintain a slight edge in the short term, as you product development cycle catches up with theirs. In this fashion, many companies I have worked with have simply outclassed those who would compete in such a category, depriving them of the oxygen their business so desperately needs.
Aside from focusing on operational efficiency and productivity, startups that do well also frequently obsess over their viral loop. For every one hundred customers, how many proactively would tell friends, given the right incentive? These stats are priceless when it comes to building surprise, delight and enjoyment into the product experience.
In summary, a few of the keys to disruptive products are:
- Output per employee
- Disruptive pricing strategy
If your business incorporates freemium, fast product experience and quantifiable metrics around output on a per staff member basis, your company will always trump the category you compete in. The movement towards the, “real time web,” has been happening for a while now, and products which deliver instantaneous, delightful results will always trump those which deliver dated, uninspiring utility.