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It is getting much easier for developers to launch a new service or bring a new device to market. But a lot more goes into building a successful business than a good idea. In addition to a startup building a good product, developers need to think about marketing, attracting talent and building a supply chain for physical products.
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I caught up with Mark Goldstein, founder of Bad Ass Advisors and manager of Efficient Capacity, an early startup fund in collaboration with Marc Benioff, to find out about what developers can do to prime themselves for a successful startup.
Goldstein said that five major trends are coming together to accelerate the process of new business ideas faster:
- There is readily and freely accessible data about markets available through Amazon and Google. Goldstein said, "This gives startups an idea of evaluating the interest in their product or service. Google Analytics in the Amazon Marketplace facilitates the ability to see what products are selling and what products are working."
- The Jobs Act promises to open new marketplaces for raising capital without having to pander to institutional investors. Angel investors have shown that startup investing can be lucrative and good for both investors and launching new ideas. New rules went into effect in May 2016 that lower the barriers that have traditionally prevented regular people from backing promising startups. Goldstein said, "Faster access to capital is a good thing for startups. Look at Lending Club and other loan marketplaces that are taking these loans for small businesses. These are providing faster access to capital than Wells Fargo would have given them."
- Incubator and accelerator groups are coming together to make it easier for developers to share ideas with others in promising new fields. Goldstein said, "This is what the evolution of Meetup has become, where like-minded people can come together because they are in the same room with each other. They will get ideas from each other because they are exploring the same ideas at the same time."
- Marketplaces like Amazon and app stores provide startups with the ability to sell new products faster. Goldstein said, "Sales and distribution channels are now easily accessible. There are now very efficient ways to reach customer segments who didn't otherwise know they used to need your product. This means that companies don't have to build a hundred products to find out whether it is a good opportunity or not."
- The supply chains for creating new products have become more efficient to set up. This means you can scale up to serve customer needs more quickly. It's much easier to develop new physical IoT devices and services that can be mass-produced economically in countries such as China.
Ingredients of a successful startup
These same factors also make it easier for other entrepreneurs or larger enterprises to steal the thunder away from a new startup. Goldstein said, "The marketplace is getting more mature, so a successful startup need to be more careful. The technology barriers to launching new businesses are getting lower. Two developers can write a complete site that does anything in a couple of months. It is no longer about the technology as much is the idea."
Goldstein said that the three key ingredients for a successful startup are soul, good ideas and timing. He explained, "The entrepreneur's soul is the first ingredient. 60% of the successful company comes from a person's fire and passion and their ability to see through walls. The second ingredient is an idea that others have not recognized. The third is the team, technology, tactics, approach, timing and just luck. It could be the most amazing idea and incredible team and the timing is off. It could be too early, too late, or some kind of macroeconomic crisis comes along."
Think beyond money
Better access to capital is good for launching companies. But Goldstein believes that building a successful business requires more than just money. In the early days of venture capitalism, the VCs had in-person meetings with successful startup founders to help prime the team for success. But Goldstein said that VCs have lost some of this focus.
In the old days, VCs would meet with the founders on a monthly basis to report progress. But that type of cadence and tradition does not happen as much today. The VCs are investing into too many companies and there are legal liabilities associated with being on the boards. In addition, the investors don't have enough time because they are too busy.
To help bridge this gap, Goldstein has launched BadAssAdvisors.com, a sort of eHarmony for matching successful startups with relevant expertise for free. He said, "The idea is to connect this community of Bad Ass Advisors to young 'bad ass' companies. We are now up to five introductions per day. The startup needs to specify what they need, which could include helping to find new talent, fundraising or marketing. Bad Ass Advisors matches people and then includes a calculator and legal documents to establish a formal relationship."
Successful startups plan for the future
Some of the most interesting innovations are likely to occur in healthcare, internet of things (IoT) and agriculture. Healthcare is exciting because many of the problems with the healthcare system are unsolvable with today's technology. The money, impact and the size of the healthcare marketplace are huge. Also, Goldstein believes it is important to focus on preventative measures and diagnostics. He is currently investing in one to two new healthcare companies per month.
Mark GoldsteinFounder of Bad Ass Advisors and manager of Efficient Capacity
IoT promises to play a big role in new healthcare products and services. New approaches to telemedicine can light up smartphones to improve communication with doctors. Smartphones can work with other peripherals connected via Bluetooth like stethoscopes, earlobe checkers, heart rate monitors and Fitbit. This type of connectivity is providing superior healthcare and promises to improve the quality of engagement with doctors.
Progressive hospitals such as University of California San Francisco Medical Center are taking the lead in making this kind of change. If they can get rid of the laborious work they can continue to attract doctors and nurses to the profession. Computers and robots can handle many tasks so that the doctors can focus on one-off cases and provide higher quality face time with the people who need it most. New devices for performing wellness checks in home and in urgent care can improve the hospital's efficiency by helping to reduce patients' anxiety about their health.
Agricultural technology is another great opportunity because it is all driven by big data and analytics. Goldstein said, "The innovations we are going to see in [agricultural technology] will dwarf what we saw in the green revolution. This will make it so we can continue to grow and produce healthy food more efficiently. Improvements in agricultural tools and applications are improving the quality of seeds, growing things indoors year-round, and making what we grow healthier for people. The next big wave is reinventing everything with big data analytics."
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George Lawton asks:
What advice would you give to developers who want to ensure their startup is successful?
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