Old Rules for New Start Ups
Friday, November 8, 2019 at 9:30AM
Love technology; focus on business
Ninety years ago, my father grew up in a country town in relative poverty. He left school at age 12 and got a job in a general store. That lasted til the Great Depression. The store closed and he joined the unemployed.
His next stop was a start-up.
One hundred miles south, a town in the neighbouring state was enjoying a spectacular wheat harvest. A friend owned a truck. Why not take the unsold inventory of the now-closed general store and sell it in the more fortunate town?
That beta test worked and the idea got traction. They spent the rest of the depression moving unsold supplies from depressed markets to more prosperous locations where they’d park in the main street and sell off the back of the truck. They survived the Depression. So did their families. He was a successful retailer for the rest of his life — although he did have to take a few years off to fight in a war.
Basic principles still apply
Matching supply with demand is not just a definition of economic equilibrium. It underwrites most successful B2C ventures and it doesn’t change with technology. Airbnb matches an under-utilised inventory of residential space with latent demand. It’s the same model as Dad’s cross-border retailing. Both were based on mobile delivery. One delivered online; the other on road.
Technology gives us a way to quickly connect to a wider clientele in a far more convenient form. AI will simply make it more so. Yet focussing on the system can take our eye off the breadth of the opportunity. Amazon spent many years only selling books. It turned out that the delivery system, not the product, was the asset.
The power of convenience.
This is the key driver in startup momentum. Watching a product demonstration recently a potential investor made the inevitable comment: “Wow! You did all that in three clicks!”
That’s exciting, but it only converts into a business model when you work out how many customers are also going to say “Wow!”
Other unchanging commercial principles can help product development. Want to fine tune your sales process? Take what was once called the Decision Journey. It starts with the customer becoming aware of your product or service, then considering yours and comparing it to others. Next, the intention to buy, then the actual purchase, on to implementation, possibly followed by support services, then cementing the relationship and hopefully maintaining it with further transactions. Nine steps in all. Not all will apply, but all can be done with technology.
These baby steps take you from testing market perception through to gathering customer data and building a pipeline. Each point along the way asks questions about who else you can connect with. You’ll get digitised along the way.
This process doesn’t require a massive investment. It simply applies old commercial practices. You can do it online, or with a channel partner, or physically via the post or even a pop-up. My father used the back of a truck but the rules haven't changed.
Reader Comments (3)
A perfect picture of transitioning from old to new and using AI for exponential growth.
Well said.
That is a terrific piece. Fabulous - thank you. Cheers to Patrick for his illustrations
I love it and the timing is perfect.
I am still laughing at the cartoon – ‘Our firm is like a family … and you are only adopted’.
Have a great 2020!