In fact, an entrepreneur friend of mine, who made millions on her marketing expertise, asserted recently that most inventors fail in business because they refuse to believe that any business expertise or experience is worth more than 5 percent in partner equity. If you consider yourself a technologist, you probably believe and may be propagating one of the following myths:
- The first priority for funding should be to develop the technology. Outside investors are most interested in scaling a proven business model, not research and development. Thus it’s a waste of time for most entrepreneurs to be looking for investors until they have a product and some customer revenue. Most founders bootstrap product development.
- Fabulous solutions require great technology. Business success requires customers to see a solution as exciting, and they rarely care about the technology behind it. I exhort entrepreneurs to keep it simple, start with a minimum viable product (MVP), and test it out with early customers. The best technologies are barely visible and low cost.
- New technology is so exciting it sells itself. The reality is that consumers and businesses alike are afraid of new technologies, due to the learning curve, potential quality problems and side effects. This fear can easily override their fear of the problem the technology aims to solve. Business people know how to downplay the technology and market the value of the solution.
- Marketing is a necessary evil to mask poor technology. In today’s world of information overload, everyone relies on marketing and social media to find solutions to match their needs. Even the best technical solutions often fail due to lack of good marketing. The right marketing efforts can cost as much as the technology.
- You can’t build a business case until the technology is finalized. In fact, building a business case, starting with market opportunity and customer segmentation, is the only way to know what you can afford to spend on the technology. Technology that can’t be sold for a profit or appeals only to early adopters is not a viable business.
- Patents are not worth the effort, since big companies will win. Intellectual property is a business issue, not a technical issue. Patents can raise startup valuation by investors by as much as a million dollars, and will attract acquisitions rather than copycats. Patents can apply to innovative user interfaces, processes or a new technology algorithm.
- Business efforts should start only after the product is right. Business experts often now recommend that entrepreneurs start their marketing first to confirm that they have real customer interest and an appealing product concept. Elegant implementations may be too expensive or too complex for non-technical customers.
- Perfecting the technology early removes most business risk. It’s true that inventions can’t be scheduled, but it’s equally true that customers can’t be invented. The ultimate risk is trying to sell a solution that customers don’t need or want.
The alternative is to find a co-founder who can provide the business acumen, as Bill Gates did with Steve Ballmer for Microsoft, and Google did by bringing in Eric Schmidt. I’m personally a technologist, and I’m always disappointed when good technology languishes on the sidelines for 20 years in denial of business realities. Don’t let a few myths stop you from changing the world.
*** First published on Entrepreneur.com on 10/9/2015 ***
See Russian translation, thanks to Everycloudtech
See Latvian translation, thanks to Nadia Karbowska