Tech entrepreneurship: you are not prepared

Tech entrepreneurship: you are not prepared

By Matthew Butler (Entelect, General Manager)

These days, new mobile app ideas, modern social tools, automation, digital transformation of the enterprise, rapid prototyping, and new businesses can be born overnight with just a website.

We read about the successful ideas all the time in the news, but we don't often get sight of the composition of these businesses. What below-the-surface decision making went down? We rarely get to peer behind the curtain to see an honest record of their journey. From dreaming and designing to budgeting, building and shipping and the complexities monetising their technology. Press-releases show the highlights, but they paper over the cracks and often obfuscate the real story.

I'll get to the point. Building software-defined technology products from an idea, is not as trivial as it might seem from the outside. With adequate planning, awareness and caution, almost all these risks can be mitigated and understood. Without them, the attraction can be a financially (and reputationally) dangerous trap. New technology businesses have potential for terrifying operational, legal, financial and skills-depth behind the veil, and these aren't the kinds of things you want to be learning about and tackling half-way through your execution, and your budget!

Let's look at a widely known example, Uber.

A groundbreaking idea which is simple for anybody to grasp. The premise is to use a smartphone application to call a taxi to your location, which is conveniently available from the on-device GPS, take the ride, and then pay electronically. It is one of those ideas where we think to ourselves "why hasn't it been done before". This is where it starts. When something sounds too good to be true, it probably is! Uber lost $1.46 billion in Q3 2017 alone, I wonder how many know that? It's not an exception either. The business lost more than a billion dollars in Q2, and $708 million in the first quarter. So where are all these costs coming from if Uber is just an app?!

There is a misconception for some of the less-technical among us that tech products are a scheme where the idea comprises everything. That the first-to-market wins and implementation doesn't need much attention. There is a blind-spot to other aspects of an application, website or technology which, while usually not deliberately ignored, are just not thought of.

In reality, there is hidden complexity in building a product, or a business, out of software beyond both the idea and the technical implementation. The purpose isto share and explore a few of the most common ones to invigorate your thought process.

The complex areas to tackle when starting a business.

Costs: This is a tricky topic, primarily because of just how context-sensitive (and ambition-sensitive) costs can be. It is important to research the input, time and technology costs which might be applicable. Seemingly small details such as designs, third parties, lead-times, or where previously unknown components of a project (e.g. licensing, specialised tools and hosting) all introduce unplanned capital or operational budget impact. This information is powerful when negotiating, so doing the research, and gathering input from individuals or partners with experience should be one of the first steps taken.

Skills: Technology is supple and subjective, but even so, not all implementation teams are the same. Talented engineers, project managers, specialists and designers are very hard to find, this is evident by the rampant growth in demand for software engineers globally. For the same money and time, different teams will achieve vastly different results. This makes it important to research, network and take care when creating your own internal teams or outsourcing development. Technical and product teams need to be aligned, communicating freely with no loss of understanding, and share a common sense of direction, passion and urgency.

Operations: Once your app, website or service is built and launched, who will operate it? When customers have questions: who do they talk to? How do they contact them? How will you manage partners and third parties who have a role to play? Tech’ businesses still need a finance team and operational teams. People are still critical in the healthy functioning of any technology. Google has a search page which should be fully automated right? Type something in and some computers do the work and send back results. How many people could you possibly need? Google employed more than 70 000 staff in 2017.

Legal and compliance: Compliance is messy, and made worse by technologies that have to operate across borders and regulatory or legal jurisdictions. Around the world, governments have different laws regulating privacy, security and data. Seek advice here, explore previous examples and learn from them. This one is often left until last, whether out of priority or ignorance, and can delay a launch, cripple an idea or incur costly technology changes.

Time: Some things just take the fullness of time. Ideas need to settle, systems need to harden, team's need to storm and form, people need to build trust and feedback follows a cycle. Larger teams don't work proportionally faster (nine women cannot deliver a baby in one month!). Rushing blinds us, and can cause teams to make compromises they didn't fully understand. By no means is 'lethargic' a viable business strategy but sustainable pacing is. Iterating frequently and learning from failures are powerful tools in a product development arsenal.

Purity of vision: So much is made possible in a technology-based service or product, because it is malleable. Product owners can become trapped in paralysis, stuck between great ideas. Running too many tasks in parallel and never quite reaching a point of commercial or practical completion. This process can pull projects apart when even meaningful and independently brilliant ideas start to distract attention from a core vision. Something Twitter initially managed superbly.

These are the real threats, but there are more: preparing for scale, marketing, user experience, hosting and infrastructure, market research, technological possibilities, and more.

Interestingly, and perhaps surprisingly, managing these aspects doesn't actually need to cost more. So Lean Startup fans rejoice. A combination of foresight, avoiding certain expensive but avoidable emergencies, and methodical work typically result in a higher quality product. This means that in the end its not at all about making a larger upfront investment. It comes down to moving through the investment, aligned to a plan, with more insight and confidence.

The objective here is not to scare people away. Technology is a magical key which unlocks ideas and businesses in remarkable ways. Instead, the ambition is to encourage new product owners, entrepreneurs, analysts and project managers to go into these projects with more clarity, a bit more caution, and a better knowledge of the journey.

If starting a journey like this or developing an idea which could be the next big tech story, become informed, ask these questions and feel confident in your preparation to handle operational hurdles and legal arguments. Be sure you've got the right team and protect your vision. Explore and manage your own expectations for the journey. Those who aspire to create technology products will be well served by mixing this kind of awareness into their excitement and anticipation.

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