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MenuWhy do I always feel like I’m too late for all the startup trends? How can I be at the front of the trends, executing?
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I'd suggest forgetting about trends, and instead focusing on finding problems that lots of people will pay you to solve for them.
Here are some ways to get started:
(a) Have a clear idea of the few areas where you may have a view of what lies just beyond the edge (technology evolution, market needs, etc.)
(b) Identify problems that need to be solved, preferably using primary research (i.e. talking to people).
(c) Remember that sometimes people cannot easily articulate what the problem is, so understanding what the problem is might require some effort.
(d) Figure out if the problem is big/widespread enough that it is worth solving.
Am happy to talk if you'd like to brainstorm your early-stage venture ideas.
You are only as late as you feel... or so goes one variation of a theme. A better first question would be to determine where in the "adoption of technology" you and/or your employer are most comfortable. You have heard of the "bleeding edge" of technology, right? If you need to be in that "innovator" or "early adopter" role, then cheat: grab onto the coattails of someone who knows where the front lines are located. For consumer tech, one person I follow is Robert Scoble. He investigates the startup community for a living and just knows what is cool in tech for the masses, most often before it ships! And well before most of us know we need it! Also, there are groups on LinkedIn to join, like: I <3 Startups. But you have taken the first step, seeking answers. Hope this helps, but if you seek further examples or additional "clarity" {grin} call me.
Japanese Scholar Okakura Kakuzo clearly puts it, “True beauty could be discovered only by one who mentally complete the incomplete.” Do not be incomplete by thinking “like I’m too late for all the start-up trends”. Think the other way, and to be front of the trends you have to know what the trends are and keep your hopes all-time high, as Moliere 17th Century French playwright an actor says, “ The trees that are slow to grow bear best fruits.” These are the following trends on which you can work:
1. New wave of biotech start-ups: The biotech industry is already valued at $295B. And that number may grow in 2020 as DNA analysis becomes wider stream and advanced. In the last decade ancestry tests have sprung up to tell you about your ancestors. But soon our DNA may inform our future actions. For example, DNA Nudge provides a cheek swab DNA test, mobile app and a “DNA Band” for your wrist. This combined technology allows you to get nutrition recommendations tailored specifically to your individual DNA. And DNA testing has the potential to go way beyond telling you what to eat for breakfast. New products in this category might use artificial intelligence to figure out the best exercise routines. Or skincare products for your unique DNA fingerprint. And in the future, we will not just be adapting to our DNA. We will likely be changing our underlying DNA to fit into our current goals and lifestyle.
2. Digital innovation spreads to Africa: Start-ups and venture capital money are starting to move into Africa. Once deemed too risky, the untapped potential on the continent is too great for many start-ups to ignore. In fact, Partech reports that $2B of VC money found its way to Africa last year. For example, Kenya-based Twiga Foods is creating a food distribution network and infrastructure, along with technology such as a mobile app for trade and inventory tracking. This Goldman-backed start-up currently connects 17,000 farmers in Kenya to 8,000 vendors. And this number is rapidly increasing. In doing so, Twiga has reduced typical post-harvest losses from an average of 30% all the way down to 4%. This is not the first African start-up to receive high-profile funding and attention. For example, AI-powered fintech start-up Jumo is making waves in South Africa. And pan-African e-commerce company Jumia was even listed on the NYSE last year. Continued wins on the continent like this open the door for more VC-backed start-up ventures to follow.
3. Sustainable finance goes mainstream: Sustainable finance is the practice of investing with environmental and social returns in mind. This concept is becoming increasingly mainstream (Bloomberg reports that the field is valued at $30B). And many related searches under this umbrella term are growing along with this emerging start-up trend. And as investors broaden their definition of Return on Investment (ROI), start-ups will look to prove more than just their revenue trajectories. Start-up pitch decks will also start to include slides to prove their net-positive social and ecological effects. For example, the food start-up Beyond Meat has rocketed to popularity with their plant-based burger that looks, cooks, and tastes like beef.
4. Proven business models race to new geographies: Start-ups like Uber Eats, GrubHub and DoorDash have already proven the food delivery app model. Likewise, for ride-hailing apps Uber and Lyft, which massively shook up the traditional taxi industry. And now there is a venture capital-funded race to capture the different geographies in these spaces. New players are establishing strongholds in other parts of the globe using the same proven business models. A particularly interesting example is Glovo. This Spanish startup, which has raised $500M in funding, initially looks like every other food delivery app. They operate across Europe, but they are also expanding operations across both South America and North Africa too. And Glovo is a little unique in that they deliver not just food, but anything: smartphone accessories, pet food, flowers. Even macarons. Although food is still their main gig.
5. A no-code start-up boom: Companies like Bubble and Zapier now make it easier than ever for anyone to build digital products. Another no-code platform, Web flow, has raised a reported $74.9M in VC funding, according to Crunchbase. Specifically, these platforms allow you to create “no code” or “low-code” custom apps and websites. “Low-code” refers to web and mobile development using a drag-and-drop interface, rather than programming languages and raw code. Low code requires much less, or even zero coding knowledge. And even seasoned web developers often use no-code solutions as a super-fast way to build apps. Or to quickly prototype business ideas. There is are a bunch of start-ups coming out of the no code movement. For example, Maker pad has seen fast success as a tutorial platform and community for entrepreneurs building without code. We can expect some of the biggest tech start-ups of the 2020s to start off as no-code Minimum Viable Products (MVPs).
6. The sharing economy reaches new sectors: Over the last 10 years, both individuals and companies realized they could capitalize on assets that are collecting dust somewhere. Which has led to one of the biggest start-up trends over the last decade: The Sharing Economy. For example, Airbnb allowed homeowners to rent out their houses while they are away to make a little extra side income. This uprooted the traditional hotel industry, as Airbnb’s can be a cheaper and more homely option for many travellers. Going into the next decade, the sharing economy concept will be fully played out as start-ups attempt to extend its power into other sectors. A new start-up named Cloud Kitchens, founded by former Uber CEO Travis Kalanick, is now the trailblazer for the concept of shared kitchen spaces made for delivery-only restaurants. These flexible kitchens allow upstart food businesses in prime locations to capitalize on the new food delivery megatrend, but with significantly less investment. As a result of this start-up trend, restaurants without storefronts are springing up across many major cities.
7. Agile development is automated: Agile development is a software development methodology that encourages adaptive and flexible planning. It has been widely adopted and become common practice at many tech start-ups. However, it is not without flaws. HBR reports that a good chunk of agile developers feels that the approach breeds stress and tension. Which is why start-ups are looking to automate this process with tools that remove friction and help enforce good practice. A prime example of this in action is Standuply. It is a digital Scrum Master bot that runs stand-up meetings and team surveys in Slack. This replaces the need for a human Certified Scrum Master to facilitate the agile development team. We can soon expect most work conducted on a routine basis at start-ups like this to be automated where possible. Start-ups that facilitate this transition and integrate with existing shared tools like Slack will match Stansuply’s success.
8. Convenience reigns in consumer markets: With Amazon setting the standard for delivery efficiency and customer service, consumers now expect only the best. Convenience and speed are becoming more and more crucial for customers. Start-ups that ride this trend and prioritize the customer’s convenience will flourish. A perfect example of this is Lensabl. This digital-first start-up provides an online prescription lenses replacement service. And they bring in a reported $6M in annual revenue, according to estimates by Owler. You take the eye test from home with their online eye exam. And their service model also allows you to send in any frames you own and get them fitted. This allows you to keep your current favourite frames. Or choose any non-prescription brand out there. Start-ups that disrupt traditional markets like this, with convenience as their core value proposition, are on the rise.
Especially since this kind of service has the potential to attract raving fans who spread the product through word-of-mouth.
9. Agtech is in demand: Agricultural technology is needed as societies look to go beyond sustainable farming. Sustainable agriculture looks to maintain the status quo of topsoil and ecological systems. However, regenerative agriculture is next on the agenda. This means to improve the soil and reverse humans’ impact on the environment through a self-nourishing process. Agtech innovations can help to facilitate the change, such as IoT soil sensors that measure aeration and respiration. Or software that helps farms with their supply chain management. For example, digital livestock tech start-up Antelliq had a $2.4B exit. Their smart tag product category allows farmers to keep track of more easily and monitor cows.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Related Questions
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What legal precautions can I take to make sure nobody steals my startup idea?
I've discussed ideas with hundreds of startups, I've been involved in about a dozen startups, my business is at $1M+ revenue. The bad news is, there is no good way to protect ideas. The good news is, in the vast majority of cases you don't really need to. If you're talking to people about your idea, you could ask them to sign an NDA ("Non Disclosure Agreement"), but NDAs are notoriously hard to enforce, and a lot of experienced startup people wouldn't sign them. For example, if you asked me to sign an NDA before we discussed your Idea, I'd tell you "thanks, but no thanks". This is probably the right place though to give the FriendDA an honorable mention: http://friendda.org/. Generally, I'd like to encourage you to share your Ideas freely. Even though telling people an idea is not completely without risk, generally the rewards from open discussions greatly outweigh the risks. Most startups fail because they build something nobody wants. Talking to people early, especially people who are the intended users/customers for your idea can be a great way to protect yourself from that risk, which is considerably higher than the risk of someone taking off with your idea. Another general note, is that while ideas matter, I would generally advise you to get into startup for which you can generate a lot of value beyond the idea. One indicator for a good match between a founder and a startup is the answer to the question: "why is that founder uniquely positioned to execute the idea well". The best way to protect yourself from competition is to build a product that other people would have a hard time building, even if they had 'the idea'. These are usually startups which contain lots of hard challenges on the way from the idea to the business, and if you can convincingly explain why you can probably solve those challenges while others would have a hard time, you're on the right path. If you have any further questions, I'd be happy to set up a call. Good luck.DK
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Business partner I want to bring on will invest more money than me, but will be less involved in operations, how do I split the company?
Cash money should be treated separately than sweat equity. There are practical reasons for this namely that sweat equity should always be granted in conjunction with a vesting agreement (standard in tech is 4 year but in other sectors, 3 is often the standard) but that cash money should not be subjected to vesting. Typically, if you're at the idea stage, the valuation of the actual cash going in (again for software) is anywhere between $300,000 and $1m (pre-money). If you're operating in any other type of industry, valuations would be much lower at the earliest stage. The best way to calculate sweat equity (in my experience) is to use this calculator as a guide: http://foundrs.com/. If you message me privately (via Clarity) with some more info on what the business is, I can tell you whether I would be helpful to you in a call.TW
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What is a better title for a startup head....Founder or CEO? Are there any pros/cons to certain titles?
The previous answers given here are great, but I've copied a trick from legendary investor Monish Pabrai that I've used in previous startups that seems to work wonders -- especially if your company does direct B2B sales. Many Founders/ CEOs are hung up on having the Founder/ CEO/ President title. As others have mentioned, those titles have become somewhat devalued in today's world -- especially if you are in a sales meeting with a large organization. Many purchasing agents at large organizations are bombarded by Founders/ CEOs/ Presidents visiting them all day. This conveys the image that a) your company is relatively small (the CEO of GM never personally sells you a car) and b) you are probably the most knowledgeable person in the organization about your product, but once you land the account the client company will mostly be dealing with newly hired second level staff. Monish recommends that Founder/ CEOs hand out a business card that has the title "Head of Sales" or "VP of Sales". By working in the Head of Sales role, and by your ability to speak knowledgeably about the product, you will convey the message that a) every person in the organization is very knowledgeable about the ins and outs of the product (even the sales guys) and b) you will personally be available to answer the client's questions over the long run. I've used this effectively many times myself.VR
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How much equity should I ask as a C-level executive in a new startup ?
As you may suspect, there really isn't a hard and fast answer. You can review averages to see that a CEO typically becomes a major shareholder in a startup, but your role and renumeration will be based on the perceived value you bring to the organization. You value someone's contribution through equity when you think that they will be able to add long-term benefits, you would prefer that they don't move company part way through the process, and to keep them from being enticed by a better salary (a reason for equity tied to a vesting arrangement). Another reason is when the company doesn't have salary money available but the potential is very strong. In this situation you should be especially diligent in your analysis because you will realize that even the best laid plans sometimes fall completely short. So to get the best mix, you have to be very real about the company's long-term growth potential, your role in achieving it, and the current liquidity necessary to run the operations. It should also be realized that equity needs to be distributed. You cannot distribute 110% and having your cap table recalculated such that your 5% turns into 1% in order to make room for the newly hired head of technology is rather demotivating for the team. Equity should be used to entice a valuable person to join, stay, and contribute. It should not be used in leu of salary that allows an employee to pay their bills. So, like a lot of questions, the answer is really, it depends. Analyzing the true picture of your long-term potential will allow you to more easily determine the correct mix.DH
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What happens to a convertible note if the company fails?
Convertible notes are by no means "earned." They are often easier to raise for early-stage companies who don't want to or can't raise an equity round. Equity rounds almost always require a simultaneous close of either the whole round or a defined "first close" representing a significant share of the raised amount. Where there are many participants in the round comprised mostly of small seed funds and/or angel investors, shepherding everyone to a closing date can be very difficult. If a company raises money on a note and the company fails, the investors are creditors, getting money back prior to any shareholder and any creditor that doesn't have security or statutory preference. In almost every case, convertible note holders in these situations would be lucky to get pennies back on the dollar. It would be highly unusual of / unheard of for a convertible note to come with personal guarantees. Happy to talk to you about the particulars of your situation and explain more to you based on what you're wanting to know.TW
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