Three risks faced by technology start-ups

Let's take a look at the following figures to wake up: most technology companies fail. The research shows that three quarters of the companies supported by venture capital ended in failure, while only 1% companies realized IPO.

The following three crises are faced by the CEO of every technology company. In order to make your business successful, every entrepreneur should know something:

1) Category Risk: What is the target market size? Value geometry? Is it growing?

Category risk is not only a startup company, but also a risk that large technology companies need to pay attention to. After all, only when the market exists can entrepreneurs exert their fists and feet. For example, if you want to sell the Bible, the target must be _ _ people. In order to increase the total income, profit and profit time, we must choose a large enough market in the growth period. In this way, it is equally important to choose the right target and improve the level of your own company.

Segway (an electric balanced vehicle) has not achieved great success, not because the product itself is not good, but because the market of "personal electric balanced transportation" has not developed. Dean Kamen, the inventor of Segway, can't give you a reason to buy this product. In the end, Segway suffered a similar fate to many technology startups, unable to open the market and the invention was put on hold.

Regarding the importance of potential market development, we can take "local advertising" as an example. At present, many companies hope to separate local advertisements from online advertising business and form a single advertising category. They think that this kind of advertisement which is good at content (so-called "editing advertisement") is a new type of advertisement which is completely different from the traditional online advertisement? But I don't think this conclusion holds? For advertising providers, this model is just another form to tap the advertising function, so local advertisements are destined to be listed as advertisements with new characteristics, and cannot become products with independent markets.

The same question faced by all startups around new technologies is: "Is the new market classification brought by new technologies or is it just a new function in the existing market classification?"

2) Competitive risk: Will it kill Cheng halfway?

In scientific and technological entrepreneurship, the best market position is to become the leader of the industry and seize the absolute dominant position of the market like the category king. Think about it. Speaking of search engines, who can surpass Google or Microsoft? When it comes to the retail industry, Amazon or Target comes to mind first. Similarly, when it comes to the mobile phone industry, the first thing that comes to mind must be iPhone, Google's Android or Samsung. Alas, this example probably shows that even the industry leader is at risk of being subverted. Apple's eyesore, Microsoft's Bill Gates once said, "Success is like a false teacher. Even smart people often forget the possibility of failure in the face of success. "

Microsoft's monopoly on online file management is being broken by Dropbox and Box.com. These startups have the "bizumer" strategy, enjoy the cost advantage and form a strong competition with Microsoft.

During the period of 1999, Siebel system was the leader of customer relationship management system. Fortune listed it as the fastest growing company in America. But this situation was broken by Salesforce.com of marc benioff, who brought a brand-new cloud system delivery model and a new pricing model of "subscription". At present, Salesforce enjoys a total market value of $22 billion, while Siebel has long since disappeared.

New technologies, new products or new business models all contain the potential to subvert existing models. If the innovation brought by competitors happens to be the core part of your business, and the other side challenges the traditional model with a very competitive attitude, it will lead customers to reconsider whether to continue to use or buy traditional products. In such an environment, local advertisements may lose their advantages as "new participants" overnight. The speed of this subversion is so fast that even the most flexible entrepreneurs may be caught off guard.

3) execution risk: can you guarantee to keep unbeaten records every quarter?

General Patton once said, "Even if the skill of the plan is not excellent, if it can be implemented immediately, it is better than those plans that sound excellent but have not been implemented." A bird in the hand is worth than two in the bush. ) Those companies that have made legendary achievements all show militarized execution and show a high degree of concentration on the elements of success: talents, execution processes, technology, etc. And set clear goals. This powerful executive power comes from the so-called "corporate culture", which is invisible and intangible.

In my opinion, Mercury Interactive (acquired by Hewlett-Packard for $4.5 billion in 2006) is the company that I have come into contact with that best embodies this execution. Mercury shows its tireless dedication to products. Although there is no slogan of "core value" on the company wall, you can feel the strong existence of this core value when you walk into the company. Jay Larson, the sales director, once said, "Our sales staff here can be divided into two categories, one is doing well and the other is new."

In an evening telephone interview, Amnon Landan, CEO of Mercury, was asked whether the violence in Tel Aviv would affect the work of Mercury R&D department. Landan said, "Tel Aviv was in danger of being attacked by missiles, and we also moved it in time. In fact, it's no big deal. " Mercury used to have more than 3,000 employees, and the whole company operated like a navy seal.

The "performance-based" corporate culture can only be built on the high standard of military execution and such employees. In order to win in the protracted war of entrepreneurship, we must make clear the sources of these three risks, and then mobilize the manpower, material resources and financial resources needed to overcome them.

(via pandodaily)