“Innovation has become a buzzword that has lost its meaning.”
At least, that’s how the written program started out for Vancouver Startup Week’s Wavefront-sponsored event Innovation, Change, Transformation: Adapting to a New Reality. For an audience of about 120 attendees, including many entrepreneurs and tech sector workers, the downtown Vancouver event featured speakers who tried to get beyond clichés to nail down what innovation really is now and how to do it right.
A panel moderated by Wavefront Executive in Residence Bill McGraw featured a trio of headline speakers who had met success in the startup world: Jim Gibson, founder of Tip of the Spear and JAGYYC; business strategist John MacDonald of Rampworth Capital Services; and Brian McMahon from the Expert Dojo accelerator.
(Note: Given the noted diversity of the city and the tech sector in particular, a more playful title for the panel might have been ‘Entrepreneurial advice from charming and distinguished Irish and/or Scottish gentlemen who know each other from previous businesses’)
— Kootour (@GoKootour) September 30, 2016
MacDonald’s advice for those seeking to be truly innovative: look at the forces shaping our world. Brainstorm about all of the different factors shaping our world. When your startup goes seeking investment, don’t just announce what your product does without any context. Instead, explain how these forces are forcing the world to move in a particular direction – and then announce what you’re doing about it. This is a more compelling pitch, he claimed.
Gibson explained how entrepreneurs looking to innovate today have a greater challenge than previous generations. It’s not just about connecting the tip of the spear (cutting-edge technology) with the back of the spear (the traditional technology and business models you’re creating something with. “You really have to reinvent the world,” he said.
Many tech entrepreneurs looking at the slope of a hockey-stick curve will focus on what’s on top, meaning they see the upward potential for customer development and revenue generation. But more entrepreneurs should recognize what’s happening when you reverse your perspective, looking at what’s decreasing, Gibson said. “You can be looking at a curve that’s driving cost to zero. The curve going down is about producing things cheaper and faster.”
While startups are looking to exploit ways to exponentially scale up operations and revenue, they also need to be careful when considering partnering or selling towards organizations that don’t do disruption well: government, schools and other groups that see linear systems. If you’re trying to sell to a sector that can’t adapt quickly, you might end up with products that have no real market.
Rather than founding companies with the potential to become billion-dollar unicorns, more entrepreneurs might choose innovation on a smaller scale, ending up with companies in the $16 million to $20 million size.
But the inefficiencies in those linear systems can also open up opportunities, noted a Wavefront-supported entrepreneur who spoke a little later. Jessica Pautch, CEO and co-founder at Mesh Exchange Tech (MeshX) explained how her own company was building a B2B marketplace to stop wasted food from going to the landfill. The perceived vulnerability to lawsuits was keeping businesses from donating wasted food to other uses — but no business had ever been successfully sued for donating food, Pautch claimed. Still, nervousness around this was what had kept other companies from beating MeshX to the punch and enabled the company to potentially take a leadership position, innovating where others feared to tread.
For McMahon, succeeding at innovation seems to depend on getting the less innovative parts of your startup right, from the beginning. He talked about coming to Santa Monica after working in businesses in dozens of countries and realizing that the local success rate for startups was hovering around two or three percent. His next move: opening up a free 8,000 square foot space for entrepreneurs and watching to learn what was making them fail.
— Wavefront (@WavefrontAC) September 30, 2016
He watched as many enthusiastic entrepreneurs formed LLCs with no traditional foundation and no governing philosophy or business plan – and even when they might have had some good processes and a plan in place, they had insufficient runway to get to where they needed to be. For McMahon, innovators need to create better business models first before they really set out to change the world.
Perhaps out of sync with the typical startup entrepreneur looking for a profitable exit (including some of the startup folks featured later on the stage), McMahon emphasized that founders should avoid VC money if they can to maintain control of their business. Rather than founding companies with the potential to become billion-dollar unicorns, more entrepreneurs might choose innovation on a smaller scale, ending up with companies in the $16 million to $20 million size – enabling the owners to live charmed lifestyles.
Imaginary Games CEO Ellin Jonsson seconded that idea later during a Q&A, noting that many advisors had told them to accept VC capital. For now, they’ve held out. “We wanted independence. We didn’t want to give away what we were creating, so we held on.”