If my meeting room walls could talk, they would tell of the number of times they have heard founders say “we are the only ones doing this” or “we are the first to do that”… all this on the back of unpatentable value propositions. Unpatentable (yes let’s make that a word!) because while there is intellectual property behind it, not every thought bubble is commercialisable and not every commercialisable thought bubble warrants regulated protections.
Peter Thiel in his book Zero to One describes a very important distinction which is often overlooked by those working off insufficient information. That is that the world of ventures or startups can be classed into two types. One type is a new technology, new in the purist sense of delivering a vertical productivity leap. Something that has never been done before, like Edison with lights, Carnegie with Steel, Rockefeller with kerosine, Jobs with operating systems etc. Clearly very great innovators, despite a lot of paddling and current underneath the duck’s belly that many of us will never even know.
Secondly we have expansionary ventures, which while having potential new markets and impact, are predominantly built on existing frameworks being broadened in horizontal scope. Their effect can be classed as globalisation or scaling. My walls would probably make the observation that most of the things they eve’s drop on are in this category. To make the point that this is not a watered-down version, one could throw Alibaba in here, PayPal, Spotify and to name a local hero Kerry Packer with World Series Cricket – Howzat!
Most VCs push for both as a key criteria for investment, which I think is a mammoth tusk. My view is that when everything is urgent nothing is urgent. And equally when everything is global nothing is global. I mean where would we be if every founder one of the 200 odd pitchers we sit in per annum was Zuckerberg?
The progress of humanity as we know it requires a healthy balance of both vertical and horizontal leaps.
I subscribe to the theoretic notion that at the right price there is an investment thesis in a pre-scaled world. Admittedly many a VC have proved me wrong and their superlative exit multiples on the quality ventures they invest in will smack me down. I just worry about the pipeline of innovation we lose when there is too much focus on picking the few for exit multiples and killing the many because of sub-scale. Especially here in Australia where a pipeline of successful home grown and bred innovation will be the key to our global relevance into the future.
Equally, there are founders that literally strain themselves beyond repair striving to achieve both ground breaking innovation and scale very early in their journey. Usually this leads to missing the market window or paves the way for a more cashed up copy-cat founding team to cream off the cake. But again I must admit, there are founders that have proved me wrong.
I would call for more globalisation from a generalist kind of founder/funder group and more of an innovative patentable technology from a superlatively specialist founder/funder group. In a comparative world, we could just stick to one’s lane and being very clear and intentionally about contribution to progress ought to deliver accretive results even sub-scale.
Just my thoughts; what do your meeting room walls say?