Compete on Execution
February 24, 2010 - Author: Tim Rowe, CEO of Cambridge Innovation Center
Ideas Are Overrated: Compete on Execution
When setting out to be an entrepreneur, most of us are fanatically focused on choosing the right IDEA. The idea is key, right?
Not really.
Some ideas do matter. If you have made a true scientific breakthrough, the idea, and the intellectual property behind it, is everything. If you discover how to create a steel-plastic alloy with the best properties of both, spend some time with patent lawyers.
But if this isn’t you, read on…
Surprisingly, what really happens in most startups is that founders start out with one idea, nearly go out of business, then morph it, nearly go out of business again, and eventually morph it to something that works. This is true in software, services businesses, and frequently even in hard tech and life sciences.
A few examples of this are in order:
- I invested about 10 years ago in a great startup spun out of a national lab that had invented a new biometric identification sensor. The sensor used the chemical properties of the skin, rather than a fingerprint, to pick out the real McCoy. It was good technology, and skirted some of the shortcomings of fingerprints, but it was tricky to build cheaply enough to be economic. Millions of dollars of venture capital and many patents later, the company had yet to release a commercially viable device. But a bright engineer noticed that one of the techniques they were using to evaluate the chemical properties of skin had a side-effect: they could see an unusually clear image of the fingerprint beneath the skin. They realized that they had stumbled upon a better way to image the regular, old fingerprint—better than any approach yet invented. The company is called Lumidigm. The new generation of sensors this company came up with are now what is used in the two highest volume biometric applications in the world–a major theme park in Florida, and the Hong Kong-China border crossing.
- Similarly, when scientists in a hospital ward in Swansea, England were experimenting with sildenafil citrate to treat a form of chest pain, they found that it didn’t help much. But an alert (and possibly red-faced) nurse reported a lot of the patients were ‘tenting’. This compound became a multi-billion dollar success under its more recognizable commercial name: Viagra.
- The fastest-growing tech startup in Massachusetts (that I know of) today is a company called Hubspot, run by a couple of Sloanies, Dharmesh Shah and Brian Halligan. They “original” idea that they pursued (while still at MIT) was to build a web-based application to “run” a business. This included (amongst other things) a lightweight database application. What they figured out along the way was that people were much more interested in figuring out how to market their product and grow their business, than run their business. For many, they could run their business on a spreadsheet just fine, but they weren’t able to get leads and customers. This got them side-tracked on a project to understand how well a business was doing online with their marketing efforts. To evaluate that, they built a tool called Website Grader. People said it was cool, so they made it available for free. The tool took off and became in Internet hit. Thousands of companies contacted them asking for help improving their online marketing. The company realized that the essential core of what they were doing was to help companies figure out how to explain themselves in a way that would allow potential customers to find them online. They coined the term “Inbound Marketing” to refer to this discipline, built a rapidly growing business, and have since published a bestselling book by the same name, on that topic.
- My own business, originally called Cambridge Incubator, was started as a kind of factory to quickly produce companies based on some ideas that myself and some friends had come up with. That turned out to be a bad idea, probably because we weren’t smart enough to do this well. But we were stuck with a big, beautiful facility we had built with our venture capital dollars, and a long-term lease obligation to our landlord, MIT. Without much choice, we started renting our pretty space out to other people’s startups that we had no equity stake in. And we were surprised to discover that that business–providing nice space to startups, and the benefits of community that came with it–was a very fast-growing business. We now operate what may be the largest facility in the world doing this.
If you are convinced of my thesis, that the original idea doesn’t matter a whole lot, then it follows that what must matter more is good, flexible execution.
My advice: start with just about any ’starter idea’ (a good, attractive idea that will get you and collaborators going), and then morph it like crazy until you find a sweet spot with high growth and compelling economics. This appears to be how many incredible businesses have been built.
Tim Rowe is the Founder and CEO of Cambridge Innovation Center, a sponsor of the MIT $100K. CIC houses approximately 240 startups, and is perhaps the densest collection of startups anywhere in the world. The Boston Globe has described CIC as “what may just be the most important building in Greater Boston”. In January of 2010 CIC announced a 10-year renewal of its lease with MIT, including an addition of 57,000 new square feet of custom-designed space for entrepreneurs.
Tim is also a Founder and Venture Partner with New Atlantic Ventures, an $115M early stage technology fund based in Kendall Square.
Tim has also served as a judge for the MIT $100K.
TWITCH Winner Receives $19K Donation
I like it.
I enjoyed reading your thoughtful blog posting and agree with your tenet that initial seed ideas often morph en route to ultimate success. E-ink is another example of a start-up that morphed well. Founded in 1997, they initially targeted advertising and billboard applications. Today their product is a phenomenal success in the Amazon Kindle. On the downside, I’ve known more than one entrepreneur who has pursued an idea “they’ve always had”, realizing too late in the game that the opportunity window had already come and gone and they needed to adjust to the changed technologies and needs of the day
On the other hand, your advice to “morph it like crazy” might be misunderstood as an invitation to a take a shotgun approach without pursuing high-return ideas that may be slower to bear fruit. According to Warren Schirtzinger and high tech bibles like Crossing the Chasm, the number one reason high-tech companies fail is the lack of market focus, i.e. “emerging high-tech companies often do anything possible to generate revenue and in the process try to be all things to all people.”
Some ideas take more time than others. Even penicillin languished after it was first discovered by Alexander Fleming. It took nine years for Ernst Boris Chain and Howard Florey to more fully understand its potential and find a practical way to produce it. A less technical example is the Frisbee, whose inventor, Walter Frederick Morrison, passed away this month. In his obituary it was noted that Wham-O took seven years to turn the toy into a raging success.
A good follow-up topic would be, how do you know when it’s time to morph your idea? Entrepreneurs often get discouraged when they take their new ideas to mainstream customers in an established market. As Clay Christenson points out, the traditional customers in a market will be inherently unreceptive (to say the least!) to new and disruptive ideas. This isn’t to say that all ideas rejected by the traditional customers are good; the key is to find and appeal to an emerging customer base that will eventually subsume the traditional market. And then, as you say, execute with flexibility, but also with focus.