Whatever we may think of today’s technology companies, there is no disputing that they are not only dominating the economy but the news headlines as well. Not only do technology companies impact everyone on a daily basis through the way we wake up to the way we work but they impact the way we think and interact as well.
While the focus of discussion has been with larger technology companies, the ones that we really need to focus on are the up and coming startups. Indeed, while both popular and business culture focus on startups and companies when they are at their peak, they seemingly forget those formative years in a startup’s life are not only the most critical but the most fun as well.
Why am I focusing on talking about startups and their formative years? The simple answer is that while everyone focuses on big technology companies with their financial war chests and how these companies are influencing the economic system, we need to start paying attention to how the economic system can be re-balanced to help the small scrappy startup that definitely does not have the financial resources of the more established companies.
Indeed, while there may be a general public belief that technology is rapidly replacing our love of handmade goods, the reality is that the love and need for handmade continues to thrive and exist, particularly amongst entrepreneurs and scrappy startups. Every entrepreneur and startup founder can regale you with tales about how they built their prototype with used parts salvaged from a junk yard or a friend’s basement. That do-it-yourself attitude is how startups are made.
The problem that we are increasingly seeing however is the fact that today’s overall economic system is increasingly unbalanced in favor of mass production versus startups in their formative years. Some of this can be attributed to our increasing reliance on a “go big or go home” culture to power the economy.
Investors and the entrepreneurs they fund are increasingly focused on “gaining market traction” and “capturing a sizeable portion of the total addressable market”. While this may make sense for a startup that is losing money and in a highly competitive market with little barriers to entry, does it make sense for startups in all industries? Indeed, why not focus on the niche market?
One successfully entrepreneur that has made a fortune on focusing on the niche is RXBAR CEO Peter Rahal who sold his company to Kellogg for $600 million (USD). The sad reality is that RXBAR is a rarity in today’s startup ecosystem due to the fact that Peter managed to do very well based on a niche market whereas every other “successful” startup seems to be focused on the mass market.
While there is nothing wrong with the mass market focused startup, one needs to question whether or not from an economic perspective, we are missing out on more opportunities for growth by not building an ecosystem that accommodates both. Indeed, the lack of focus on niche markets could potentially be a “blue ocean strategy” whereas the mass market focus is a ‘red ocean strategy”.
Leave a Reply