“Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” Folklore is that this is what Steve Jobs said to Pepsi executive John Sculley to provoke him to join Apple. There is an implicit underlying message here that whatever Pepsi was doing, it certainly wasn’t anything novel or innovative; the condescending remark sounded like an insult to the largest beverage maker of the world spread across more than 200 countries.
Fast forward to current day. We were conversing with a pretty promising startup which was into selling Potato chips. The founders had pedigree, experience (exited a very successful earlier startup), passion and all the other ingredients which made them a formidable proposition. Post the meeting, when we were discussing the pros & cons, one of our team members made a telling comment about them – “what is the big deal here? All they are selling is potato chips! So much for innovation & disruption.” The scathing & dismissive comment got me thinking. Was there any merit in the disdain that our team member had? As per him, the founders had the best of the degrees (hallowed IIT/IIM combo) and all they were doing is importing, packaging, rebranding & selling potato chips! Were we being unkind to the startup? Was it unfair? Does a startup need to be disruptive? Is expecting startup to be innovative…a fair expectation?
Invention, Innovation, Disruption…what exactly do they mean in startup context? These words have been thrown around so much lately and with such different meanings that they’ve become confusing and somewhat useless criteria. That’s unfortunate, since budding entrepreneurs need to cut through the hype in order to build sustainable businesses. IMHO Startups shouldn’t try to be innovative. At least not at the start. This is a controversial statement to make but let’s dig deeper.
I am no social scientist but let’s keep it simple. Invention is not innovation. Invention is needed for innovation to take place. In many companies, inventions that result in patents are considered innovations. These companies are often touted as “innovative.” But to me, that’s not the correct classification. An idea that looks great in the lab and fails in the market is not an innovation; it is, at best, a curiosity. Until people are willing to buy your product, pay for it, and then buy it again, there is no innovation. As Jeff Immelt once put it, “Innovation without a customer is nonsense; it’s not even innovation.” At best it is an invention. In fact, there is no correlation between the number of patents earned and financial success. So for Startups It is OK to NOT be an R&D powerhouse…at first. Small startups aren’t R&D powerhouses. Facebook made React after they were already big. Google was long past their startup days when their coolest moonshots started landing. Elon Musk isn’t building a rocket in his garage.
A Customer decides if the product is innovative, not the underlying Technology! Real innovation can change the context — the market space, the customer space, the competitive space — in which a business operates. Startups don’t have to invent new technology, they can bring fresh approaches to solving problems with existing technology. So the innovation small businesses engage in shouldn’t be compared to the capital intensive research that governments, academia and enterprises carry out. All this innovation mythology is demotivating to small-scale founders. What makes a company truly disruptive is subjective and depends on the space the company occupies and what it is trying to accomplish.
The idea of startup and innovation has become encrusted by myths. One myth is that it is all about new products. That is not necessarily so. New products are, of course, important but not the entire picture. When innovation is at the centre of a company’s way of doing things, it finds ways to innovate not just in products, but also in functions, logistics, business models, and processes. Another myth is that innovation is only for geniuses – a lone genius or small team code away in the metaphorical (or actual) garage leads to a destructive sense of resignation; This is wrong & it is fatal to the creation of an innovative startup. Of course, geniuses exist and, of course, they can contribute bottom-line-bending inventions. But companies that wait for “Eureka!” moments may well die waiting.
And die you can’t. Don’t let the ‘Be disruptive’ mantra become a millstone around your neck. Keep doing whatever you have been doing to remain alive. Just Don’t Die. Keep trying to make something that at least someone really loves. As long as you’ve made something that a few users are ecstatic about, you’re on the right track. As long as you have some core of users who love you, all you have to do is expand it. It may take a while, but as long as you keep plugging away, you’ll win in the end. It will be good for your morale to have even a handful of users who really love you, and startups run on morale. Don’t forget that Airbnb founders sold breakfast cereals to keep the company alive. From that to the biggest US IPO of 2020 which happened last week ($100 Bn, take a bow guys) is one of the most inspiring stories of our time.
Coming back to our story – well, we are still evaluating that potato deal. After all the world needs all kind of chips, be it potato or microchips. We leave you with a thought from Paul Graham: “There’s just one mistake that kills startups: not making something users want. If you make something users want, you’ll probably be fine, whatever else you do or don’t do. And if you don’t make something users want, then you’re dead, whatever else you do or don’t do.”
If the customers want potato chips, well then so be it.
– Ashish Bhatia
Founder, India Accelerator