There is a multi-trillion dollar economy opening up to technology faster than ever. It has been driven by trends that have changed the nature of how entrepreneurs will be characterized going forward; specifically, industry executives will be the next wave of in-demand startup CEOs.

new wave of entrepreneurship

In April of 2007, Apple changed everything with the launch of the iPhone. It is hard to imagine that it has only been 8 years since the release of the first truly pervasive smartphone, but there is no denying its impact has been world-changing. Beyond the creation of a new dimension of industry-driven, by location-based, services (and with it, a myriad of billion dollar companies), an equally significant phenomenon emerged. By creating technology that was intuitive to the consumer masses, every person around the world started to embrace technology as more than just a work tool. Lawyers, doctors, car mechanics and people from every sector of the economy not only had a tool for productivity, but a piece of technology in their pocket they embraced as an intimate part of their lives.

Furthermore, these new consumers could now point to a standard for usable technology. Cumbersome, enterprise legal software that won’t allow a lawyer to search cases from outside the office is no longer acceptable. For those outside of the Silicon Valley silo, conversations can be heard from construction workers sitting on a lunch break saying “Wouldn’t it be nice if there was an app to …”. Unfortunately, these conversations are often too far away from Silicon Valley’s ears, which are still dominated by the talk of what will be the next WhatsApp or Instagram. Even so, a new breed of entrepreneur is emerging who see firsthand the challenges in their industry, and with that the opportunity to make a world-changing impact, and these entrepreneurs do not fit the founder archetype that many Silicon Valley investors look for.

new breed of entrepreneur

Photos from http://www.ablogtowatch.com, http://securityaffairs.co, http://geniusapp.com, and http://www.rakenapp.com

Previous decades saw similar shifts in entrepreneur characterizations. The late 90s were about Harvard MBAs applying traditional management techniques to leverage brand new Internet technologies. The “aughts” brought on the “22 year-old Stanford Computer Science” graduate applying technology to a low hanging industry. Now, in this decade, we are seeing a new wave of entrepreneurship driven by industry executives with deep product backgrounds leveraging technology to disrupt a traditionally non-tech industry.

For the past 2 years I’ve had the opportunity to see this shift firsthand as the managing partner of Silicon Valley Software Group (SVSG), a firm of CTOs focused on helping companies with their technology strategy. SVSG has seen entrepreneurs ranging from movie producers, lead singers of platinum album rock bands, travel executives, and hedge fund managers all trying to figure out how to leverage their domain expertise through technology. After a number of similar engagements, a few observations have emerged:

  • In each venture, a product-focused entrepreneur saw the adoption of technology among their peers in a particular industry and, with that, the opportunity to create a product focused on that industry.

  • None of these entrepreneurs had notable tech experience.

  • Hardly ANY of these high profile individuals had relevant connections with the Silicon Valley community.

This last observation is of particular importance!

As tunnel-visioned as Silicon Valley might be, there is a reason that it has produced so many world-changing companies.

The combination of growth capital, multidisciplinary talent, and mentors sharing best practices around how to create hyper-growth businesses are often taken for granted by those who are part of the ecosystem. However, the disconnect between Silicon Valley natives and outsiders is shocking. Many of the companies SVSG has come across have no ability to raise strategic capital at first because their businesses are too risky when considering common pitfalls they are more likely to fall into compared with their Valley peers. Concepts as commonplace as the lean startup methodology are welcomed as sage insight to these new entrepreneurs.

What is missing for these new founders is a bridge into Silicon Valley. To date, this has been stymied by a narrow mindset from the Silicon Valley community. However, the forces of capitalism will eventually prevail and these new entrepreneurs will find their own community to center around. Keen investors will lead the herd and take advantage of existing markets ripe for change. Incubators and accelerators will emerge with a focus on entrepreneurs with deep industry experience. We are in a tech boom right now and there are countless ways to apply technology to industries that haven’t changed in decades. For those sitting in the corner office, the time has come to venture out, there are markets to disrupt.

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Comments

Matt Hicks
I think one of the biggest problems in startups today is the "lean startup methodology". It is this mantra of paying the developer beans while they work day and night to build something that is driving the best developers from working with entrepreneurs. After all, if you're going to pay a developer in a percentage of ownership if the project succeeds, why not just not get paid to work on your own endeavor and skip the entrepreneur entirely? The developers are the ones that drive success in technology startups, yet they are far too often treated as just a necessary evil to get their project out there. I have worked with a lot of startups and this is the number one problem they end up having. They can't find good developers that are willing to work long hours for nothing but promises, so their startup fails because they end up with mediocre developers that aren't up to the task. Forgive my rant, I did enjoy your article. :)
Involved Members
I don't see it that way exactly. I think services like Toptal and also the build your own app services have basically become the equivalent of the guys who sold the gold pans during the gold rush. Everybody and his mother wants to become an app builder and these new tools have made it possible for people to break out of their routine and dream a little. The reality is that most people and I will include myself as partly guilty, don't do enough idea validation pre-build and also do not budget or plan out their marketing effort so the challenge becomes to build, build your app and then like giving birth, you have to go out and actually make it into a viable business. It's only natural that most fail, but overall the net effect is hugely positive because some great apps will and have been built and will succeed because people who otherwise would never have envisioned being able to execute on an idea will have gotten the opportunity to succeed (or fail) rather than not having tried at all.
Matt Hicks
Though there is definitely a place for the "build your own app services", I would argue its place is for early prototyping and not for production release. We are far from a place where the developer can be replaced by "no technical experience necessary" software. That time may come at some point, but I have yet to see any deployed application that is anything but a joke that wasn't written by a real developer. I think these tools are great and I even recommend them to my clients frequently as a means of communicating their ideas, but the need for customized, optimized, and efficiently created software is still the realm of the professional software developer. These tools help to minimize the cost burden on the client though allowing a single individual like myself create applications that would previously take teams of developers, I can pull assets and design mocks from an existing prototype and rapidly release a production application that fits the needs of the client.
Jared Bownds
Hi Matt, Good rant. However, to say that developers are the ones that drive success in technology startups is a bit narrow. There is a mixture of vision, technical feasibility – and also innovation involved at every level from sales and marketing to operations – and also yes, software engineers. While were at it, let's not forget about product managers. In summary, the business side drives the targets and vision, while the engineers functionally bring visions to life, and strive to hit and improve upon each business driver. In each case, one is not truly successful without the other, so success is the burden placed on organization, and each role exists because it's important. Perhaps this is an idealistic statement, and may not be true in all instances, but consider this just another rant.
Matt Hicks
Jared, I did not mean to imply that the developer is the only valuable part in a startup, but I would say it the most necessary part as they are the ones that build the system. However, all other pieces are critical as well as there is nothing to build without the idea. :) I was simply aiming to say that developers are drastically undervalued in startups and I hope that will start to change.
Jared Bownds
With regard to your aim, makes sense, and well put.
Quickize.com
What about Zapier, Google Apps etc? We work within the Quickbooks ecosystem and it's not build that's the problem. It's adoption and monetization in the ecosystems. We need less tech and better UI/UX to monetize in the app marketplace world. Case in point, Dropbox. There are hundreds of cloud storage solutions. What did they do better?
Involved Members
We built our app the old fashioned way-by a development team-and while I agree that I could not build something as well using "build my app" tools, I do think I could have built a pretty darn good app for a fraction of the price which would have left more budget for marketing and for tweaking the app. Maybe we are talking apples versus oranges. My app is a mobile directory that incorporates instant messaging, etc so in the complexity scale, it is not nearly as challenging to build as other concepts. Anyway, the point I am making is probably better articulated by Jared-it takes more than the developer to build a startup, but I see you clarified your point by stating that you feel the developer is undervalued, not necessarily the only valuable piece of the puzzle. At the end of the day, i do still believe a great marketer with a average product trumps a great developer with an average marketer, but your point is otherwise well made.
Safi
Yeah, I see that too a lot of times. They want the very best developers but they don't want to pay "sorry, we don't want to burn our money so fast"; it's a bit paradoxical. What they often have is a vision, a good idea. They would like us, the developers, to help them formulate a product from that idea and ultimately to implement it. Sometimes, their proposition is basically nothing more than "I have this idea, realize it for me, and in case it's going to be a success then X% of it is yours." - which just doesn't make sense; if I could realize all my ideas for free (giving away some percentage of future profit) then right now I'd be doing my 1000th idea. (ps. Thanks for the article; I liked it.)
Matt Hicks
I agree with most of what you said, but I would challenge you to spend just an hour trying the "build my app" route and I think you'll quickly realize the necessity of the developer. Your app may be very simple from your perspective, but even a chat app needs a server back-end, database of users, authentication resources, and a hand full of other pieces of functionality that you are probably neglecting to realize. Certainly some of these automated tools provide at least parts of that functionality, but very quickly I think you'll realize that they either aren't customizable enough or aren't flexible enough to accomplish what you want. Unfortunately this is actually the point where I pick up many of my clients. They've gone down this road and made a messy attempt at an app and want me to "finish it" for them. I'm left in a position of having to explain that what they've created is unusable and must be built again. Now, there is a big problem in the development world of mediocre developers overcharging for their own incompetence as well as software development companies that price gouge. I have a real problem with this personally and when I started OUTR Technologies I decided I would not do support contracts, I would confirm the price to the penny before work is started, and I would never charge for bug fixes. I work very hard to try to compensate for most of the other software development companies in the world.
Matt Hicks
I don't believe you mean you need less tech, but rather the tech needs to be better hidden behind clean and efficient user interfaces, right? After all, Dropbox is in no way "less techy", they just provide a much more simplified interface than many of their competitors.
david hite
oh, so you are saying you would like to care of the sales too? its important for any start up to have someone to sell the product and someone to build it
david hite
point taken, what do you suggest would be ideal? profit sharing, as soon as you sell the product the developer on my team gets half.
Matt Hicks
I'm not saying that the developer is the only piece necessary in any startup, although in a lot of cases that is true. My company is actually a good example of this though. When I started my company I had no idea how to market my company, but ultimately it proved unnecessary. My company thrived entirely on word-of-mouth. I now have more clients than I can handle and have never needed a sales person. Again, I'm not saying that's even the norm, but my point again is simply that developers are undervalued.
Matt Hicks
I propose that developers be compensated for the work they are doing, not given some ethereal promise of profits if the company ever succeeds. I have several friends that have gone down this path, worked very hard for a couple of years, and when the startup fails they have nothing to show for it but wasted years of work.
needle suture
You didn't build that. Someone else did. sorry couldn't resist quoting one of the most ignorant things ever spewed by a sitting US president.
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