Navigating Nimbly — Three Start-Up Lessons from 2020 So Far
At the start of March, just before the COVID-19 lockdown, our company closed a seed investment round. We had no revenue, no customers. We did (and still have) a fully issued patent and a disruptive approach to delivering the data revolution to the policy intelligence arena. We did (and still have) a range of competitors that are much better funded and much larger.
And yet we managed to exit the first phase of the pandemic with
- monthly recurring revenue
- traction towards some strategic goals
- increased attention to our B2B product and
- the beginnings of a serious marketing funnel.
It seems like a good time to review how our start-up has so far successfully navigated these shifting currents. Hopefully, our lessons can help others make the most of a difficult 2020.
It is true that technology-enabled companies have generally fared better than personal services, travel and tourism firms.
However, we believe that technology is a necessary but not sufficient condition for success in the current environment.
Among other things, the current shift to the digital does not deliver a competitive or even a comparative advantage; it merely ensures that firms can remain on the competitive landscape.
How did we do this during one of the most challenging economic times in the last 100 years? Here are our top three contributors to success so far this year:
It is a trite truism that start-ups are more nimble at responding to shifts in the competitive landscape to disrupt inefficiencies. But being nimble requires more than just delivering the latest technology (in our case, APIs).
We entered the pandemic with one product: a platform that converts the words of the public policy process into quantitative data that delivers visualizations and predictive analytics when used by human experts. We know. It’s a mouthful. Disrupting human intelligence networks with automated, patented technology requires patience and market education.
The pandemic increased dramatically the need to identify policy trends. Our platform was tailor made to address this. But adopting new technology amid a crisis is not exactly an easy task. Even when we built the APIs to deliver enterprise-wide data delivery, the reality is that many companies were worried about liquidity and solvency issues just as we were going to market with our APIs.
Seeing demand for insight, we decided to demonstrate daily the kind of enhanced insights that can be acquired through platform use. We launched a daily publication (the COVID19 Report) at a low subscription rate ($150/mo) with the idea that we would deliver value and educate the market. The launch was a success, delivering to us our initial set of recurring revenue.
During May, the policy dynamic shifted.
Politicians and regulators began using COVID19 as a justification for any policy priority. We shifted with the policy process, re-positioning the daily platform analysis as the PolicyScope Risk Monitor.
This is a Lean Start-Up 101 lesson that has served us well. The process pairs formal customer discovery interviews with Agile product development to accelerate progress towards a successful product in the market.
However, the listening process is about far more than product development, particularly when serious disruption is in the business plan.
We learned that we had under-estimated the level of disruption implied by our technology. We also learned that while people say they seek novel solutions, the sales process within large, established companies creates hurdles regarding adoption of innovative technologies.
Inertia is the biggest hurdle to innovation at scale, not necessarily product design.
This feedback is both thrilling and sobering. It is thrilling because it clarifies the path regarding market education and the value proposition. Pivoting to address inertia requires a slightly different set of marketing priorities. It is sobering because market education takes time. People need to appreciate their current tried-and-true mechanisms for acquiring policy risk intelligence are both inefficient and suboptimal.
The pandemic accelerated our ability to acquire this feedback. Every time someone asks “how do you know this?” we hear an invitation for a demo. It might have taken us far longer to get here without a serious crisis.
3. Engaged, Strategic Partners
The innovation path is not linear.
Methods like the Lean Start-Up methodology provide structure and a mindset for proceeding through the innovation process, which can be comforting. But progression through each of the steps does not occur at a consistent pace nor does it always occur sequentially.
It is crucial to select carefully the first few investors in the capital structure. Cash-starved start-ups may jump at any and every offer of funding. But choosing the wrong set of initial investors can be a recipe for disaster.
The innovation frontier is not a safe space for anyone.
Early stage investors that do not share the founder’s vision will be quick to jettison a business plan in an effort to create a quick revenue stream. Early stage investors that do not bring to the table a diverse set of skills cannot pitch in to help make the most of a promising opportunity.
Having made the decision to include external investors into the capital structure at an early stage, founders must also maximize the knowledge and experience of the new board members in order to increase the likelihood of success.
In our case, the technological and business expertise of our new venture studio partners provided the crucial ingredient for our ability to navigate nimbly through the challenges presented during the second quarter of 2020. It may sound obvious to tech community natives, but it was a revelation to realize that selling a product is profoundly different than selling a consulting or knowledge product. That shift in mindset would never have happened without our VC studio partners whose wealth of experience in bringing new technology to market has been invaluable.
The second half of 2020 will bring more challenges. The process that generated initial traction during a crisis will likely need to evolve. Learning to live with — and survive — a pandemic will generate deeper shifts in economic activity. Start-ups will have be particularly nimble this year as the demand generation function continues to evolve rapidly, if not linearly.
We look forward to meeting the growing needs of a market hungry for better, more efficient mechanisms to monitor and anticipate public policy risks. We know our early stage investors will continue to generate value for our company at every step of the way.
BCMstrategy, Inc. is a start-up company that is bringing the data revolution to the policy intelligence business through patented technology. The company measures and visualizes publicly policy risks using a web-based platform. Individuals can access the PolicyScope platform and the daily PolicyScope Risk Monitor through the company website. Customized, enterprise-level data delivering using APIs are available as well. To schedule a demo and to explore enterprise-level deployments, please contact us.