Top 5 Takeaways from the CEC’s Startup Forecast 2013
Last week, I attended the 2013 Startup Forecast. Hosted by the CEC, this was a great opportunity to connect with the Chicago entrepreneurial community, hear from local luminaries, and do a little predictive analytics on what the next 12 months has to offer aspiring business builders. As I described in last week’s post, I took notes, reflected on what I heard, and distilled my learnings down to the perspectives I need to apply and the actions I’m going to take. Now it’s time to tell others what takeaways I will be using while continuing to build my company. So here are the top five takeaways that will help guide our efforts, and hopefully, our success.
Perspective: Every business is now a service business.
Howard Tullman offered this perspective during his humorous and fast-paced talk about the trends he’s noticed amongst tech startups. He offered several others (the fast will eat the slow, the social graph is giving way to the interest graph, there’s a website that will tell you when to pee in the middle of a movie, etc.). But this one stood out. For the last two decades, startups have been trying to come up with a product that will solve a problem and make the founders rich. And some have. However, the most successful products are part of a larger service. Google gives us a search product, but makes its money on the adwords service; Apple gives us iThings and MacStuff, but profits most on its App Store, iTunes, and telecom services. Amazon, Ebay, Craigslist, Facebook, and many more survive and thrive based on their service ratings (or the “service” ratings of their users). And companies like Groupon and Zynga struggle based on mostly anecdotal evidence of poor service, even as their products get consumed like crazy. So what’s a startup to do? I’m going to do the following…
Action: Start with a service solution to a problem and make the product promote the service rather than the other way around.
Perspective: Real change requires an alchemy of skills.
A shout out to my colleague Neal Sales-Griffin, Co-Founder of Starter League, who made everyone powerfully aware of this perspective. He told a great story about how he realized his business skills alone were quickly becoming “irrelevant” and that he needed to augment them with a strong technical education. Building a company around silos of skills, where teams are divided by departments, doesn’t help startups one bit. In fact, the very reason I like working with education-inspired companies like The Starter League and Mobile Makers Academy is because they embrace this concept of skill-based cross-pollination. So I’m going to take a page out of Neal’s book and the network science I learned in school.
Action: Create teams with a diversity of skills (marketing, sales, design, development, etc.), rather than departments where these skills remain isolated.
Perspective: Bureaucracy destroys value, but a virtuous relationship with legacy businesses will add significant value to all involved.
This was perhaps the most surprising perspective I heard at the event. Delivered powerfully and eloquently by Glenn Tilton of JP Morgan Chase, this perspective requires an understanding that not all disruption is good disruption. It’s often better to work with existing businesses rather than tell them you’re coming after their lunch money. Revolutions may be exciting, but they are never sustainable. If we want lasting change, Glenn proposed we spur existing businesses to open their minds to startups and prompt startups to work on sustainable solutions that offer a convergence with existing businesses. He suggested that we ask a simple question: how can we promote the combining of brainpower between the businesses that already exist and those that have yet to arise?
Action: Cooperate with and learn from existing businesses, don’t just compete with them. Strive for evolution, not just revolution.
Perspective: Big Data’s big day is still on the horizon.
As college kids, aspiring job changers, and current software craftsman race to fill the design and development needs of today’s companies, Brett Goldstein, the Chief Data Officer of Chicago, reminds us that data is the next “big D” job market waiting for talent. Having explored machine learning, social network analysis, education research, and many other forms of data-intensive study, I totally agree. Thanks to Brett, the availability of data in Chicago is at an all time high (see: data.cityofchicago.org), and the city is quickly becoming a center for business and academic research. But just collecting data is not enough; analysis comes next, and we are only beginning to understand the nuances and skillets needed as the field itself grows faster than the bytes it collects.
Action: Know data, know data analysis, and most importantly, know data pros.
Perspective: Tough times mean good things for rational decision makers.
Not all thoughts about the startup future in Chicago were rosy. Lon Chow (of APEX Ventures) pointed out that while the money coming out of venture capital in Illinois is growing quickly, the money going into Venture capital is actually decreasing. This means we will see companies get funded in the near term, but unless things change, we’ll see far more demand on venture money then there will be supply as the year progresses. What this means for Chicago is that the venture marketplace will evolve. We’ll continue to see successful Chicago exits, and we’ll continue to see capital find good companies with savvy founders. But the quality of businesses will go up as they compete for scarcer resources. Lon’s betting his money on this evolving ecosystem. I’m going to bet my brains, skills, and talent.
Action: Buck trendiness, avoid “sexy” sectors, and focus on smart business.
Five Takeaways, five new perspectives, and five concrete actions – and that was just the first 90 minutes of the event. Thanks to the @chicagolandec for putting this on. Now it’s up to you and me to make the most of 2013.
* Adam’s column, Mission Control, is about launching a startup and tracking its rise. From overcoming setbacks to ultimately (fingers crossed) fulfilling his mission, Adam Lupu offers his inner thoughts and outer workings while building a company. Read more of Adam’s “Mission Control” column here. *