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Beyond Silicon Valley: How Start-Ups Succeed in Unlikely Places - Coggle…
Beyond Silicon Valley: How Start-Ups Succeed in Unlikely Places
High-growth tech start-ups are the business
miracle of recent decades.
companies that create truly new offerings have a long, arduous path to growth that may include educating customers about how to use the product or service.
In Silicon Valley, the quest for growth all too often trumps
sustainable unit economics and profitability
Entrepreneurs outside tech hubs take a different approach from the one favored in Silicon Valley — and are achieving outsize success.
Start-ups operating amid conditions of relative scarcity, where capital and talent are hard to come by and economic shocks are more likely to occur, face unique pressures
These “frontier innovators” hold important lessons for companies of all sizes and in all locations — including Silicon Valley itself.
If the number of users
takes off, start-ups can indeed become very large, very fast
In Silicon Valley to burn through capital, innovators on the frontier are less likely to tolerate losing money on each customer
But they tend to avoid the high-risk grow-or-die
approach: They focus on both growth and profitability
Even companies in emerging markets that serve very poor customers charge for their services from the start rather than subsidize the business until they've achieved scale.
It takes time — and resilience — to build an industry from scratch, and this too makes a growth-at-all-costs approach untenable
A disproportionate number of the frontier start-ups I have worked with focus on providing services that meet universal human needs
some firms don't have the luxury of choosing a balanced approach to growth and instead are forced to keep an eye on the top and the bottom lines
In the mythologized view of Silicon Valley, startups rush to develop a minimum viable product, raise capital, and lay waste to train inefficiencies in the process.
A disproportionate number of the frontier start-ups I have worked with focus on providing services that meet universal human needs
Venture capital can be a powerful tool that helps start-ups accelerate at critical moments. But too much of a good thing can distort the market
Within existing industries, entrepreneurs often set up
operations in new ways that improve people’s lives.
Entrepreneurs far from innovation clusters lack access to large amounts of venture capital, nor is there an investment class that will put up with growth without profitability for long periods.
One way frontier innovators overcome shortages is to build distributed workforces that tap the best talent everywhere
because innovators at the frontier invest so much more in finding and training candidates, they take a longer term view of the employer-employee relationship.
Companies operate under the assumption that employees are replaceable and thus high churn is an accepted by-product
Another response to a lack of readily available talent has
been for companies to build and train their own pipelines
from innovation clusters, however, recruitment
is a universal pain point.
frontier innovators take a different approach to retention, focusing less on workplace perks and more on incentives that reinforce values such as global connectivity. Branch, which makes microloans to customers in emerging
frontier innovators take a different approach to retention, focusing less on workplace perks and more on incentives that reinforce values such as global connectivity. Branch, which makes microloans to customers in emerging
Stock options, Silicon Valley’s de facto financial retention
tool, are challenging to replicate on the frontier take longer and are less proven
in many emerging markets stock options are not well understood by employees, sometimes the legal structure for them does not even exist.
As a result, many founders are experimenting with new models of employee ownership that are better aligned with the frontier context.
The companies have overshadowed a growing and impressive cohort of high-growth companies that have taken root elsewhere. But that is changing. Successful startups at the border have lessons to teach us; in fact, your model may turn out to be the most durable.