Should the entrepreneurial development infrastructure, including business schools, incubators, and local developers, go from a strategy-focused approach that benefited 99% of UEs to a product-focused approach that benefited 1% of UEs?
Today’s entrepreneurial development relies on finding marketable products, promoting them through pitch competitions and shark tanks, and supporting them with angel and venture capital (VC), sometimes known as the product-angels-VC strategy.
But is this the most effective plan for fostering entrepreneurship?
Think about how some of the most successful businesspeople of the VC era’s past 60+ years developed:
Microsoft: By negotiating a licencing agreement for the IBM PC without giving IBM an exclusivity or the opportunity to buy, Gates acquired the operating system and ousted the powerful IBM from its throne. In order to close the sale and launch the project, Gates used personal funds and licence income. Because he wanted advisors with stake in the business, he accepted VC after launch. The secret to his success was not VC.
Walmart: Sam Walton began by using $25,000 from his in-laws to launch Walmart and defeat Kmart. His first plan was to dominate the country market first, then use the money he made from there to launch an unstoppable attack on Kmart’s metropolitan stronghold. His idea wasn’t particularly original, and he didn’t use venture capital, which is why it didn’t contribute to his success.
By copying MySpace and enhancing the strategy, Mark Zuckerberg of Facebook defeated Rupert Murdoch. Not with a novel idea, but with a great approach, Zuckerberg achieved his goal. He used the resources of his family and friends and concentrated on college students. He used venture capital and angel funding, but only after demonstrating the unicorn potential of his venture.
Wayfair: Niraj Jain established his company’s dominance in the online furniture market before securing venture capital funding for Wayfair. When the business was ten years old and had roughly $600 million in sales, he raised his first round of capital in the amount of $36 million. That is not seed capital. That is capital at a late stage.
Only 1% of the 85 billion-dollar, unicorn-entrepreneurs actually received VC funding based on technology. Unicorn-Entrepreneurs often received VC funding, if they required it, after engaging in strategic innovation, that is, after creating, validating, and putting into practise a potential unicorn’s business plan. 76% never received VC.
Compared to product innovation, strategic innovation and execution abilities have created 99 times more unicorns.
The majority of items may be duplicated and enhanced. First-mover products made up just 11% of the market. 89% of early adopters failed or were outperformed. Success requires more than being the first to market with a good product. It requires a clever plan and the ability to carry it out.
Emerging trends frequently alter the game’s rules, which strategic innovation then uses to its advantage to win. New trends based on ground-breaking innovations render obsolete outdated goods, methods, resources, and expertise. The initial movers may enter with a product that fits the growing trend, but clever movers harness the trend’s changing influence to dominate with the correct strategy and execution abilities.
99% of Unicorn-Entrepreneurs reached their Aha thanks to strategic innovation and VC funding after their breakthrough. Entrepreneurs might gain from understanding how to use financial-savvy techniques and talents, rather than ideas, to cross the VC gap from Idea to Aha. Nearly all Unicorn-Entrepreneurs who succeeded in new industries did so by identifying the proper strategic breakthroughs rather than product innovations to close the gap.