Recently I was on Fabian Böck‘s BOECKBX podcast and talked a bit about corporate innovation and the effects of the pandemic on businesses – including my own.
Have a look and listen.
Based on my own experience working in outsourced innovation with governments, organisations and some of the largest companies in the world on and off between 1996 and 2010, I do not think it is a good idea to outsource (business model) innovation.
On a side note, we need to keep educating journalists on the difference between “Existenzgründung” (lifestyle business founder and freelancers mostly exchanging their hours for money) and startup founders. One doesn’t equal the other.
That the journalist writes I had a “Karriereknick” (career bend, in the negative sense) also goes to show that they have little knowledge of the world of startups. I’m a startup founder. Risk of failure is assumed as real. Not an office hero, chasing the 9-5 career. One does not equal the other. The failure I spoke of was harsh, but it was the best learning experience I’ve ever had so far. If anything, it was a career bend in the positive sense upwards and onwards.
And I was wearing a OnePiece Onesie, not a track suit. Let’s get that straight too. :)
There is something I’ve been wanting to share with you for a while: I’m single again after a 7.5 year relationship ended a while ago.
So that means…
I’m free to roam the world and do as I please again
If you ever had a crush on me, NOW is YOUR time to message me for a date or start developing a crush AND message me for a date! (I promise it will be our little secret – seriously!) LOL 😉
It’s been a while now and people close already know. That is why I can share it with you by now. We tried everything and we were both miserable for a very long time – so we finally decided to do the sane adult thing and end it. I guess the breakup was as amiable as these things get and we’re still very good friends.
Things change and you start to move on.
Now I have opted to be a public person – but she has not, so this is all I am ever going to be writing about this, but I thought I’d share the life event with all of you, sticking to my philosophy (or prophylactic self-help) of full disclosure living in public, so now you know what that other thing I mentioned that I couldn’t talk about back then, because it also concerned another person with a right to their chosen privacy, not just frivolous old me.
So we’ve decided to let our shared apartment go and I have decided put all my worldly belongings, except some clothes and Macs, in storage for the next 12 Months.
Starting from August 1st I’ll be living on a mattress or a couch out of a suitcase around the world.
No worries Cologne, I’ll still be based here for now.
But stay tuned for what I’m up to in the next 12 months.
First up, I am going to take a couple of months of vacation to move on, reflect, recuperate, regain my fitness and health to prepare myself for what is to come…
Where do you think I should go next?
So good bye, home office…
And let me take a moment to clarify.
No, I haven’t turned into a friggin’ hippie in search of “myself”. I’m not going to sit on a beach on Bali meditating and watching sunsets with you, wasting time and opportunities. Jesus H Christ on Rubber Crutches, what were you guys thinking? #lulz :P
I was always found. I know my purpose: Helping people through dispersion of knowledge. Dispersion of how to create a startup, how to create value for yourself, your family, your community, your country by private initiative, by startup entrepreneurship, by way of a more scientific approach.
Secondly, I’m already traveling the world because of this stuff – so no big changes here. Seriously. #nodrama
Now let there be no doubt that I’m an self-employed entrepreneur first and foremost; So NO, of course there is no way in hell I’ll be coming to your neck of the wood if someone is not paying for my ass. Have you lost your mind? This is not how the world as we know it works. ;)
That said, if you’re not corporate or you’re not getting paid for whatever you’re inviting me for, I’ll be happy to come over if you (aka your sponsors or overlords) cover travel (economy is just fine) and accommodation (a couch and hot shower = excellent).
If you’re corporate and/or you are getting paid for your event, I’m happy to put you through to my agent for booking and availability. If you are getting paid (e.g. you have a salary), I am getting paid too. That’s a straightforward deal.
I have the greatest respect for Mark Suster as an entrepreneur and investor. I really treasure his insights. I also have great respect for the theories and methodologies of “competing against non-consumption and “jobs to be done” of Clayton M. Christensen. I teach them to startup founders and corporations.
Let me be crystal clear: When I talk about the benefits of crowd funding for bootstrapping and validation, I’m talking only about crowd funding without selling equity.
I argue selling your actual product or service is a great way to bootstrap and validate your business, in effect using crowd funding as a channel for taking pre-orders.
I make a clear distinction between trying to crowd fund an idea or a vision and crowd funding a real product or service. That is to say, I think there is a real difference between selling your product or service (asking in effect the market to pay for it and help you validate if they will buy it) as the reward or perk you offer instead of offering ephemeral perks and rewards not directly related to your product or service (which will not help you validate if people will buy it).
“If I had asked people what they wanted, they would have said faster horses.” -Henry Ford
“Disruption happens when companies use technology to help customers “achieve what they already had been trying to do.”” -Clayton Christensen
The theory simply asks, “What job your product is hired to do?” And if you want your customers to switch products you need to ask, “Why would they ‘fire’ the other product and ‘hire’ yours?”
Competing Against Non-Consumption (disruptive innovation)
True disruption occurs when companies compete against non-consumption. “A new-market disruption is an innovation that enables a larger population of people, who previously lacked the money or skill, now to begin buying and using a product and doing the job for themselves,” – Clayton M. Christensen.
If you’re an upstart chasing after the non-consumer, the great news is that your audience is non-discriminating. They want something easy to use and they want it cheap. They’re not expecting that same level of quality and performance. “Because,” says Clayton M. Christensen, “something is so much better than nothing.”
(Business Innovation Factory, 30.01.2006)
I think it’s obvious that Crowd Funding fits the properties of a disruptive innovation and I don’t think anyone is arguing otherwise.
However, (or perhaps not that surprising as Suster is already vested in the world view of the incumbent as a VC) Suster and Christensen seem to ignore the disruptive power of crowd funding as seen from the side of the table of the entrepreneur.
I sense the classic argument we always hear from the incumbents in the talk between Suster and Christensen: It always seem to revert to the argument of quality – as if that is all there would be too it.
We’ve heard this before.
Remember the records industry? “Who would like mp3 files when you can have quality audio on CDs?” Turns out the story was rather people want the freedom of choice to select just the good songs without the 10 other crap fillers on a CD, and would quite eagerly sacrifice audio quality for the ability – hence Napster was wildly successful, hence they sued Napster out of the world BUT without taking over the space of Napster, still not recognizing what people want, what the new opportunity offered them.
And we’ve seen how this turned out before.
Instead of seizing the opportunity for themselves, iTunes, Last FM, Spotify, Amazon, Pandora et al came in and screwed the records industry out of the opportunity – and no one was sorry for their loss but themselves.
And it’s the same old story, same old arguments which are today being bandied about in the discourse about with Massive Open Online Course (MOOC), but that’s a different albeit highly related discussion. Check out Clay Shirky’s post on MOOCs for more on that topic.
Christensen teaches us about the concepts of “jobs to be done” and “competing against non-consumption”. As far as I can tell, Crowd Funding without selling equity is doing both for the entrepreneur very well.
To the best of my knowledge, crowd funding without selling equity is:
Getting the job done for entrepreneurs of getting early stage funding, or perhaps more precisely validating their product in the marketplace (explicitly or implicitly) without substantial financial risks and without taking a lot of time producing something first that perhaps the market doesn’t want (negating risk and time to market or failure for the entrepreneurs).
Enabling entrepreneurs that otherwise would not get the attention – let alone the funding – of a VC, bank or angel, effectively competing against non-consumption (lower barrier to entry for entrepreneurs).
A highly valid MVP (Minimal Viable Product) when used correctly.
As an entrepreneur, you no longer have to ask the incumbent private equity gatekeepers for permission to play. You now have the option to walk it alone.
If you fail, there’s little to no downside. It’s a learning experience. You’ve only lost face. Get used to it! Now pick yourself up and play again. And again.
If you’re successful, maybe you won’t even need an investor at all for scaling or at least you’ll have revenue from sales as a bargaining chip to get the term sheet you want.
Am I saying that the VCs will go the way of the Dodo? No. The way of the record companies? Most likely.
VCs will have their place and will still be a highly valid or even the only right play for some types of ventures, just like the elite schools of Stanford and Harvard will not go out of business because of MOOCs.
I am saying that crowd funding without selling equity is a powerful disruptive tool for entrepreneurs.
It is enabling many more entrepreneurs to succeed that wouldn’t otherwise be able to play.
And it will enable many more entrepreneurs to FAIL – and fast, before they have spent all their savings, bet the barn, lost their spouse and spent a good part of their life building something that no one wants.
And that’s all good:
For the VCs that will be able to fund more validated businesses and proven entrepreneurs instead of throwing spaghetti on the wall to see if it sticks (perhaps at the cost of less proprietary deal-flow).
For the entrepreneurs that get to play without asking for permission and again and again ad infinitum with little or no cost and risk to learn, learn, learn.
And for the world that will hopefully see more value generated, more new jobs as a result of the lower barriers to entry for more people.
Do listen to anybody that tries to tell you otherwise – just don’t take their advice. You no longer need their permission. JFDI.