Building a Disruptive Technology

I wanted to back track a little today on my product positioning article to talk about building a disruptive technology.  C’mon guys…I thought we were beyond the products?  (Kidding ;) …alright that wasn’t funny, I have a bad sense of humor).

Let’s talk about how a disruptive technology is different than a streamline product, how it affects you as an Entrepreneur or start-up, and how it alters your strategy and fundraising goals.

What is a Disruptive Technology?

A disruptive technology is a product that disrupts a traditional market.  I’m sure most of you start-ups out there have heard this is the “uniqueness” venture capitalists look for.  Yes, it is.  But unlike streamline products…now we’ve got a whole different set of issues to deal with….and sadly, you will very likely fail unless you are very, very careful (just telling the truth, no matter how hard).

Positioning Disruptive Technology

Disruptive products are very difficult to get an accurate product positioning strategy and market positioning strategy going with.  Lets use the TV as an example.  It was a disruptive technology.  Imagine this guy probably went around pitching it to Venture Capitalists, and they look at him and ask him what problem he was solving.  Well, he wasn’t solving a problem…because we didn’t have a problem with no TVs.  Now though, if you took away TV’s…we would have big problems.  So essentially, this product created a solution for a problem that didn’t exist, which was adapted by the market, and basically created it’s own need.  Still following me?

So let’s put ourselves in a venture capitalist’s shoes for a minute.  How the heck did we know someone would need a TV?  How BIG of a risk was this…to just assume people would adopt a technology they had never seen?  Besides, think about all the other risks…because that Entrepreneur now had the chicken and egg problem.  Which comes first?  This guy set out to invent a TV, but how would he get people to start putting stuff on the TV?  See what I’m saying?  I bet this guy had to fight for 10+ years to get a TV to market (hense the phrase: never, ever give up).

Product Development Risk vs Market Risk

My friend and mentor Daniel taught me about risk.  He made it very clear: Your job as an Entrepreneur or founder is to eliminate risk.  Many founders or entrepreneurs start by elminating product development risk.  Then the venture capitalist will often swoop in and eliminate market risk.  Problem, if the disruptive technology doesn’t work for the market (in which case, alot won’t).

The point to all this was, you have to focus on eliminating those market risks first with a disruptive technology.  It doesn’t matter if you build it, because we don’t have any proof they will come.  If I were a venture capitalist, I would rather invest my money into paying to build a disruptive technology after some Entrepreneur showed me this was viable by going out there and proving it in the market.