This is a series of seven common entrepreneur mistakes, and how to fix them.
The context will be biotech entrepreneurs, however these principles can apply to entrepreneurs in any industry.
Most successful products today are enabled by some novel technology that provides the features and benefits of that product. Entrepreneurs utilize this underlying technology and direct it towards a particular market application. A common mistake of entrepreneurs is, although they have identified a great technology, their choice of market application is not ideal. This problem usually occurs when a product application was chosen because of the entrepreneur’s familiarity with one particular problem—or shall we say—their lack of familiarity with a more acute problem. As a consequence, there is lackluster investor interest and limited interest in their product. Entrepreneurs should recognize two important principles at the outset:
Principle 1: Technology is Agnostic to any Single Market Application
Technology itself is not beholden to any specific market application. For example, in the biotechnology industry, a scientific discovery that interrupts cell cycle control can be directed toward the development of a therapeutic for breast cancer, prostate cancer, or brain cancer. Often the choice of application is a result of the entrepreneur’s familiarity with a market problem, or more often—convenience. For instance, if down the hall from the entrepreneur is a researcher who has tumor tissue available from breast or prostate cancer patients, the market application can easily be directed toward breast or prostate cancer therapy. However, glioblastoma, a type of brain cancer with a more acute market need has a lower barrier for adoption in terms of effectiveness. The National Cancer Institute’s website lists over 55 drugs used to treat breast cancer. Whereas, the FDA approved just 5 drugs for glioblastoma—none are curative.
This same technology applied to breast cancer or prostate cancer would have higher hurdles of efficacy than for glioblastoma due to the greater number of effective alternatives. The market application for a technology may have been selected because of convenience when it may not have been the best application for business success. Certainly, there are technical, biological and regulatory issues that factor into the selection of a market application, but at the outset entrepreneurs must first seek to align their technology with an acute market need in order to be successful.
Principle 2: Most Products Today Possess an Underlying Technology Platform
Technology-based products arise because of an underlying “technology platform” that enables the product features, but the technology is capable of being directed toward many other products for different market applications. Often, the underlying technology platform is not realized because the focus has been on the product application. Also, the platform technology of any particular product is sometimes difficult to characterize at first, but with practice it becomes easier to identify and redirect.
Technology Transfer Offices at universities and research institutions possess shelves full of unlicensed patents, not because the technology is ineffective, but because the market application chosen is not appealing to potential licensees. Almost all products have an underlying technology platform that would allow it to be redirected toward another, possibly better, market application.
How to Avoid this Entrepreneur Mistake?
Realize that the market application of a technology is usually a choice, and is often selected based upon the entrepreneur’s personal awareness of a particular market need. Practice getting out of your comfort zone and force yourself to be exposed to problems in other industries. Learn from experts who have different backgrounds and experiences than yours. When you become familiar with the nuances of diverse problems you can apply many technology solutions to solve that particular need. Successful entrepreneurs make themselves aware of problems confronted in different industries and markets. Unfortunately, if you are unaware of market problems, your abilities are self-limited. It is as if you are repairman with only one tool—if you are a hammer, everything just looks like a nail!
The most successful products arise from an entrepreneur’s awareness of an acute unmet market need AND a great technology solution. In other words, successful products combine great technology with a market application that has an acute unmet need with few alternative or substitute products.
There are two critical elements that underlie successful products 1) the novelty and useful capabilities of the technology 2) the acuteness of the market need and the lack of adequate substitutes for the product that the technology supports.
If you recognize these principles at the outset of your entrepreneurial career, you can better align technology with a critical market need, and you will have greater investor interest and market receptivity.
Remember, technology is agnostic to the market application—the same technology utilized in cell phones for wireless communication can be applied to medical devices for heart rate monitoring, or leveraged in the petroleum industry for real-time assessment of oil rig production.
Never forget that the bigger or more critical the problem, the bigger the market need and the more important the solution. Find critical problems, even if they are in a niche market. There will be lower hurdles for acceptance in markets where few effective products exist. The height of the hurdle for product acceptance is directly proportional to the number of competitive products and good substitutes available for that particular need. A market void of effective products or good substitutes has increased interest from investors, and lowered hurdles for adoption. Remember to align your technology to solve the most critical need, and you will never be stuck with a great technology solution in search of an important problem to solve.
© 2016 Craig Shimasaki