Tech unicorn bubble? When building a business, watch out or you could end up swimming with sharks
We see it all the time: the latest tech darling pouring time and money into raising their profile.
The company sponsors every event going, turn up to panels flanked by more advisors than a politician and their picture is in every newspaper going.
Don't get me wrong. In many cases this is deserved attention, as good businesses rise to the top and quite people are rightly interested. But all too often, reputational value is put before financial success.
The ecosystems in which high-growth technology companies operate have often been accused of being detached from real-world business metrics.
A combination of accessible venture capital, fired up entrepreneurs and a headlong rush to build the next ‘unicorn’ can lead to a company’s perceived value outpacing underlying true business indicators.
This hype machine helps no one. Lofty valuations built on PR are a risk to the sector as a whole, building an ever-higher higher house of cards. Last time, one stiff blow sent the whole thing tumbling down, taking the technology industry years to rebuild trust and value and taking many good businesses down with it.
Instead, entrepreneurs need to focus on building a healthy profitable business first.
It is easy to become distracted by pouring wads of venture cash into public relations and marketing, which should first be spent building the right product.
Understand your customer, build something they want, and only then make people aware of it, not the other way round.
In a world swamped by choice, even in our niche, the tough thing is not convincing people to trial a service, but getting them to stick with you after they have. This comes down to a finely tuned and well-targeted offering.
It’s very easy to eulogise about the importance of waiting until the product is right and then marketing it effectively, but pinpointing this golden moment is the real skill. It’s not like an alert pops up on your calendar. Entrepreneurs and their companies live and die by their decision making skills.
Miss this window, and you risk getting stuck in an endless development cycle, polishing an interface which no-one will ever see or calibrating the world’s best user experience, devoid of users.
Too often, pre-profit, or even pre-revenue, companies are pushed into the shark tank in the hope they will swim. Some do, some escape, but all too often it makes for a public feeding frenzy. What is needed instead, is patience and timing.
Businesses should go into the shark tank prepared if they want to come out victorious.