Facebook, Zynga, Google, Foursquare, Linkedin, Twitter. There's no shortage of news, capital and buzz surrounding technology giants and startups. Everywhere you look, everywhere you read, it would appear that technology rules the day. There is no doubt we are beholden to the wonders of the latest and greatest technology improvements that make our lives easier, healthier, and more productive. The question then begs, what if you have an idea for a company that is not technology-related, is not going to revolutionize the way people socialize, communicate, shop, or -- gasp -- is an actual brick and mortar business? Can it be done and do you have a shot?
Recently, I sat down with a friend to discuss a budding idea she was working on. After discussing the merits of entrepreneurship and the risks of cutting out on one's own, she finally summarized her main concerns: "Aren't most startups tech-related in some way?" and, "If I don't have a tech background, how will I be able to raise money?" Forget that her concept was completely non tech-related (a unique restaurant), it was fascinating to hear such bizarre but oddly pertinent questions.
With the overabundance of venture news surrounding the seemingly endless tech boom, it's no wonder that potential entrepreneurs fear that non technology-related startups are a waste of time. Of course, it makes sense for the majority of businesses to embrace social media, e-commerce and any logistical ease created during the past decade. So while your potential company may not be solely focused on tech, be sure to embrace all that it can do for you.
Yet given the right product and the right individual, the market has shown time and time again that good products, tech-related or not, attract good people and good capital. SecondMarket, which works with companies to create a market for typically illiquid assets (think private stock and restricted equity), realized very early on that their specialty and success hinged on personal networks. Using old fashioned in-person meetings and phone calls was the key to early user understanding and adoption. Verbally walking a potential client through a completely new concept required SecondMarket to rely heavily on people instead of software. While they have recently launched an online marketplace for their services, it was the early ability to prove the business model, completely independent from technology, that paved the road for their current success.
Ultimately, your non technology-related idea or nascent startup should seek to attract an audience and capital using one of these three baselines:
1) Uniqueness. A vending machine for movies (Redbox). A reverse ATM which provides cash for your old electronics (Ecoatm). Quick, easy, but above all else, unique.
2) Painkiller. A device that translates and stores all of your receipts (Neat). Not a placebo, but a universally understood solution to a massive annoyance/problem.
3) Simplicity. A parent friendly retail toy store where everything is under $5 (FiveBelow). Parents get it, kids love it. Nothing more, nothing less.
From an investment standpoint, the concern behind any non technology-related startup is its' ability to scale quickly. The theory being that tech startups require little manpower and with the right software can spread virally. Conversely, physical assets and manpower require more capital and more patience. That said, a variety of venture firms have successfully put their weight behind the aforementioned companies because they encapsulated one, if not all, of the Unique, Painkiller, Simple attributes. While each of these companies now has large components of technology/social media woven into their business models, they all began and attracted investment and revenues because of their physical attributes or presence in a marketplace.
Follow Patrick FitzGerald on Twitter: www.twitter.com/PatrickKFitz