Peter Rip writes:
There is an enormous temptation in startups to think and talk expansively about a long-term vision centered on the technology of the Company. That vision often includes the word enable as in we will enable Thats your first clue. Enable is one of those value-halving words. So are Discover, Context, Create, and Build. All those words really say, The proof of value is left to someone else. That applies equally to the valuation. The proof of value is left to someone else because we can’t articulate it.
Companies started by technologists routinely fall into this trap. (I mean both business and engineering technofiles, BTW) They dont start with the intent of solving a specific problem. They start with the intention of leveraging a specific technology. The fact that the technology is a piece of many potential futures seduces the team to think they have a big opportunity. It is uncomfortable for the team to commit to a market because they dont know the end user. There are two solutions to this. Turn inward and build technology, or turn outward and recruit people who do understand the solution. It is dilutive, but if it doubles your value, you cant afford not to do it.