10 Simple Steps to a Billion Dollar Business
How many times do you come up with an idea and think to yourself, ‘Wow, I should really do that.’
People in general have the capacity to come up with great ideas. We are all inherently creative to some extent. But there are a few key factors that separate great ideas from great technologies and from great businesses.
In this current global economic environment, a lot of businesses are struggling. There’s a lot of doom and gloom about. Yet it seems every other day there’s a story about successful technology companies making billions of dollars.
Recently the ‘Billion dollar Buy-out’ is the catch phrase running around tech hubs like Silicon Valley. But what takes a company from being worth nothing with a great technology to, a billion dollar business?
Before we look at the answer first I should point out that, like with the English language there’s an exception to every rule. There are some companies that just have technology so good it sells itself.
A good example of that is Atlassian. Atlassian is an Australian private company that has no sales force, just a great software solution. They develop proprietary software that helps companies track information, analyze data, collaborate on documents and develop their own programs.
Not quite a billion dollar company yet, Atlassian has gone from start-up to about $200 million in just 10 years. Their clientele includes eBay, Facebook, Twitter and LinkedIn.
Also there are some great technology companies worth billions of dollars like photo-sharing website Instagram, and microblogging platform Tumblr. But…that doesn’t make them great businesses either. Mainly because they don’t actually make any money. These two are examples of a great idea that people love, but don’t pay for.
But there are a lot of great ideas in the world. A lot of inventions, a lot of smart people coming up with world changing ideas. Some get lucky (like Instagram and Tumblr), some fail and some take years of hard work.
For those ideas to become great companies, the pathway to that destination is relatively simple.
1. Have an idea,
2. Turn the idea into an invention,
3. Sell the invention to some people to see if it’s good,
4. Create a business to sell invention to more people,
5. Have plan for business, make it big,
6. Sell invention to many people,
7. Make invention better,
8. Make company bigger,
9. Repeat cycle and add to business model,
10. Sell for a billion dollars.
Sounds simple enough? Well unfortunately it’s not. Most people get to step one easy enough. But then most people will fail at step 2.
For the very few that make it to step 2. Most of them will fail at step 3. And for those that make it to step 4…they are likely to fail in the first year of business.
But some do make it through the other side, and still can’t take great technology to a great business. Here’s a couple of examples of great technology, but not great businesses.
The launch of Segway had hype and fanfare like nothing before. It was the answer to the problems of personal transportation. It was a game changer…well that’s what the owners believed at least.
The Segway is actually an amazing piece of technology. With inbuilt gyroscopes it’s a self-balancing battery powered transportation device.
It’s got a swathe of computers and motors that work in tandem to make the machine work. But Segway never really took off as a business. Why?
Well the technology is great and the sales pitch is outstanding. But the Segway didn’t actually solve a big problem. It was just something new and interesting. It ultimately failed to disrupt the transportation market it was aiming at, personal transport. People couldn’t afford it and didn’t find it particularly helped them in any way.
Cassette tape ended the reign of the record player. The ability to have a compact portable audio device was ground breaking, but then CD’s came along and spoiled the party for cassette tapes.
CD’s were the major format at the time, and dominated the music industry for many years. But in 1992 a new technology and format came out that was going to spell the end of CD’s forever. It was great technology, it was the MiniDisc.
You could quickly search through discs, and even record and edit on the portable device itself. It was better tech than all other audio formats.
But the problem with MiniDisc was hot on its heels was still better technology. Technology that would change the way we listen to music, and change the whole music industry forever. MP3’s and MP3 players.
Each of these examples highlights a different problem that stops great technology from being a great business.
Segway had tunnel vision and weren’t prepared to accept that as great as their technology was it didn’t really solve a problem for lots of people. And although they are still a business, they certainly aren’t a great technology business.
MiniDisc weren’t open and aware to other technologies in the market place. They failed to appreciate the market in which they were trying to build a business. Within a few years a superior technology simply overtook it.
But for point of comparison, let’s look at some great business, and see what made them stand out in a competitive world of technology.
You simply can’t go past Apple when it comes to turning great technology into a great business.
When Steve Jobs and Steve Wozniak put together the first Apple computer they didn’t know the impact it would have on the world. But what they did have was a great vision to put a Personal Computer in the homes of millions of people.
The benefit they had here was that they started a whole new industry. The Personal Computer didn’t exist at that stage. So the two Steve’s had the advantage of being early movers.
That’s not to say there weren’t competitors. IBM and Dell became competition, as did Microsoft when it came to operating systems and software. But what Apple did was make their products beautiful and easy to use. And what they were able to do was design, market and sell their products like no one else.
Although not at the pinnacle it once was, Nokia is an example of taking great technology and turning it into a great business.
Mobile phones were all the rage from the late 80’s into he 90’s and of course the smartphone revolution today. But Nokia dominated the mobile phone market through the 2000’s. How?
What Nokia did was make a product accessible to the masses using available technology. Mobile phones were expensive devices that only the affluent and rich could afford.
Nokia changed all that by putting to market an affordable mobile phone for everyone. This led them to having the top 6 best-selling mobile phone models of all time.
They sold almost one billion units worldwide between those top 6 models alone. Nokia phones are still the number one used-phone in developing nations across Africa.
There a couple of key factors that made these two companies tech giants of the world.
Apple had the combination of a great technical guy in Wozniak, but a great salesman in Jobs. Without the creative and marketing genius of Jobs, Apple would simply be a company for computer hobbyists. If Wozniak had gone it alone he wouldn’t have had a great company. If Jobs had done it himself the company wouldn’t have had great technology.
Likewise, Nokia didn’t necessarily have the marketing genius and personality of a Jobs-like leader. But they identified an unmet need in a market that affected millions of people.
They created a big solution to a big problem. And that was to put affordable mobile phones in the hands of everyone. They also had the advantage of being the first company to mass market cheap mobile phones.
When we look at these basic examples of great technologies, it’s fair to say not one technology is necessarily better than another. They all meet an unmet need, and they all were new technologies of their time.
But what companies like Nokia and Apple were able to do was have the leadership and management in place to make great technologies into great businesses. They also met an unmet need that impacted millions of people around the world and were also able to make their technologies simple and accessible to everyone.
And that’s the key difference between great technology, and great technology companies. It’s really got nothing to do with the technology at all.
It’s about the people that lead the technology and the team that’s involved to take it from good to great. It’s about making it accessible and relevant to lots of people, not just one small segment.
These companies also had the foresight to see when something wasn’t working. For them failure was par for the course, just a part of the process. And both Apple and Nokia had their fair share of failures. But they saw the problems, and fixed them the next time around.
So here’s the checklist that makes a great business from a great technology.
- Great Idea.
- Great Technology.
- Technical People: Innovators, Programmers, Scientists.
- Non-Technical People: Visionaries, Marketers, Sales people.
- A plan to change the world.
- Humility to know if something isn’t as great as you thought it was.
- Drive to keep going if the idea and the technology is great enough.
With the steps outlined and the checklist above, there’s potential to turn great technology into a great business. It’s hard, takes years and there’s a very good chance it won’t work.
But the right tech, the right people, the right plan and the drive to make it happen, gives a fighting chance of making a truly great technology business.
for The Daily Reckoning
Ed. Note: Great tech, great people, great plan… great company! Simple! Of course, it’s not that simple, and lots of companies are missing one or all of these components. That’s why Tomorrow in Review spends countless hours searching for the best of these tech companies… and offers you several chances to get in on the ground floor. It’s a completely free newsletter that is delivered straight to your inbox every day. Sign up for free, right here, and get in on the world’s leading tech companies… before they become “billion-dollar buyouts.”