How to be in the Right Place, at the Right Time, With the Right Story
People in the entrepreneur ecosystem often talk about the importance of a company being in ‘the right place, at the right time, with the right story’.
In fact, many investors view this as the secret of knowing who to back.
Now you might feel that this phrase perfectly describes your business, but unless you can communicate this to others, how will they see what you see?
The Right Place
There are two parts to being in the right place:
- Where your company is based can affect perceptions about your innovation.
- Demonstrating clarity about markets you need to access is key to confidence in you.
The good news is that being based in the UK can positively enhance your reputation with international investors. 47% of the 30 international investors surveyed for Scaling up: the investor perspective by Innovate UK said that UK scale-ups are more attractive than those in other countries. The relatively advanced innovation ecosystem in the UK and a perceived superior management team quality were the two reasons most cited for this. Anecdotally, on the Clean + Cool Mission, we’ve heard similar things from US accelerators who see the research coming out of UK academia as world-leading and a key factor in our innovation ecosystem, through Knowledge Transfer Partnerships and businesses spinning-out from universities.
Ninety-six percent of investors believe that having a strong management team was important to the success of a business (Scaling up: the investor perspective by Innovate UK). In fact, it was rated as the most important factor for growth ahead of market demand, strategy and vision and access to finance.
Not knowing where your market is, can massively undermine confidence in your management team.
The Right Time
In 2015, Bill Gross (the inventor of the cost-per-click model and founder of Idealab, the longest-running tech incubator) gave a TedTalk. In it, he shared research he’d done into why start-ups succeed or fail. It turned out the most important factor was timing. Timing accounted for 42 percent of the difference between success and failure. Team and execution came in second, and the uniqueness of the idea, came in third.
He gives three examples of companies where timing was key to their success:
- Airbnb – It came out during the height of the 2007-09 financial crisis. Just when people really needed extra money, they could easily rent out a room or home to a stranger.
- Uber – Uber also emerged during 2007-09 financial crisis. Despite a strong business model, what Uber most needed was to get drivers into the system; and drivers were now looking for extra money.
- YouTube – Just two years after the codec problem, which made it hard to watch videos online, was solved by Adobe Flash and when broadband penetration crossed 50 percent in America, YouTube appeared. YouTube didn’t even have a business model when it first started, but it was perfectly timed.
This doesn’t mean that launching during a recession is the key to success for all businesses, only that 2007-09 was great timing for the specific business models of Airbnb and Uber.
The Right Story
Being in the right place at the right time is easy to identify retrospectively – when a company has been successful. The important thing creating the impression that your company is in the right place at the right time – that’s where the right story comes in.
The impression of ‘right place’
Naming lots of different markets across lots of different sectors can make you look un-strategic and scattergun. Yes, your innovation might have lots of different applications, in different sectors around the world; but a strong leadership team knows who they should go after first and where these customers are.
If you’re struggling to narrow your customers down, the Pareto principle can be helpful – 20 to 30 percent of your customers usually generate 70 to 80 percent of your profit – who are these customers and where are they?
Investors want to know that your innovation hasn’t been developed ‘in a vacuum’. Even if they think you haven’t quite found the right customers, sectors and markets yet; identifying someone is better than identifying everyone. At least that way investors might believe that you’re strategic enough to find your market – the right investor might even help you with this…
The impression of ‘right time’
If you have got a truly unique technology and a Story Canvas that features the current wants and needs of your Heroes (customers), a super topical Ordinary World and a Compelling Villain that is an immediate problem in need of a solution right now – then you probably don’t have to worry about creating the impression that your time is now.
But most innovations exist within a technology category. And tech categories go through a ‘hype cycle’ (created by technology research, and advisory firm Gartner) that looks like this:
This can be both a blessing and a curse. Investor interest is likely to be high if your technology category is nearing the Peak of Inflated Expectations. If, however, your tech category is in the Trough of Disillusionment or even looks like it has gained mainstream adoption, it might appear to investors as your time has passed.
If your technology is perceived negatively because it’s in the Trough of Disillusionment or is seen as now mainstream, what you need to do is tell a story that differentiates your innovation from what has gone before.
There are four approaches to this:
- Redefine the category
- Build on the category
- Borrow from a category
- Create the category
- Redefining the category:
Usually, when a tech category is engaged in the hype cycle, many subcategories emerge. For example Software as a Service (SaaS) has now fragmented into subcategories such as SaaS as a Platform (SSP), Digital Experience Monitoring, Desktop as a Service (DaaS) and Integration Platform as a Service (iPaaS).
These subcategories all sit at different points on the hype loop. According to Gartner’s Hype Cycle for Software as a Service 2020 – SSP is on the rise, Digital Experience Monitoring is at the peak, DaaS is sliding into the trough and iPaaS is climbing the slope to the mainstream.
Try to discover and map out the subcategories relating to your innovation. Aligning your story with a subcategory on the rise or at peak can help convince investors that now is the time to back what will hopefully be the company to take the technology mainstream.
- Building on the category:
This is where companies find or create labels for their technology that suggests a game-changing improvement on what has gone before. As this relies on people liking what has gone before, this approach works best with technologies that have become relatively mainstream.
Web 2.0, Second Generation Solar and Smart Phones are all examples of where this type of description has been successful.
- Borrowing from a category
Sometimes your tech innovation might not be new in general, but might be new in the sector in which you operate. Familiarity with technology from other sectors encourages people to believe that the time has come for it in your sector.
Octopus Energy has done this with its promise to bring ‘the same kind of platform that brought prices down and service up in retail, to the energy market’. The fact that it has a team with an e-commerce background, is key to believing in its Kraken platform proposition.
- Creating the category:
This is the hardest way to reinvent a tech category to make it look like its time has come. It involves telling a story that positions your innovation as something entirely different from what has gone before.
As an example think about the way Apple CEO Steve Jobs positioned the iPad.
Tablet computers, or ‘pen-based computers’ as they were sometimes called, were all the rage with investors in the 80s and early 90s. Many companies had tried and failed to create a mainstream tablet market. Microsoft even took a run at it with the Tablet PC in 2002. The problem was people didn’t believe in tablets after all the hype, and they didn’t want a PC in tablet form. In other words, Bill Gates got the story wrong and failed to escape the hype cycle’s Trough of Disillusionment.
In 2010 Steve Jobs convinced us all that the time was now by creating a new category. What he sold the world wasn’t a tablet or a more portable PC. His iPad launch sold us a new kind of device:
“So much more intimate than a laptop and so much more capable than a smartphone.
“iPad creates and defines an entirely new category of devices that will connect the user with their apps and content in a much more intimate, intuitive and fun way than ever before.”
We might not all be Steve Jobs, but sometimes you hit upon a way of describing why your product that is so different from an existing category – that it comes to define a new category.
In conclusion, when investors are looking for companies that are in ‘the right place, at the right time, with the right story’ – they are just really looking for the right story.
Your story is a living thing. You will need to periodically review your Story Canvas; to make sure the wants and needs of your Heroes (customers), their Ordinary World, their Compelling Villain and the way you describe the solution you offer as a Mentor are up to date.