Startups
5 Ways Digital Disruption is Creating Massive Opportunities for Startups
Recently I caught up with Roger Seow, who is the Head of Social Media & Digital Integration at a large financial institution, and has a career that spans many years and companies. He has made a name for himself as a thought leader, who changes the status quo through the use of digital disruption principles.
During our chat, we covered a lot of ground around where the opportunities lie and some strategies that startups can use.
This article is based on Roger’s advice from many years of experience and insight, and it will also clarify some really useful points around digital.
What is digital disruption in simple terms?
It’s the use of digital technologies such as social, mobile, analytics, and cloud computing to challenge the traditional status quo of doing things. This could be improvements or solving problems on an idea that hasn’t been thought about. For something to really be disruptive it needs to be able to scale or grow quickly. Digital Disruption is everywhere, not just with startups, and they are not immune to being disrupted themselves. It’s important to be aware that the landscape has changed.
The components, that make a successful startup, are that you’re agile, nimble, willing to experiment, have the ability to execute on trends and able to make mistakes. Digital disruption is something that just happens and it’s a means to an end. Startups by their very nature are already disruptive because you can do things quicker and cheaper than most businesses. Before discussing digital disruption, Roger always stresses that it’s important to understand the four key ingredients that make a successful startup.
– What problem are you trying to solve?
Most entrepreneurs look at their startup from an opportunity lens because they are serial optimists by nature. There is nothing wrong with that but you need to make sure you’re finding a problem that actually exists. Will someone pay to have this problem solved? Is the problem large enough and is it something people care about? If your startup is able to address this then you’re well on the road to success.
– Find the right people to solve the problem
No one has a monopoly on all the skills that are required to make a successful startup.
When we talk about digital disruption it’s not just about coming up with a great idea. You need to be able to think what the future is going to look like with your solution, when it’s of scale. With this in mind, you need to think about what people you need along the journey that can perform such functions as marketing, legal, risk management, business strategy and product development. Ideally these people would have good business acumen, understand commerciality of your idea and know how to manage the startups reputation. Obviously you don’t need all of these people on day one, but you will need them on the journey.
– Have the correct structures in place
Structure has its purpose and sometimes it’s looked upon by startups in a negative way because it can potentially slow things down.
The temptation for a startup is to take shortcuts in getting something to market, but if you really want to be sustainable and successful, you need to be thinking of scale. In order to scale you need to have strong structures in place from day one.
“Try to build for scale not to scale.”
– Lastly, funding to execute
When you have thought about the first three ingredients, then you can think about how to approach the various ranges of funding in the market. Any person or firm, who is wanting to invest in your startup, will be wanting to see that you have a problem worth solving, the people to solve it and structures that will demonstrate financial discipline. When all of these are aligned then it’s a good time to look at investment. Successful capital raises are often done because of an understanding of these principles.
Now that you understand these four ingredients and what digital disruption is, let talk more about the opportunities that exist for you and your startup, thanks to our good friend digital disruption.
1. Large organisations can’t innovate as fast as your startup can
By virtue of their brand and time in business, one model your startup could consider would be to actively position yourself as very innovative for large, traditional, organisations. If you look at the recent trend in acquisitions, large organisations are seeing startups as attractive and buying them because they simply can’t innovate fast enough. One of the ways your startup could take advantage of this and prove your startups worth is to build some relationships with large organisations and then ask them to put forward a self-contained problem. Once you have their problem you could use your startup mentality and skills, to solve their problem and prove you can be a valuable partner to them.
Then what the large organisation brings to the table for your startup. is that they can help you grow to scale by exposing a number of their customers to you as a test. This partnership could be a win-win model because, in the eyes of the large organisations customers, they are seen to be innovative, without having to build everything themselves. From the startups point of you, you get to test and refine your product to a real customer base. This sets you up for success when you go to get funding and allows you to show them you have a track record and have incorporated the feedback from these customers, into your product.
You might be thinking to yourself, “I don’t know any large organisations”. Some ways, to find them, are to go to meetups, hackathon’s put on by large organisations and government-sponsored activities.
“Google staff gets 20% of their time to explore new ideas.”
It’s also important to understand that a lot of large organisations will be happy to talk to you because most of them know that no one has a monopoly of good ideas. Chose the right time to approach the “Gandalf’s” (Think, Lord of the Rings) of the large organisations, who can navigate you through the key decision makers and assist you to validate your idea further. Look to your mentors or angel investors to advise you when the right time, to engage large organisations is, because it’s different for every startup.
The other factors, to consider, is when to share your idea and how much of it to share, because your competitors might be listening. On the flip side, the question to ask yourself is, have you shared enough of your idea to gather excitement from the guide within the large organisation?
2. The Social Media wave has already hit
“80 – 90% of people today have a disbelief of what organisations say about themselves.”
There are a lot of costs involved in marketing, to tell your potential customers about your products, services and differentiation in the market. If you consider that a large part of people might be discounting that message, then you need to look at other ways to get your message through.
“Increasingly people are turning to Social Media and online ratings, to inform them prior to making a purchase decision.”
Like-minded people, on sites like Tripadvisor, are getting together and sharing their stories, talking about solutions and sharing their experience. Previously people would primarily trust big brands, but this new phenomenon of people buying from people is something that startups can take advantage of. One way you could take advantage of this, with your own startup, is to create these destination points on free social media platforms, and then invite the crowd into your product development cycle and marketing ideas. In the old days, when you wanted to test your idea, you had to run small focus groups in a room, whereas now you can run Google Hangouts with a crowd, and do a similar thing, but at a much larger scale.
As far as completing the transactional side of selling on social media, it’s best not to do this part on the platform because you run the risk of creating a conflict of interest, and having prospects think that you only engage them so you can get something from them.
Trying to complete a transaction on social media loses the purity of the benefits that you get such as things like unsolicited advocacy, community, peer to peer sharing and collaboration, which is what typically comes out of the medium.
The mindset, that you need to have when selling online, is that selling is a cycle. It starts with awareness of your startup, development of the idea, refinement, education, packaging etc, and then finally, the exchange of value – social media has a big part to play. Use social media for all the parts of the sales cycle, but not necessarily the final transactional element where credit card numbers are exchanged, as this could taint the whole social media message you are trying to put out there. The final exchange of value is best done on your website with a shopping cart.
3. Mobile first and the cloud (not the ones up in the sky)
When Roger attended Dreamforce (an annual Salesforce event) in 2013, Yahoo CEO, Marissa Mayer, said that they want to be a mobile first company and she remembers when she first got the job, there were only 40 mobile engineers, they now have more than 4000.
The rise of smartphones worldwide and the demand for content to be consumed on them has created even more opportunities for startups, especially considering that many websites are still not mobile friendly.
Part of the further rise is in smartphone use, has been driven by Android becoming a serious player and other brands of smartphones starting to come on the market. This will only continue to grow as the market share starts to split further between the likes of Apple, Android, HTC, Sony etc. As the entrepreneur / founder it’s your job to set the vision for the startup, and it’s important to ride the wave that is already here. If you’re at the stage where you want to pivot your business, a mobile first strategy is something to consider. More people in a household have smartphones than they do televisions or newspapers, and they can engage and interact whenever they want. As a startup, you want to create a really great mobile experience so that your users can consume and contribute with you, whenever they want, however they want.
If you’re at the stage where you want to pivot your business, a mobile first strategy is something to consider. More people in a household have smartphones than they do televisions or newspapers, and they can engage and interact whenever they want. As a startup, you want to create a really great mobile experience so that your users can consume and contribute with you, whenever they want, however they want.
One other result, that has come from digital disruption, is the cloud. I remember a few years ago when maintaining server was a real pain. You had to have a special room, adequate security, loads of expensive hardware (that always needed changing) and air con to keep the room cool. Now the cloud allows us to move infrastructure, which startups and businesses use to manage themselves, to experts, which will help them drive scale further as they grow. The cloud moves capability to where the expertise exists, as long as you get the security and privacy right, with the option you go for.
The opportunity here is that large organisations still can’t use this tool to its full capability yet, whereas you can. There is really no reason for a startup trying to stay lean, not to take advantage of this digital disruptor.
4. Payments and the opportunity
Digital disruption is also creating opportunities in the payments space, if you’re a startup that is interested in facilitating payments. The two forces, that consumers are driving, are simplicity and frictionless commerce. On the other hand, the same consumer also wants security and safety. Pay Pal has won the game so far because they have made it frictionless, by allowing users to login with their mobile number and a 4-digit pin, which you would be unlikely to forget.
On the other hand, they also cover the security aspect by covering fraud for 30 days. At the micro level, if you’re a startup wanting to succeed as a payments provider, you need to get these two things right. At a macro level, the other part to understand is that the exchange of value between the user and a startup is only a slither of the entire value chain. Roger believes that there is still opportunity as no one has cracked payments end to end yet. The challenge of course, is that there are only small amounts of margin in it, yet there are so many players in every transaction that want a slice.
Even if you do not want to be a payment provider, it’s still worth having some form of digital wallet on your site, to allow frictionless payments. Where applicable, your startup should also consider taking advantage of the new Apply Pay technology, that allows you to do real world, contactless transactions, with your smartphone. If you do all the other bits previously mentioned, and do them well, then the transactional side takes care of itself.
5. Content is king in the long term
The way that you market your startup can be still achieved by traditional advertising or SEO / pay per click, but it depends on what you are trying to achieve. Digital disruption has really made content an important part of any marketing strategy and you can take advantage of it. In order to do this successfully you need to get your messaging right and clearly communicate within your content, what problem you are solving, and why your startup is in the best position to solve it. If your not good with content it’s definitely worth investing into some good copywriting.
The content should also have the intent to build advocacy, remembering that people buy from people. Rogers opinion is that a lot of content out there just reads like a marketing brochure. Make it easily digestible and shareable so that your audience can see, feel, and understand what you do. For example, if you are trying to solve a financial problem don’t dilute your message by creating content that talks about cars or coffee. This strategy is a good way to start a niche and grow from there.
The content should also have the intent to build advocacy, remembering that people buy from people. Rogers opinion is that a lot of content out there just reads like a marketing brochure. Make it easily digestible and shareable so that your audience can see, feel, and understand what you do. For example, if you are trying to solve a financial problem don’t dilute your message by creating content that talks about cars or coffee. This strategy is a good way to start a niche and grow from there.
If you look at Amazon as an example, they didn’t start by being the world’s biggest retailer from day one, they started selling CDs and books, then they invited users to review their products, long before they expanded into everything else. Your marketing mix is really important. Depending on what your strategy is, this will determine where you should share your content. Are you trying to create awareness, increase traffic or create shares and likes? Tailor your content to the channel you’re sharing the content on. Content will really help you create interest. One issue though is most marketers create interest around a specific point in time, but it’s really preferable to keep that interest going, which is very rare. The life of a tweet is 12-15 seconds. How do you keep the interest going? Ensure you have consistently new material to keep the conversation alive.
Tailor your content to the channel you’re sharing the content on. Content will really help you create interest. One issue though is most marketers create interest around a specific point in time, but it’s really preferable to keep that interest going, which is very rare. The life of a tweet is 12-15 seconds. How do you keep the interest going? Ensure you have consistently new material to keep the conversation alive.
If you want to continue reading up on the subject then Roger recommends reading Code Halos that talks about social, mobile, analytics and the cloud and how they are challenging businesses.
The book is available on the Amazon link below:
www.amazon.com/Code-Halos-Organizations-Changing-Business/dp/1118862074