By Rana Gujral (@RanaGujral)
So cool, it hurts
I know tech industry insiders want to be cool because I used to be like them. I started my career at big companies with famous names, like Logitech and Kronos. But I quickly grew disillusioned with the waste I saw in the corporate environment. I wanted to solve real problems, not just fatten a bottom line.But that was before I joined with my partner, Stephen Kawaja, to found a startup that makes software for the least Silicon Valley of industries. In the eyes of Generation Y, actually making things — as opposed to apps — seems hopelessly unsexy.A recent IndustryWeek salary survey found only 2 percent of 21-29-year-old respondents worked in manufacturing. Students interviewed called the sector slow and out of date. Most people associate factories with repetitive work and mindless conformity — like that disrupted by a sledgehammer-wielding Anya Major in the iconic 1984 Apple ad.But just 150 years ago, factories were the Silicon Valley startup incubators of their time. Henry Ford’s Model T was every bit as disruptive as Uber (or Facebook or Google). How does a once-cool industry become so uncool — and yet still survive?For one, by realizing that cool doesn’t matter that much in business.Just take our customers, for example. Specialty chemicals have become an $800 billion industry, despite making what are frankly some of the most prosaic and least sexy products on earth. They’re behind the coating on a washing machine that makes it look shiny and new, the polymer added to concrete that makes it more flexible and less likely to crack, the glue that sticks the wood veneer to your desk securely enough to make it look authentic.“Innovation” in this context is often incremental. It’s not about “disrupting” a whole industry — it’s about redesigning to improve performance by a mere 0.0001 percent.But here’s the secret: That 0.0001 percent is ultimately more useful to the world than 10,000 pairs of DrumPants. To quote the tagline of German specialty chemicals company BASF: “We don’t make a lot of the products you buy. We make a lot of the products you buy better.” And customers are willing to pay a premium for those better products.How many people are really willing to pay a premium for timpani in their khakis? My guess is, beyond the Silicon Valley bubble, not many.
More than a 1 percent problem
Already in today’s crowded startup ecosystem, a new company that can’t make inroads outside the Silicon Valley bubble is bound to fail. In a survey by venture capital database CB Insights, 42 percent of tech startup founders cited “a lack of market need for their product” as the main reason for their company’s failure. Just look at Secret. The VC-backed anonymous messaging service was a Silicon Valley darling — but folded last April, having failed to take off outside of the tech-industry fairyland.That’s a trend that’s likely to accelerate in upcoming years. Most of today’s fast-growing tech companies are created by and for a small, affluent, urban population — the 1 percent. But these users’ share of the market is contracting. By 2020, four out of five smartphone connections will be in developing nations, where efficient pizza delivery is often less of a concern than access to clean drinking water. And woe to the tech company that doesn’t prepare itself for this change.I’m not suggesting that startup founders drop everything and start to work on an app that somehow makes washers shinier. Nor am I suggesting that developers resign themselves to merely making incremental improvements to their existing products forever. What I am suggesting is that developers, startup founders and venture capitalists stop running headlong from every business opportunity that doesn’t have a catchy, easy “Uber for X” nickname attached.
Getting back to basics
Think about the roots of the computer revolution. They’re not in the flashy offices of venture capital firms. They’re in unsexy industrial labs like Bell Labs, where scientists invented the transistor in 1947. Or Xerox PARC, home to the world’s first Ethernet connection and its first Graphical User Interface (GUI). These were places where great minds worked hard to solve big problems, without pressure to rush new products to market or create early exits for VCs. And as they’ve declined, America has been left with a huge gap in our innovation infrastructure.To move toward the future, the Internet really needs to get back to its roots — its unsexy, specialty-chemicals–like roots. It needs to turn its attention to real, practical problems that matter outside the urban, affluent 1 percent. And it needs to learn how to think big again.The good news is that some tech companies are already showing the courage to do so. They’re stepping up to solve the real-world problems the Valley ignores. Bright, a solar panel installation and distribution startup, recently raised $4 million in seed money to expand its operations in Mexico, where power from conventional sources is often prohibitively expensive.Veeva, a cloud-based solution for the life sciences industry, fills a much-needed technology space by tailoring data services specifically to big pharma and biotech. Aditazzdesigns and builds complex buildings like hospitals for 20 percent the usual cost by applying the same software and techniques used to automate microchip design. It’s these types of companies that will continue to see profits long after goofy wearables startups have faded away.The question is only whether the rest of the Valley will ever catch up.With contributions by Jean Thilmany of Hippo Reads.