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Written by Maliekah Harjani
You know what they say, timing is everything; in love, in life and particularly, in business. In many ways, timing is difficult to define. It remains a mystery; you can’t control it, yet it represents one of the greatest make-or-break points in a start-up’s life.
The hard truth is that 90% of tech companies fail. No doubt, there is no single solution that can protect a start-up from this outrageous death rate. Timing, however, is one factor that business leaders describe as having a strong contributing role to a start-up’s success.
Serial entrepreneur Bill Gross of Idealab points out that timing accounted for 42% of a start-up’s outcome. CB Insights did an analysis of 101 start-up post mortems and also found that lack of market need was the top factor that resulted in failure. As investors, we also attempt to anticipate market readiness and timing when forming a thesis about a company or sector.
Riding the wave
Picture the perfect business: there’s this incredible idea, an intelligent group of individuals that can execute, a viable business model and strong financial support from investors. Scenerio 1 is where you launch too early, which means that your customers are not ready for what you offer. Scenario 2 is where you’re too late, which entails that you may not be able to squeeze in to get a piece of the pie. In either scenario, early or late, you’re left with an unfavourable outcome.
The trick is that you need to ride the wave, not surf against it. Oftentimes, tech entrepreneurs have ideas so advanced that consumers are not ready to adopt it. Sometimes, the current infrastructure that a product would need to rely on is not strong enough. Frequently, we also see companies that enter the market too late, with established and well-financed incumbents that have already created a strong customer loyalty.
Above were some examples of what the wrong timing could result in. The good news is that timing can work in your favour, but only if you understand what makes timing right. Let’s call them “triggers”.
What are the triggers that can help identify market readiness and opportunities, you ask? To help explain this further, we are going to apply the Critical Mass framework developed by Pete Flint of US-based venture firm NFX. Once again, you may not be able to control these factors, but it can certainly help identify opportunities in different sectors, business models and offerings.
Considering enabling technologies and market trends
According to the framework, the first trigger of market readiness is the pre-existence of technologies that are already available. Without the development of the smartphone, we wouldn’t have ride-sharing services like GoJek and Grab.
In Indonesia, developments in network infrastructure creates opportunities in consumption of streaming media, healthcare and education content. To ensure that your product can stand tall, you need the right tech infrastructure. Entrepreneurs that know this are knowledgeable about the pipeline of emerging technologies as well as past technology developments and how to leverage on it.
Another thing to strongly consider is economic trends – this creates opportunities. A common example – the 2008 financial recession in the US created the sharing economy. Investors passed on Airbnb, thinking that individuals would never rent out their rooms to strangers. What they did not catch is that during the recession, people needed extra income and the stigma of sharing homes with strangers was no longer applicable. Uber also launched around the same time, where drivers needed to find new ways to grow their income.
Similarly, Indonesia saw an increasing number of SMEs struggle to expand their market reach, an opportunity that eCommerce marketplaces (like Tokopedia and Shopee)and FinTech SME lenders (like KoinWorks and Modalku) seized. Now forecasted to be US$55-65B market in 2022 (McKinsey, 2017), eCommerce has triggered interesting opportunities in logistics & fulfilment, omni-channel management, and other eCommerce enabling technologies.
Ultimately, it comes down to customer behaviour.
The last, and one that I believe is the most applicable to Southeast Asia is cultural acceptance and customer behaviour. The way we interact with technology changes at the light of speed. This may be difficult to explain, but it’s one of the most vital elements to timing. Culture shifts lead to change, which then affects adoption. With the presence of Friendster, users were habituated to utilise social media, which then helped Facebook grow as behaviour was already semi-shaped.
In the same way, horizontal eCommerce has set this behaviour and precedence for shopping online, providing the right consumer mindset for vertical eCommerce (more niche, specific platforms like Sorabel and Dekoruma) to thrive. With the widespread adoption of mobile digital devices and online consumption, we’re seeing fascinating social trends.
According to WeAreSocial, the average Indonesian now spends 8 hours 30 mins online daily, of which 3 hours 30 mins are used on social media. Indonesians love to share content, stay connected to peers and also interact with new people online. This unlocks opportunities in social-commerce, video streaming and e-sports. Similarly, with more individuals transacting online via smartphones, we see the array of financial services that can be offered to individuals including lending, wealth management, personal finance management and insurance.
These new opportunities are “triggered” by a shift or movement. The right timing, determined by technology, economic and cultural trends can help assess whether a start-up can flourish. Very often, it is not just one trigger, but rather a combination of factors that give birth to a phenomenal opportunity.
As an entrepreneur, your job is to identify these triggers and ask – are your customers really ready for your product? Do the current economic conditions and existing technologies, supported by the right customer mindset champion it? Is this what your customers truly need at this point in time or the near future? Are your customers preconditioned to behave in a way that will encourage adoption? Is there a market in which current incumbents are unable to address pain points successfully? If your answer to any of the questions are a no, then perhaps that timing is just not right.
My perspective is that timing is about precedence and precondition. We love entrepreneurs that are visionary, forward-looking and experimental, but it’s crucial to consider the current external landscape. It’s something you can’t control, but it affects your business tremendously. In order to be successful, you must ride these trends. Just like the waves of a beautiful Balinese sea, determined by the Earth, Sun and Moon, you could swim against the current or surf the high tide. I’d go for the latter; I hear the view’s great.