Capabilities for starting a digitech startup

In my ranking of capabilities for starting a tech startup, experience ranks behind passion, determination, intelligence and resourcefulness. 

Modern digitech firms thrive on patterns, cushioned by mobile internet: more than 80% of the largest 10 run the same business model (aggregation).

At the start-up phase, there is limited core transferable experience from a CEO of BankA to a CEO of FintechA. However, at scale-up (massive growth phase), experience becomes extremely important as the company attains stability.

An inexperienced founder either makes way at scale-up (Google founders/Eric Schmidt) or brings in an experienced person (Mark Zuckerberg/Sheryl Sandberg). As Samuel Ajiboyede noted, there are 3 phases at play: entrepreneurial leadership (at start-up), managerial leadership (at scale-up), and corporate leadership (at maturity).

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Comment 1: Yes the hardest stage is at start up ..More than 50% fail in the first 5 years. All linked directly to experience. Most times only about 10-20% of the team has the requisite experience .

An inexperienced team makes executions harder. It takes a longer time to explain what the the vision ,the mission,strategy and consumer marketing tactics are . An inexperienced team pays attention to all the wrong subjects . They aren’t used to a cohesive work style . They are mostly trying to outdo each other; profitability and the customer is lost in the maze. After natural passion ,experience is the next key capability for a startup to thrive.

Comment 1b: I share the same view on this Moses Daniel Nwaokete although passion and intelligence and resourcefulness are adequate at start-up phase, experience cannot be underrated. There are many innovative Startups that did not sail above the initial phase due to lack of experienced people in handling vital aspects for day-to-day operations.

My response to both:  Note that I wrote “startup”, not “small business”. That data you quoted lumped small businesses. The Nigerian government or World Bank may write that Nigeria has 4 million startups and that about x% fail; that is not true. Nigeria may not even have up to 5,000 startups. Real startups which have genes of scalability and growth will not fail in Nigeria at that percentage.

Now, if you look at real startups, using samples of those which we can refer to, the most successful ones were NOT started by those who have experiences in their sectors. Google boys did not work in advertising. Paypal “mafia” did not work in finance. Mark Zuckerberg did not work as a community organizer. Paystack boys did work not in finance. The Ulesson founder was not a teacher. In all these digitechs, experience in those sectors did not stop them.

But as they began to grow, they went and hired those with experiences in those areas. Check the top 10 digital startups, those who started them were NEVER employed in their sectors.

Comment 2: Professor Ndubuisi Ekekwe, the examples of Eric Schmidt and Sheryl Sandberg are spot on. At the beginning, passion is a necessary fuel for the innovations that start ups tend to being to the table. Once a business model has been established though and there are many moving parts, people with good MBA type education and business administration experience are often required to keep the ship sailing as required. Thank you.

Comment 3: Not to be a kill joys, but many a times, the discussions here tend to be biased towards digital only firms (in a way that focuses on software as a product firms, rather than digital only as a business model principle, eg. Xiaomi’s marketing strategy) while completely disregarding everything else that is obtainable within the vast expanse of the technology ecosystems and this kind of limits the discussions we’re able have.

Since the fundamental idea here is that the discussions revolve around technology innovations, it would be really helpful if a clear definition of a typical tech company is established as it pertains to this space so that we can adequately evaluate any adjustments we may need to make on our expectations and relate accordingly.

Eg, why would Nike have the guts to classify itself, a mere shoe brand, as a Tech Company? Why, on the other hand, would Tesla as a Tech Company have same or more idolising repute here as the likes of Google and Facebook even though it’s not an Aggregator like they are? Are the discussions to be niched to digital tech only or are they to be holistic, because presently, tech is largely FinTechs and Facebook? Can we have a taxonomy of tech companies as it pertains to this space?

My response:… when I make a point, I am always careful where necessary to classify. This particular construct applies to digital techs as noted. If you are starting a semiconductor business, you need experience. Data does not lie; most of the leaders in digital techs were started by those without prior experiences in the fields. But that does not apply to say semiconductors, etc.

Comment 4 : Does this movement or transition hold for Elon Musk? The man Musk can easily make nonsense of all the corporate management and leadership frameworks on show out there, yet still delivers and captures massive value, because he’s Musk! Ordinary rules don’t hold in his case, but you still need to pay attention when he speaks or tweets.

In my Nation of Entrepreneurs piece, we have builders, managers and experts; the builders pioneer or found, the managers step in as CEOs and C-suite band to advance and stabilize the mission, of course the experts create those products on offer.

Ingenuity doesn’t need experience, but to run things and bring others to work like a well choreographed band, you need experienced managers.

My response: Elon Musk is peerless. Not sure there is any reason to compare him with any human.

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