Ax'21 - On start-up success
I was recently asked what is unique about our company, what some call a Unique Selling Point, i.e. something by which we will be able to beat the competition and conquer the world. You do not get this from all the VCs you meet, but from many you do. I think I understand why VCs like this question: when you are trying to understand what a start-up is doing and why they would be successful, clear and precise answers trump long-winded, complicated explanations. This idea of uniqueness even has a link to management theory, where in the ‘resource-based view’ by J Barney and others there has been a focus on understanding what kinds of resources explain one firm’s better performance from that of mediocre others. In this literature, the outstanding performance is achieved by those firms that have some resource(s) that are valuable, rare, inimitable and within organization (VRIO), or valuable, rare, inimitable and non-substitutable (VRIN).
However, I argue that this question is missing the point – of entrepreneurship, and of how companies become successful. Within the context of academic debate, it is useful to observe that the otherwise commonsensical point that superior firm outcomes may be related to better than average resources (whether knowledge or other) is looking quite squarely inside the firm – and neglecting much of what happens on the outside. The widely referred to body of work about the outside world in this context is the Porter’s 5 forces. Indeed, an aspiring entrepreneur could be well served to conduct some analysis from both perspectives, and thus be somewhat better prepared for the trials ahead.
But my point lies elsewhere. I am a co-founder and CEO of a microalgae cultivation and specialty ingredients business, by the name of Algonomi, with a strong team of my colleagues the algae biologists and one expert in virology and GMO techniques. At this early stage, we cannot claim anything that we have that is unique so that nobody else has it. We have no IPR, in the sense of patents or other forms of protection. But look around, in almost any industry – who has a unique, i.e. rare, resource that they had when they were a start-up? Many companies have strong competitive advantages. Think of companies like Nike, Apple, Facebook, Nestle, or even Tesla. They all are successful in their industries, but I would argue the success has not come from something unique that they had as a resource at the beginning. Did they have unique ideas? Maybe, even probably. How about a unique technology that no-one else had? I very much doubt it. Strong building of organization, operations and brand? Absolutely. And here is my point: Outsized returns are produced by the work of careful, well-planned, learning-abled building of a company, that has some of the key elements in place. These elements can vary, but for us, as an example, they are a strong expertise in the given deeptech area from which we will produce ingredients for which there is demand; broader trends towards climate related action; and a snowballing interest towards plant-based foods and other ingredients. This building of a company could be seen as the work of assembling resources – and while there is no one recipe for this work as industry, geographic and product contexts vary, this argument turns the focus on continuous, intentional good efforts, away from imagined exceptionality. Slightly different but nevertheless very much related, and infinitely more eloquent, account of these dynamics comes by an Oxford Professor Marc Ventresca in ‘Don’t be an Entrepreneur, be a System-Builder’.
Who or what inspired you to be an entrepreneur?
I see the work of an entrepreneur as very much a creative occupation. We are all building something new, and as long as one remembers to keep an open mind, you can be part of building the future.
If you would get 10 billion euros right now, what would you do?
Hmm… I would probably support infrastructure investment in places where that is a real problem, i.e. in less developed countries – I think infrastructure improvements tend to have a large impact on allowing people and societies to advance in their lives.
Who is your favorite superhero?
Noam Chomsky. Not your traditional superhero, I know, but for his relentless and sophisticated work over the decades to point out abuses of power and privilege, for the benefit of those less privileged, groups which he incidentally is never part of.
If you could change just one thing in the world, what would it be?
Climate change is of course a threat to the whole species and as such there can be no more important concern, but discrimination is another – whether based on gender, colour, ethnicity, of social status, or for other reasons.
Main course at dinner, choose: a) Monkey brains with devils sauce and baby vegetables, b) lab grown steak from human cells and béarnaise with crispy fries, c) Organically grown Nepenthes Truncata salad, including tomatoes, sweet blue peppers and glowing mushrooms with a small chance to kill you instantly.
I suppose b) – after the European Novel foods regulatory approval of course…