How startups grow by going old school.

High Tech Starups

As the Vice President of Sales at Determine, I have the opportunity to visit great organizations in many different industries and countries. Often, they present challenges. I always try to not only understand the problem being presented but, more importantly, pinpoint the core issue at the root of the discussion.

It’s something I find personally rewarding, and am always looking for patterns and relationships between issues in order to create common solutions.

Sometimes I discover a nugget that stops me in my tracks — something I find extremely fascinating. What catches my attention is when it’s really a great example of how new is embracing old. Let me explain….

Some studies, including this one, have shown that new Industries are unlikely to emerge in old business clusters; e.g., Detroit, where old industrial and high tech are unlikely to mix well. The logic is that the area is congested and suffers from “negative lock-in” effects. This is connected to geographical economic agglomeration theories, which are way beyond me. Basically, I think infrastructure, transportation and workforce skill levels actually dictate an area’s potential growth path.

There is an alternative view to those studies, and somewhat contrasting theory, that new industries are more likely to emerge in existing clusters. This is certainly the case here in Indianapolis, where I have seen an explosion of tech startups; as well as in East London, UK, which is, I believe, now the second biggest cluster of tech startups after the San Francisco Bay Area.

In reality, I have seen similar impacts in both types of regions. I have also seen high-growth companies stall in places such as the Bay Area, as they become ensnarled in broken processes, and mired in multiple point solutions that never solve the core business problem.

As a company approaches $1 billion in revenue, internal decision-making and workflows need to be automated and integrated for the organization to continue to grow. Data flows across all business areas also need to be seamlessly connected. The alternative requires employing very smart, expensive people to operate in unfulfilling environments; but talent will always gravitate to places where it can have the greatest impact.

Until now, I thought high-tech startups only had to worry about how they can keep growing, spending the billions in investor money they’ve raised. The assumption that their challenge is to recruit as many bright young things as possible, put them in a cool office environment and watch them grow could not be further from reality.

As I observed recently, what is fascinating is how these startups are taking a mature, almost old-business approach to overcoming obstacles. They are investing earlier in connected solutions, turning more of their attention early on in the process to anticipating the problem of scalability. In particular, they’re maintaining their agility, and focusing on the ability to continue making quick decisions throughout the growth cycle.

In other words, at these flashy cutting-edge organizations, boring business processes are taking centre stage and real money is being spent on them. That communicates to me that these organizations are truly interested in developing long-term growth strategies, and their processes and solutions have the scalability to keep pace.

It’s great to see that the new high-growth and high-tech sectors are learning from traditional slow-growth verticals. The future of those skills learnt on the factory floor in places such as Detroit and Birmingham, UK, have a new voice, and relevance, in the cool glass towers of the Bay Area and Shoreditch / East London.

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