STARTUPS AVOID DEPENCENCIES: Control of your destiny is vital

Are you thinking of a startup idea that depends on other companies, perhaps large corporation who have to agree?

Must some other business group give you permission before you can be a roaring success? Of course you know you will need "strategic partners," but what danger does that put you in? Can it bring advantages that balance the risks?

That issue ("dependency") is a HUGE issue to startups. It contains bad news and good news.

It can be a deal killer with potential investors.

It can inhibit great people from joining you.

Or it can give you near-monopoly power versus your competitors.

Or it can give you a launching boost that rockets you to amazing success.

If you have this issue in your business plan, you'll need a careful plan to deal with it successfully.

First a real EXAMPLE for you to think about:

Today in Tech Crunch I spotted a great sample of this issue and its impact on a recent startup. In a nutshell, AnyClip had to launch without the mass of content-providers it had hoped to get, corporations with videos agreeing to support the AnyClip movie finding service. Read more and you'll see in detail what is happening right now to this respected startup, AnyClip. For today, here are my observations for you to think about:

• Launch delayed. AnyClip had been climbing the "hot ladder" of success, the bloggers got excited and started spreading the word. But the contracts (lawyers, giant corporations, sluggish responses) were slower in arriving than hoped for.
• Launched with less energy. AnyClip went ahead, finally. They decided to make their move now (probably before the hot buzz cooled off). That is less than the best, the hot air is less so the balloon rises less rapidly, to less height.
• Launched with less "Wow". The lack of abundant content plus missing indexing left reviewers of the launch yawning (instead of raving). The central compelling reason to use AnyClip was mooted. Promises not delivered leads to growing criticism and more skeptics.
• Helps competitors. Now me-too competitors are more eager to leapfrog AnyClip. Or to avoid their business model and try one less dependent on signing up content providers.
• Hope still exists. Now AnyClip will have to more slowly sign up the content it needs and index it. That slower growth is not all bad. The startup is still able to focus on its dream (deliver amazing "finds" in viewable video content). It still has the defacto position of leader of a new space. It still is without a competitor leaping over them.

BOTTOM LINE: It is better for a startup to avoid depending on giant corporations for its success. Independence is golden. Free to do what you want is better than having to wait for others to negotiate legal documents. If you must work a bplan that includes giant corporations, do your best to alter it so that if they do not cooperate for a long time (maybe never), you still have a startup that can start up. Mastering the art of managing "dependency" will contribute to your building an unfair competitive advantage.

I wish you The Best on your Adventure!

Comments

[Glenn Gutierrez]

For sure. Freedom is good. It's all about malleable destiny.