Inc.'s editor comments on how business opportunities today are so complex it takes a group of individuals or businesses all working together to launch a start-up company.
When I was kid, I'd occasionally read science fiction, and there was one story that intrigued me. It was called Venus and the Seven Sexes. My memory of it is a little hazy, but I do recall the premise: namely, that conditions on the planet Venus were so difficult it took seven sexes to procreate.
I often think of that story when I hear about the process by which many cutting-edge new businesses are being formed these days. Some of the hottest opportunities around are so complex, it seems, that it's not enough to go after them the way we used to: with one founder romancing a customer. Instead, the start-up process increasingly resembles procreation on Venus, with companies being launched by entire networks put together for the express purpose of capitalizing on a particular opportunity and creating something new.
By networks, I mean ad hoc groups of both individuals and business entities, each of which has something vital to contribute to the project at hand. The participants may range from highly skilled soloists to companies of various sizes and financial players of various types. Aside from their passion for the project, what the individual participants typically have in common is an utter lack of interest or expertise in running a business. They often are not involved at all with the operations of the company they help to launch, and after the launch all or most of them move on. In that sense, they are like members of a Hollywood production team: diverse individuals coming together on a project-by-project basis, doing their thing, and then going their separate ways.
But while they're together, the network members bring an extraordinary level of experience, skill, and creativity to bear on extremely challenging projects. The results show up not only in the brilliance of the ideas and the quality of their execution but also in speed. A well-organized network can deliver solutions much faster than, say, the typical new-product development team of an established company. That's something a lot of companies--especially large ones--are willing to pay for.
Now, we can all speculate about what's driving this phenomenon. I myself suspect that demographics play a role, in the form of the aging baby-boomer population. At any rate, it doesn't hurt to have an unusually large number of talented and experienced people around who have the particular expertise required to get one of these ventures off the ground.
No doubt technology is important as well, although not in the way you might think. Yes, a lot of Internet start-ups are network businesses, but you don't need to be in a technology-based industry to be part of the trend. On the other hand, there's no question that the technological tools developed in the past 20 years--E-mail, faxes, groupware, and so on--make it much easier for geographically dispersed players in any industry to work together.
Most interesting to me, however, are the lessons that the network phenomenon offers to the rest of us. In this regard, it's worth noting that these networks revolve entirely around the participants. I mean that the success of any given venture depends as much on identifying and attracting the right participants and then choreographing their work as it does on having a clever business concept. Quite simply, you need the best talent you can find. What's more, you can't buy that talent with salary and benefits. It's available only for a piece of the action.
Which brings us, in a roundabout way, to this month's cover story by senior writer Edward O. Welles. The protagonists are the interesting folks at Lunar Design, in Palo Alto, Calif., perhaps best known as one of the companies that helped design the Apple PowerBook. The story focuses on Lunar's effort to balance traditional fee-based work with "venture design," an arrangement whereby a business forgoes all or part of its normal fee for an equity stake in a project or company.
That's a hot concept among service businesses these days. What sets the Lunar people apart is the thoughtfulness and sophistication of their approach. They recognize the risks inherent in a strategy that some people naïvely view as all upside. They also understand the real long-term payoff of pursuing such a strategy. If it works--and there's no reason to believe it won't--it will have a dramatic effect on the kind of projects that Lunar designers will spend their time on, and thus on the company's ability to attract and keep the best people around. Sort of like one of those network businesses.
Which reminds me of a science-fiction story I once read.