If you're running a startup, you're probably racing against other startups, and even incumbents, to offer something new to consumers. But too often, entrepreneurs forget what they were taught at a very young age: the tortoise, not the hare, wins the race. Speed matters, of course, but only when accompanied by a smart strategy and execution plan that maximizes long-term value over short-term wins.
As both an entrepreneur and a venture capitalist with years of experience launching and growing companies, I've seen this play out a number of times.
It's happening right now in a new and interesting area: the race to bring dockless bikes and scooters to city streets. I'm an active investor in this space and have watched it unfold in real time.
This race includes a plethora of companies: independent players like LimeBike, Spin, MoBike, Waybots, Skip, and Bird, as well as transportation players like Uber (through its JumpBikes partnership), and soon Lyft.
Criticism in the media and among city officials has been everywhere from tempered to scathing, with frequent references to the well-documented photo of China's bike pile-up problem. But the U.S. is not China, and if domestic bike companies don't take responsibility for cleaning up any possible mess, city and state officials will happily do it for them.
So, who wins? And how? There are lessons in this ongoing story from which all founders can benefit.
Here's some advice for companies trying to dominate this contested space--which equally applies to other founders with their own races to win.
1. Don't follow in Uber's footsteps.
The average Valley startup in the dockless vehicle space would quickly turn to Uber for their execution playbook. That would be a significant mistake. Uber never owned its fleets (as these companies do), and it spent hundreds of millions of dollars to learn you can only ignore regulatory and legal constraints for so long. The assets in the dockless industry are easily picked up and impounded, as multiple cities have shown recently.
The lesson: Whatever your startup is aiming to bring to the world, recognize the relevant stakeholders, engage them, and use them to create a competitive advantage. Think in terms of harnessing the powers that be for your benefit, rather than trying to operate despite them.
2. Focus on user experience over speed.
The bike- and scooter-sharing race is one that won't be won by speed-to-market but by user experience, of both hardware and software. Uber's partnership with JumpBikes--and acquisition of the company--can likely be attributed to JumpBike's ease-of-use and the fact that the experience of riding its electric bikes is unique in comparison to its non-electric, generic competitors. (Full disclosure, my firm SineWave was an investor in JumpBikes.) It's also part of the reason some cities have exclusively granted JumpBike's operating permits.
The lesson: Being first to market is a benefit, but if switching costs are low, you must minimize the risk through an enhanced user experience. Take the time to develop a user experience that will catch on with consumers, even if it means rivals may reach certain milestones before you do. Doing it right will eventually prevail over doing it fast.
3. Operations, not just product, can create a competitive advantage.
Over time, bike- and scooter-sharing will resemble the Uber-versus-Lyft game, but with many more competitors. These businesses can be an operations nightmare, requiring charging stations, servicing and maintenance, and on-the-ground staff. They also involve a ton of physical inventory, which is best financed with debt, requiring a track record of smart unit economic management. Those companies that learn to maximize utilization rates and streamline operations will have a competitive advantage in the longer-term.
The lesson: Your business is much more likely to be a marathon than a sprint, so streamlining your operations should always be a high priority. If your business involves physical inventory, however, this issue is even more important.
Dockless vehicle-sharing is an exciting new phenomenon, just as ride-sharing was only a few years ago. But the path to success in this industry will look different from ride-sharing. And arguably, the true advantage might be found in a company's smart management of stakeholders, particularly state and city officials who are worried about their streets, their sidewalks, and their citizens.
Don't forget what Aesop taught you years ago: It's not just speed that wins the race. Play smart to avoid an upset.