The Great Unbundling

Have you seen this photo?

Or this one from a while ago?

A lot of great businesses have been built in the last ten years by unbundling.  Technology is moving so rapidly today it’s possible to create very large markets out of ones that weren’t really accessible before.  Logistics and transportation are more efficient, individuals can participate in the just in time economy. Heck there was even an article that wasn’t satire about the shut in economy.  We are going from the old Karl Malden American Express ads, “never leave home without it” to “never leave home”!

If you aren’t used to being around startups, you might not have thought much about the unbundled economy.  But, it’s happening, and now the ability to target micromarkets is possible.  There isn’t one industry that won’t be affected.  As consumers, we notice the consumer goods (B2C) aspect of it.  But, in business to business (B2B) markets, the ability to unbundle is going to be huge.  It can topple traditional big players and transform industries.

If you have experience in an industry, you might be able to start a brand new business.  Here is how.

Think about re-assembling the individual pieces of your industry in a new way.  Don’t worry about if you think it’s possible or not-the fact is we have made so many technological advances in the last five years that what was previously impossible is now possible.  Draw it out on paper.

1.  Start talking to other people in your industry.  People that will understand the problem you are trying to solve.  Don’t worry about them “stealing your idea”.  The truth is someone else probably has the idea anyway and it’s all going to be about the execution anyway.  Talking to other people will help you build the idea.

2.  If you aren’t technologically savvy, you need to find some people that are.  That means going to networking events in your town with the tech community.  It means going on sites like Built In Chicago, Github, or going to your local college engineering school and networking with students and professors.  Pull them by their pocket protectors into a coffee shop or bar and start commiserating.

3.  Start building.  Get something programmed.   Paintings start with the first brush stroke.  Tech companies start with the first line of code.

4.  Don’t worry about the equity yet.  When you start to get something going, use Mike Moyer’s Slicing Pie to figure out how to divide it up.

5.  Launch.  Get customers.  Talk to your customers to find out how they use the product.  Fix bugs.  Be careful not to over feature.  Do one thing really really well.

6.  Continue to build company.  If you can grow with revenue, grow with revenue.  If you need outside capital, start looking at ways to raise it.  My advice, try to build the company without raising outside capital if you can.

When you get to the choice of growing the company with revenue or outside capital, it’s important to talk to experienced investors that have been down this path before.  I have spoken with a lot of entrepreneurs that are starting to go down this path.  They aren’t ready to raise capital yet, but they might soon be.

I think there is a lot of potential for these kinds of businesses to be built in non-traditional tech centers of the United States.  This is what Steve Case calls, “The Rise of the Rest”.  They have the people with the necessary career experience to see and solve problems in traditional industries.  In Chicago, we doubled the amount of venture capital that went into business in the past year.  It’s happening.