The market with the best opportunity to create a new sweet spot for entrepreneurs is all things ‘green’. It has a series of inexorable trends working in its favor from energy independence to government sponsorship to environmental awareness. Three years ago when I first looked in earnest at this space, I thought it was too embryonic and too soon to invest time and energy. Now, I think the opposite.
Exciting advances are springing up all around us. Alternative technologies in solar, wind and nuclear enable new sources for energy. Green algae provides a reusable source. Innovations for clean air and water abound. Electronically powered automobiles are being moved into bigger production lines. And companies by the hundreds are starting up to serve niches in all of these markets. Investment capital is flowing and big bets are being made. Unfortunately, I’ve discovered a big problem in talking to people in the space.
Irrational exuberance is back!
Over the past six months, as we’ve looked at dozens of green businesses, they all have some unique aspects to them but also share one common trait … a maniacal zeal for the innovation and a dismissive nature for the business. Here’s what we hear.
Green is a movement … profits will come.
Big mistake. Too many of these bets are being made however on things that have very little relevance to the buyers they hope to secure. I’m afraid to say it, but I’ve seen this act before. For those of us who lived through the .com era in technology, the lessons were hard to learn. Turned out it really wasn’t about ‘disruptive innovation’ or ‘creating new business models’, it ultimately came down to turning eyeballs into profits. Those that could survived, those that couldn’t had interesting stories about how the world had wronged them in their youth.
Fundamentals to Green Value
Every new innovation has an adoption curve that company leaders really need to acknowledge and plan around. At the end of the day, a buyers criterion are simple … is you’re innovation an easier, faster, cheaper solution to the problem I have than the one I’m using today and will adopting it come with little to no switching cost. Yes means you get to pass go. No means some time in the penalty box.
When we look at businesses in exciting new areas, we look at five things:
Does the owner/leadership team share an authentic purpose?
Is there a long-term relevant solution upgrade that increases value?
Will the business model be simple and flexible enough for buyers to embrace?
Can the innovation be produced, marketed, sold and services at healthy margins?
Is this a business venture or a science project?
History is a simple teacher on this front. Entrepreneurs who are building value for the customers and creating a business around it find their sweet spot faster than those who believe a great market will carry their innovation.
Don’t allow your business to fall into the irrational exuberance zone. It’s a slippery slope from there to survival to ‘out of business’.
I’ve been fascinated with how some people and companies find their ‘sweet spots’ while others seem to constantly be trying to create a new identity. It’s almost as if the truth is too scary to tell when in fact the opposite is what makes you successful. This blog is my passion to study how the winners become winners and share the secrets with you. I’ll offer my own thoughts to be sure but what I’d really like to talk about most is how others have found their core … and put themselves in the value zone.
Dreams of Green
The market with the best opportunity to create a new sweet spot for entrepreneurs is all things ‘green’. It has a series of inexorable trends working in its favor from energy independence to government sponsorship to environmental awareness. Three years ago when I first looked in earnest at this space, I thought it was too embryonic and too soon to invest time and energy. Now, I think the opposite.
Exciting advances are springing up all around us. Alternative technologies in solar, wind and nuclear enable new sources for energy. Green algae provides a reusable source. Innovations for clean air and water abound. Electronically powered automobiles are being moved into bigger production lines. And companies by the hundreds are starting up to serve niches in all of these markets. Investment capital is flowing and big bets are being made. Unfortunately, I’ve discovered a big problem in talking to people in the space.
Irrational exuberance is back!
Over the past six months, as we’ve looked at dozens of green businesses, they all have some unique aspects to them but also share one common trait … a maniacal zeal for the innovation and a dismissive nature for the business. Here’s what we hear.
Green is a movement … profits will come.
Big mistake. Too many of these bets are being made however on things that have very little relevance to the buyers they hope to secure. I’m afraid to say it, but I’ve seen this act before. For those of us who lived through the .com era in technology, the lessons were hard to learn. Turned out it really wasn’t about ‘disruptive innovation’ or ‘creating new business models’, it ultimately came down to turning eyeballs into profits. Those that could survived, those that couldn’t had interesting stories about how the world had wronged them in their youth.
Fundamentals to Green Value
Every new innovation has an adoption curve that company leaders really need to acknowledge and plan around. At the end of the day, a buyers criterion are simple … is you’re innovation an easier, faster, cheaper solution to the problem I have than the one I’m using today and will adopting it come with little to no switching cost. Yes means you get to pass go. No means some time in the penalty box.
When we look at businesses in exciting new areas, we look at five things:
History is a simple teacher on this front. Entrepreneurs who are building value for the customers and creating a business around it find their sweet spot faster than those who believe a great market will carry their innovation.
Don’t allow your business to fall into the irrational exuberance zone. It’s a slippery slope from there to survival to ‘out of business’.