Page 17 - Network Magazine Fall 2018
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1 Startups measure cash in 0s. Larger companies measure cash in 000,000s. You’ve probably seen financial state- ments from large, publicly-traded companies in annual reports. At the top of the statement, it’s usually noted that all numbers are depicted in the $ millions. So, if the balance sheet shows cash of $10, this actually means $10 million. It’s probably done to save ink on all those extra zeroes!
In a startup, this is not necessary. At many startups with which I’ve worked, if the balance sheet shows $10 in cash, it means $10 in cash. This fundamentally changes the types of decisions that entrepreneurs make. In this case, the gold literally melts faster when there is less of it!
2 Startup teams are usually comprised of two guys, a dog, and a dream (which is how Mike Gausling of Originate Ventures described his startup). Large company teams are comprised of departmentally organized, cross-func- tional disciplines with nine-digit budget discretion and 20 attorneys. The value of available human capital and orga- nizational capacity is hard to measure with precision but
Not so in a startup. Startups behave like mobile guerrillas looking to attack to win one customer at a time, making short-term and less-formal alliances under the radar of the marketplace.
4 Most start-ups believe they have a market with thou- sands of potential clients, but large companies actually have them. Geoffrey Moore’s brilliant book, Crossing the Chasm, dissected the Technology Adoption Lifecycle curve (below) and essentially explained why some un- heard-of startup with some new-fangled technology really only has access to 2-4% of the potential customers.
This minuscule percentage represents a group known as “in- novators,” customers who believe it is their mission to seek out and explore all new technologies in an effort to gain a competitive edge in the marketplace. They see advantages in the technology that even the startup may not perceive.
Meanwhile, large companies with their $000,000s in marketing budgets, armies of organized salespeople, and world-class production capabilities own the market’s
 Technology Adoption Life Cycle
  Chasm
2.5% Early Adopters Innovators 13.5%
Early Majority 34% Late Majority 34%
Laggards 16%
     suffice it to say that when one of your most-valued team members is a dog, decision making often takes a more primal approach than the more clinical, documented, and buttoned-up approach of the big company.
3 In startups, it’s “us against the world.” In larger compa- nies, it’s “the world against us.” Many seasoned business readers are familiar with the “Innovators” series by Guru Clayton Christensen. Large companies have market share and territory to defend. They have supply chains and distribution chains comprised of personal relationships and legal arrangements that make them more formidable on the battlefield, but typically less agile. They often take a defensive position behind litigious and monopolistic behavior.
other 96-98% of customers. Small companies need to approach prospective clients in a fundamentally different way because their clients are fundamentally different.
All of these characteristics and others create essentially different behaviors between the nano- and macro-scale companies. Just as 100-nanometer gold has a different color, melting point, and solubility from one-centimeter gold, the way the nano-scale businesses get financed, make hiring decisions, secure clients, and impact markets are completely different from their macro-scale business counterparts.
Wayne Barz, Manager of Entrepreneurial Services for the Ben Franklin Technology Partners of Northeastern Pennsylvania, can be followed @ TechonomicMan on Twitter and on the web at TechonomicMan.com.
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