Blissful Ignorance – the Start-up Paradox…
Within entrepreneurial communities, it’s often the prevailing wisdom that innovation comes from industry experts that jump outside of the mainstream, team with technologists, and return with a new company or product to disrupt their existing industry.
Is this correct?
It seems to us that when starting a new startup in a particular industry, ignorance about that industry provides an advantage and raises the likelihood of starting a successful company. Having deep knowledge and familiarity with an industry serves to de-motivate innovation.
Familiarity with an industry means that you know all path dependencies, existing technological challenges, structural constraints, competitors, and hurdles, all of which are a good reason NOT to start a new company.
Hence, knowledge, which is indeed power, might on some occasions be too much of a good thing: in a competitive and entrepreneurial environment it can act as a deterrent for innovation.
As Stephen Johnson has emphasized, a leap in the dark based on a hunch and intuition might prove a better strategy than risk aversion based on (what may seems to be) perfect knowledge.
Consider Zappos’ entry into the clothing business, IndieGoGo’s entry into online loans, Cyota’s entry into the Security and Anti-Fraud market, or even General Assembly’s entry into education. None of the founding teams of these companies came from the industries in which they currently operate. And few even launched their companies with a focus on these industries.
The impact of knowledge on deterring innovation is part of the reason why companies who are active in particular industries for a long time look outside to capture innovation.
Outside innovation can be achieved in different ways:
- building a platform that supports external development of applications/ plugins (consider the iPhone app store or Google Apps)
- releasing software under as an open source project to encourage external innovation (consider Google’s development of Android)
We’d be interested to get your feedback.
Who is more likely to start a successful startup?
1. An industry veteran?
2. Ignorant outsider?