Industry Dependencies

Will you be able to move fast enough?

Another question you need to ask yourself is how much your venture depends on a specific industry or third-party players. If it does, the next question to consider is how quickly that industry or those players move. This is especially true if you operate under a marketplace model where your product connects suppliers with their trade partners or customers, or if you plan to market a product or service to that industry.

If the success of your venture depends on an industry known for its slow decision-making, you may want to reconsider your venture. Slowness can be caused by multiple factors: complex and siloed organizations, a conservative industry with little appetite for innovation, or a complete reliance on long-established vendors from both technical and financial perspectives. This slowness will result in incredibly long sales cycles that will eventually kill your venture.

If your venture is in tech, there is a critical distinction between an industry that is already digitalized and one that is not. You will have a better chance with those industries that are poorly or not digitalized as they will be hungry for any innovation that can make their operations easier, their customers happier, and their costs lower. Not surprisingly, those are the industries you want to work with.

The airline industry is notoriously slow, and this is mainly due to a safety-driven mindset. Most of their processes, including sales, are designed to minimize risk of any kind. When it comes to selecting industry partners or embarking on innovation projects, this translates into long, very long, due diligence and decision-making processes. This is not helped by the fact that airline organizations can often be very siloed. To make things worse, their tech infrastructure supporting passenger services is based on a complex web of often poorly integrated systems provided by third parties.

We learned this the hard way. Naively, I thought that once the industry standard to help airlines develop their API was released, it would take a reasonable amount of years for the industry to transition, fully, to an API-driven ecosystem. That was a mistake. Getting airlines to expose APIs that one can easily make sense of, integrate and work with, ended up being a far longer journey, which is still ongoing today.

This dependency on airlines' readiness prevented us from acting as fast as we would have liked and having the impact that any emerging company aspires to have. Some had warned me about this, but I did not listen closely enough, for the reasons I explained in the previous chapter.

Key Takeaway #2

Speak with other emerging companies that are already working with your target industry. Ask them about their experience and inquire about the length of the sales cycle and the reasons behind it. Then, decide whether you are ready to enter that industry or not.