Being a startup in an unsexy industry can have its advantages believes one founder, particularly when your only competitors are sales and marketing focused corporates that struggle to innovate or execute on new ideas.
“There are some advantages of being in a non-sexy industry,” says Ziv Kedem, co-founder and CEO of Israeli company Zerto, “It means there are not too many people doing it and not too many can convince VCs this is a multi billion dollar market.”
Kedem was speaking to Decoding the New Economy during his recent visit to Sydney about Zerto, a disaster recovery software company – a distinctly unsexy business – which is his second startup following the sale of his first, Kashya, to storage giant EMC in 2006.
The advantage with being non-sexy is often the only competitors are large corporations, a prospect that doesn’t phase Kedem. “If the competition is only coming from the large vendors then there won’t be any innovation there,” he smiles.
Sales and marketing focus
Kedem’s view is many large companies are focused on sales and marketing, which means they don’t have the skills or the motivation to execute business plans in new sectors.
In many respects this echoes the experience of Seth Godin who expected Google becoming a competitor to his Knol business would be the fledgling company’s death knell. Instead Knol survived and Google’s notoriously poor attention settle upon another shiny, sexy industry to disrupt.
The problem for those non-sexy industries is raising investor money as the presence of a Google, Microsoft or Amazon in the market tends to scare VCs, private equity firms or retail investors away.
Crowdfunding downsides
Unlike his compatriot, John Medved, Kedem doesn’t see crowdfunding as a way around an investment drought as smaller investors are attracted to the ‘sexier’ businesses as well and raising the substantial amounts necessary for enterprise ventures is difficult on those platforms.
When a startup can find an investor, Kedem recommends not being shy about raising funds. “It’s rare to meet someone who raised too much,” he states.
Kedem also recommends investing in the team and looking for skills that the company will need in the future, not just today. Talking, to everyone from investors to customers to peers, is also important and he believes this is why Silicon Valley and Israel are so successful as technology hubs.
Believing in yourself
The most important aspect for an entrepreneur is self belief says Kedem, particularly when raising funds. “You’re doing the investor a favour when you go to them,” he says.
Ultimately that self belief is probably what everyone in business needs, particularly when facing a huge competitor.
Regardless of how unsexy your business is, believing it addresses a problem that people will pay to solve, may well be its greatest asset.