Chip Royce, Flywheel Advisors
Time to read: 4 minutes
Common advice for tech companies is to find that unique market niche and stay focused.
This advice is completely wrong for a unique type of company.
The MultiUse Technology Company
A multiuse technology company markets a technology that benefits many different industries in many different ways.
These companies may produce:
- Hardware and Devices
- Software
- Hardware/Software Solutions
- Fabrics
- Materials/Plastics
The core technology often originates from corporate or university research programs. If the company didn’t develop the intellectual property, the owners offer a license to prospective companies. Once licensed, the company founders create a company and work to commercialize the technology.
Multiuse technology companies have a unique advantage, a “blessing”.
Many Options Can Be A Blessing
These companies target different use cases and many industries. They have more options compared to a software company that solves a specific issue for the insurance industry.
The best multiuse technology companies research and speak with prospective customers across different industries. They’ll find the desired use cases and products. They discover product-market fit.
Many Options May Also Be A Curse
This blessing is also a curse for the multiuse technology company.
An inexperienced management team faces too many options.
How to decide where to focus your effort?
Do they have enough working capital?
Which use generates the most profit?
Failure to navigate this process will overextend a multiuse technology company.
How To Manage Growth for Multi-Use Technology Companies
Fortunately, in my 30-year career, I’ve developed best practices that help these companies succeed.
Here are three key steps to manage growth for a Multiuse Technology company:
1) Build an Opportunity Portfolio
How do you know if you selected the right industry to focus on? Do I have the right product to sell? What method of distribution is best? Did this opportunity peak last year? Is it peaking now? Or is the best yet to come?
Take a portfolio approach and focus on different industries. Publicize your core technology and speak with customers (“customer discovery”).
You’ll learn what problems customers have, what you can do to help them, and what they’ll pay for your problem.
From there you can build a multi-industry go-to-market strategy that allows for many use cases, adjusting the company’s allocation of people and capital as opportunities mature.
2) Create The Right Company, Right Capital Structure
You can’t execute a portfolio strategy without extra flexibility and plenty of working capital.
A traditional startup focuses on one line of business and its shareholders invest only for growth.
A multiuse technology company is more complex. You’ll need a company that controls the intellectual property and manages the strategy of the portfolio.
The investors must allow for a variety of value-creating outcomes. These may include royalties from licenses and the creation of business segments/divisions. Investors must be comfortable with a company structure that allows for dynamic events. This includes the ability to spin out separate companies that focus on an industry or product without the distractions of building the portfolio.
3) Recruit the Right Team and Skillsets
You also need the right team to execute a portfolio strategy.
At company formation and in the early days, you’ll focus the multiuse company on discovery. This requires:
- Expert resources for company formation
- Savvy strategists survey markets to build a portfolio of use cases
- Operators with strong systems skills to build your company infrastructure.
As the company identifies and validates the business opportunities in your portfolio, you’ll start to hire product and industry specialists to develop, market, and sell within the unique requirements of each industry vertical.
In conclusion…
Multiuse tech companies with novel intellectual property have advantages thanks to many use cases in different industries.
Multiuse companies also come with pitfalls for those who aren’t prepared to make the growth journey more difficult. Or worse, nearly impossible to succeed if you make early mistakes.
A company that:
- Misses the step of creating a portfolio of opportunities
- Makes mistakes in company formation and structure, and
- Hires the wrong executives
…will have to spend valuable time and resources to commercialize their company.
Multiuse tech companies that:
- Adopt a portfolio strategy
- Create the right company structure, and
- Hire the right skilled leaders at the right time
…are blessed with more opportunities and a higher chance of success.
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