5 Essentials for Achieving Long-Term Success in the Tech Sector
Apply now to be an Entrepreneur 360™ company. Let us tell the world your success story. Get Started »
The tech sector can be an unforgiving place for startups, with some analysts pegging the failure rate at 90 percent. A company that stays afloat for five years is considered a veteran. So what do you call a company that has been around since 1981, rolling with all the changes that have occurred since the debut of the IBM PC 5150 to the launch of the iPhone 6?
Advanced Systems Concepts, Inc. (ASCI) was founded in 1981 and has evolved from its humble beginnings as a processing software provider to Digital Equipment Corporation (now HP) to pioneering the IT automation field with ActiveBatch, one of the world’s leading IT automation solutions on the market. Along the way, we have learned some valuable lessons about how to succeed in the tech industry. Here are five tips to help you achieve long term success in tech:
1. Be careful what you wish for.
Most startups dream of a big company acquiring their product, and the money pouring in. What they don’t realize is that big corporate dynamics can come into play. That happened to us when we negotiated the sale of a great product to a major industry player. Long story short: a rival product existed within the acquiring company, and its backers eventually won. In retrospect, we should have seen the warning signs, which included difficult negotiations. Like a marriage following a tumultuous courtship, it didn’t work out. Luckily for us, we negotiated the contract based on a worst-case scenario, maximizing the upfront payout and minimizing royalties, so we weathered the storm.
2. Give customers holes, not drills.
As technophiles, it’s easy for us to get caught up in the “cool” factor of new technologies. But it’s important to keep in mind that most customers don’t share our enthusiasm: They want solutions, not technologies. We learned this lesson the hard way when we sold two products separately, expecting customers to put them together for a complete solution. Eventually we merged the two technologies, creating a single solution for our customers and the product took off. You can avoid that if you always keep in mind that customers look to you for holes (or solutions), not drills.
3. Turn customers into company advocates.
Sometimes, one happy customer is worth 100 paid ads. In the early stages of a startup, most entrepreneurs lack the funding for a huge marketing push, so it’s essential to get customers to be evangelists for your products. This worked for us early on because we believed in our product 100 percent and displayed a passion for it that was contagious. We also backed our product with quality design and great support. Our strategy to get the word out included seeding the market by delivering products to a few high-profile customers with minimal licensing and support costs. This technique allowed us to quickly build a good reputation and attract more customers.
4. Understand the market and listen to your customers.
The one constant in the tech sector is change, so it’s important to stay on top of evolving technologies and changing market demands. While changes can be disruptive, technology evolutions can also provide golden opportunities. In our case, the widespread adoption of Windows NT by OpenVMS users provided such an opportunity. We could have looked at it as a negative, since we had many OpenVMS customers, but instead, we analyzed the pain points and developed a product to help OpenVMS customers migrate their script library to the new Windows product. In that way, we applied our technology and market knowledge to capitalize on the changes. We’ve used the same strategy to turn subsequent technology evolutions into a win for our company – and our customers.
5. Don’t forget that profit equals revenue minus expenses.
It’s a simple equation, and we all know it’s true, but many companies start out with a budget and then fail to follow through with the monitoring required to make sure they operate within their means. Expenses become more anecdotal and feelings-based, and that’s dangerous. So make sure you always know where you stand. Also, avoid purchasing on speculation. Make sure you truly need a resource before you invest in it. Taking on large expenses and failing to generate returns is a recipe for failure. We’ve kept that in mind at Advanced Systems Concepts, carefully evaluating ROI before hiring new employees or investing in equipment, and it has paid off in longevity.