This is the third article in a series of entrepreneurship in the field of data integration. The content shared here mainly focuses on some thoughts on infra-software entrepreneurship.
What to do and why to start a business
What to do (what) and why (why) to do it are two important factors that affect the success of entrepreneurship. It is worth spending enough time thinking through this before starting a business. Many times we underestimate the meaning of “enough” and think we already have a clear understanding, but when we actually start, we find that there are too many gray areas. Thinking clearly about what and why requires entrepreneurs to have some entrepreneurial methods as well as sufficient industry insights and understanding. Many technical people who start their own businesses for the first time have accumulated some knowledge in technology or industry insights, but they generally lack or insufficient in entrepreneurial methods. As an entrepreneur, you need more input to make up for your shortcomings in a timely manner. There are many ways to quickly improve entrepreneurial methods, below are some experiences I have summarized over the years.
- Related courses: Nowadays, the Internet resources are really developed. Through some courses, you can quickly gain some cognitive improvement by learning from others’ experiences. I have taken an educational entrepreneurship review course and bought some courses from Geek Time, such as Teacher Bi’s interview column. They did help me to a certain extent.
- Official accounts: The ones I follow mainly include Sequoia, Hillhouse, GGV, Yunqi, and Shixiang. Following these capital-related official accounts can help me learn some knowledge, understand the situation of the venture capital circle, and dig up some useful information. Technical entrepreneurs often lack knowledge in terms of capital and funding. In addition, most technical entrepreneurs rely on VC investment to start their businesses. It is important to do your homework on how to deal with VCs; otherwise it will be embarrassing if you don’t even know some basic common sense when chatting with them.
- Friend: Friends can be VCs, technical personnel, potential customers and so on. This will be very helpful for entrepreneurs to determine what and why.
Regarding what and why, here are some points worth noting:
- Spend some time deepening your industry insights: First, understand what track you are in and who the players are both domestically and internationally. Even if you only focus on the domestic market initially, it is recommended to take a look at what overseas competitors, especially those in Europe and America, are doing and how they do it. This can be very enlightening. At least in the computer industry, Europe and America are far ahead of China. The changes in the European and American markets can be very helpful for predicting changes in the Chinese market (of course not completely copying them as there may be different circumstances). In addition, domestic competitors in your field can also provide you with some unique input. For example, I thought my idea was really cool and new but after researching other players in my field I found out that they had already done it before me but with poor results.
- Pay attention to information input and thinking: Conclusions drawn from insufficient information tend to be one-sided. Starting directly or getting hands-on is always easy but collecting more effective information and thinking about it is often overlooked. Sometimes during entrepreneurship process taking a break to observe more or think more will make you realize that there’s a wider sky above us all along . Of course we should also pay attention to controlling our degree of involvement because as an ancient saying goes “Learning without thinking leads to confusion; Thinking without learning ends up dangerous.”
- Understand what cannot be compromised during product development process while fully believing & being firm about it: Achieving this point is not easy; It often requires deep thoughts on both ‘what’ & ‘why’. Entrepreneurship decisions are often made amidst uncertainty even when things we believed were right turned out wrong later on . But at least for now ,you need something that you believe deeply based on objective inputs after thorough consideration . If this element is missing then personally speaking ,it would shake me up ; From team perspective everyone would lose their focus ; And from customer perspective people might feel like your positioning isn’t clear enough . What exactly cannot be compromised? Can we remain steadfast when faced with temptation? These require skills.
- Pay attention to understanding customer needs: If given opportunity talk more with customers since they’re ones actually paying money for products/services offered by companies/entrepreneurs etc… Many times technical people come up with ideas which customers don’t care about at all! Information obtained from customers must be carefully considered before drawing conclusions. Firstly,the user’s words may not necessarily all correct so dialectical analysis needed. Secondly,customer mostly gives conclusion only based upon surface level things such as which features he/she needs or doesn’t need. As entrepreneurs,it’s important to think deeper into underlying demands behind these requests so problems could get solved fundamentally.If just adding functions without considering trade-offs & deeper thoughts then product easily becomes scattered points of functionality leading astray from original path.
The challenges of infra-software entrepreneurship in China
The domestic and foreign situations are very different, and entrepreneurs in China will face the following difficulties when starting a business in basic software:
- Compared to Europe and America, the domestic payment ability and willingness are slightly worse: Although I have experienced this in the entrepreneurial process before, I always feel that there is a lack of data support for this point. Is it my own feeling incorrect? However, the data in an article on Shixiang WeChat account gave me a full understanding of this issue. It is not difficult to imagine that many companies will target the European and American markets when starting businesses. Of course, it does not mean that going overseas is always good. Everyone still needs to consider their own actual situation. Overseas may also face some policy risks, after-sales service issues, global competitors and other problems.
- The soil for the survival of PLG (product-led growth) is still in the process of maturing: The maturity of the domestic soil for PLG is not as high as that in Europe and America, and it is not realistic for basic technology startups to fully engage in PLG. Even in Europe and America, PLG and SLG are combined to be done together. The large amout of funds in China is still controlled by giants such as finance and traditional enterprises, so subscriptions and SAAS are unacceptable for these organizations that control China’s main funds. Therefore, the technology software startups that focus on doing PLG mainly survival depends on small orders. If they want to take big orders, they still have to use bidding and sales-driven methods to get orders. In addition, there are also many companies in China that resist the trend of PLG. Pursuing comprehensive solutions is still the main choice of traditional enterprises, financial institutions, and government.
- The concept that hiring people is better than purchasing software still widely exists: The key decision makers of domestic enterprises still holds a common belief that it’s better to hire someone to use open-source software rather than purchase professional software. This leads to great challenges for the sales of infra-software. However, in the long run, I believe this situation will change. In some emerging companies, purchasing professional infra-software is gradually being accepted.
Business competition can be brutal. Some appropriate and reasonable tricky techniques that do not violate laws or ethical constraints are still worth trying. Common tactics include riding on hot topics, generating buzz, and using clickbait titles to a certain extent. I witnessed firsthand how an open-source software created by a fellow student who developed a chatbot based on GPT technology quickly gained thousands of stars within a short period of time after the rise of ChatGPT.
Still believe in OSS.
A very common way to start a business in basic software is through open source. As the saying goes, good wine needs no bush, and open source is a great way to expand your user base. I have always believed that OSS is one of the best practices for starting a business in basic software, mainly because:
- Thorough validation and requirement collection: A product is difficult to mature without being extensively used. In addition, the community not only provides feedback on product defects (bugs), but also offers many requirements.
- Promotion and brand awareness: Open source software and its surrounding ecosystem are very mature, with many open source organizations and open source ecosystem software that can cooperate with each other to increase exposure.
- Seizing the opportunity of standards: If the open source software covers a blue ocean field, open source software that is open, free, and lock-free by suppliers is easier to control standards.
- The stepping stone for commercialization of technical products: It is difficult to sell a new commercialized product without some good relationships and market validation. Open-source software is a good stepping stone for entering users’ core scenarios. If the open-source project succeeds, there will naturally be a lot of market validation and corporate endorsements, making it much easier for exhibitors to do commercial work.
There are some conflicts between open source and commercialization, and how to balance them is an art. But at least the listing of Kafka and Elasticsearch has given basic software entrepreneurs some confidence. The problem of transformation between open source basic software and commercialization can be seen in the article by the former growth VP of Kafka.：How Confluent Leveraged Kafka to Grow its Commercial Business。The general meaning can be understood as open source and commercialization can be balanced well, and this turning point exists. Of course, there is a premise here that your product must indeed have value to solve problems.
The data integration track is still a blue ocean.
The big track of data ecosystem software is still reliable for at least 10 years under the wave of digitization. The conclusion drawn from interviews with top Silicon Valley VCs, entrepreneurs and frontline personnel by the Shixiang team can also support this argument: Digitization is still a golden track, and entrepreneurship and investment around cloud, SAAS, and data can continue for another 10 years.
Data integration software and databases are basically good partners. It may have been difficult to estimate the size of the data integration market in the past, but now we have objective data to look at. Snowflake was founded in 2012 and had a valuation of $33 billion after its IPO, while Fivetran was founded in 2012 and has a valuation of $5.7 billion after financing in 2021. Even Airbyte, which was founded in 2020, is now valued at $1.6 billion. There are also domestic companies that have raised over one hundred million yuan ($15 million). This shows that VCs generally have confidence in the data integration market.
Of course, when I say that data integration is a blue ocean track, it’s not just because of looking at these data, but also because I have been working in this industry for many years. The reason why the data track is still a blue ocean also comes from some of my other judgments. In summary:
- Continuous digital wave: The objective existence of the digital wave and the flourishing data ecosystem requires a bridge like data integration software, which will become increasingly important as digitization deepens.
- No authoritative standards yet: Unlike databases that have matured over decades, data integration has only recently begun to pay more attention to CDC. There is no data integration software that has mastered the standard yet, but we have seen roles like airbyte making some attempts in this area.
- Huge space for technological innovation: Because the development of data integration software is still relatively short in years, there is still much room for improvement in terms of performance, functionality and form. One direction to consider is similar to the development history of cloud-native technology - a continuous process of technical sinking. In the field of data integration, how to further abstract and sink technology may decouple variables from constants and bring new things to data integration software.
Manage your emotions well to become a person with high emotional intelligence
I have a deep understanding of this during my entrepreneurial process. A person who is good at teamwork and communication must have good emotional management skills and high emotional intelligence. This is even more important for an entrepreneur. When working in a large company, we can easily recruit excellent employees and let customers come to us because of the advantages of the platform. However, this situation is completely different when starting our own business.
Improving emotional intelligence, which is a soft skill, can be very beneficial for entrepreneurs to attract outstanding talents, enhance team morale, improve collaboration efficiency, and communicate well with key decision-makers in the enterprise.
If emotional management is not done well, many times it will lead to inefficient communication before real communication begins. There’s a thinking model called 73855 (Mehrabian’s Law), which states that tone of voice, facial expressions and body language are the core parts of communication. Technical people tend to be straightforward and only focus on whether the content itself is right or wrong while ignoring the techniques used to convey information.
Sometimes when teams collide with each other they all have their own bright spots and shortcomings but sometimes it becomes an emotional confrontation that changes the whole conversation’s mood. Time is precious for startup teams so improving communication collaboration efficiency is crucial.
Emotional management and emotional intelligence are soft skills that are reflected in many areas, and this is also an area where I constantly need to learn and improve.