Basing a company on new technology takes unique skills.
New tech offers entrepreneurs great opportunity to do something that has never been done before—but it comes with a tradeoff. (MATTHEW ANSLEY, UNSPLASH)

Over 500 million years ago, a spectacular array of new species emerged over a relatively short geological period. Called the Cambrian explosion, this era brought us most of the animal phyla we know today. Fast forward to modern times, and our most explosive periods of innovation are driven by technology. Once the basic infrastructure of the internet and mobile computing had been built out, for example, concentrated innovation brought us a wealth of new categories we’d never seen before at scale (including software-as-a-service, social media, and the sharing economy). Now, in this moment, simultaneous and significant advancement across a range of powerful tech, including AI, IoT, robotics, cryptography and blockchains are launching us into another Cambrian-like explosion.

The Paradox Of Innovation At The Front Edge

This opportunity presents entrepreneurs with a paradox. This tech gives them an evolved, rich toolset with which to create first-of-their-kind companies. But with a technology still forming, and both the new business models it supports and regulatory landscape unclear, it’s extremely difficult to know in which direction to build.

Advice From A Founder Of Three Successful Firsts

For UC Berkeley’s Silicon Valley Innovation Week, I discussed this paradox with Chris Larsen, founder of the first online lending company, Eloan (in 1996, a year before the domain was registered), the first US peer-to-peer lender, Prosper, and Ripple, an early player in blockchain-driven global payments. Here are a few insights that came from the conversation.

Chris Larsen and Alison McCauley discuss entrepreneurialism at the front edge of innovation for UC Berkeley's Innovation Week.
Chris Larsen and Alison McCauley discuss entrepreneurialism at the front edge of innovation for UC Berkeley SCET’s Silicon Valley Innovation Week

1.     Ignore The Experts: Trust Your Gut

One of the hardest parts of doing something that has never been done before is to know what to ignore, and what to take in. When you are forging new ground, you will have “all these experts saying it is not going to work, it would have been done already, or that the big guys are going to kill you,” described Larsen. “But if it’s obvious, it’s probably too late.” He spoke about how in the early days of the web, the common belief was that no one in their right mind would ever put financial data on the internet. “The hardest thing is ignoring advice from people you respect. If they are saying it’s a great idea, it is probably too late.” Yet, Larsen advised, “Don’t ignore the good advice. There may be a nugget that helps you adjust your model.”

But how do you hone your inner compass? Larsen talked about how the real magic comes from finding new ways to connect the dots, which means entrepreneurs can’t be too heads-down in their particular domain. He advised reading about the future, and looking for what really resonates with you. And he spoke about how he does a lot of writing, because it is so helpful for exploring different angles. “It’s the Stockdale Paradox, facing the brutal facts, but always having faith that it is going to work out. The faith is what gets you through.”   

2.     Connect To Hearts Before You Build

I’ve seen many early stage founders attempt a tech-first approach to their business: build cool technology, then try to connect it to hearts and minds. Larsen emphasizes the importance of honing your vision first. “Don’t start until you have that story perfected in a way that you can reach the hearts of really smart people,” he explains. Only then can you effectively recruit for talent and raise funds. “This is how you win: really great things happen when people’s hearts are in it.” But, Larsen emphasizes, “It’s got to be genuine.”

This ability to articulate such a strong vision for the future becomes essential when things get hard, a natural phase of any startup looking to do what is considered impossible. Before you get to product-market fit, “there is always a little bit of stumbling in the dark. We call it crossing the desert. You only have a little bit of water, and maybe you are going in circles.” 

3.     Build, Don’t Disrupt

The hallways of Silicon Valley ring with talk of disruption. “Disruption is a bad thing,” asserts Larsen. “Twenty years ago technology wasn’t all that important in the world, but now it’s everywhere.” In that setting, “Talking about disruption, as if that’s good, is incredibly arrogant. It sets a tone that everything else besides what we are doing is somehow bad. It’s a toxic idea. I think we need to think of ourselves as builders, not disruptors. The world needs to be constructing and building things.”

 4.     Cut The Lifeboats

Larsen shared how he wouldn’t have started his first company if it weren’t for a Stanford business school professor saying a single sentence to him at just the right time: “Cut the lifeboats.” The professor was commenting about how, at that time, the graduates were making risk averse choices in their careers. “Start companies,” encouraged Larsen. “If you fail, it will be good experience anyway, and you can get backed again. We are in a period of incredible change, so there is so much opportunity. So many domains are changing simultaneously, and the magic that can come from connecting this with that has never been greater. And there have never been more investors that want to back startups.”

5.     Know When To Replace Yourself

Few CEOs, Larsen explained, have both the skill set to sell the impossible dream in the early days and the discipline to take the company all the way. “Once you get to product-market fit, if you don’t have discipline, you are toast,” says Larsen. The timing is crucial, he advises. Wait until you have demonstrated you have the right product, which will help you recruit the right person, but “don’t wait too long,” Larsen explains. 

The full interview with Chris Larsen

(This article first appeared in Forbes.)

Alison McCauley is the founder and CEO of Unblocked Future, where she helps entrepreneurs and executives who are pushing the frontier of emerging technology to communicate their vision, nurture their ecosystems, and go to market. A best-selling author and frequent keynote speaker, she also educates executives who aren’t at this front edge to better understand how new innovation will impact them (and what to do about it). She’s spent her career studying the intersection of human behavior and emerging technology, with 20 years of consulting to technology-first startups and Fortune-500 companies across industries including healthcare, education, telecommunications, energy, retail, finance, hospitality, and manufacturing.

You can follow her on Twitter or LinkedIn. Check out her website.