The Rise Of Technology
Before we get into the nitty-gritty of lean entrepreneurship, it’s important to understand the backdrop of how technology has revolutionised the world of business over the last decade.
While starting a business was traditionally a very time-consuming and costly exercise, the rise of technology means modern businesses can launch new products and enter established markets for a fraction of the cost.
Three important technological innovations have streamlined the process of starting a business and accelerated the rapid growth of disruptive tech startups.
- Open-source computer networks allowed businesses to scale horizontally and dramatically increase their computing capacity, without investing in expensive supercomputers. Between 2000 and 2005, the average cost of launching a tech company fell from $5 million to £500,000.
- Between 2005 and 2009, the development of cloud computing technologies and Amazon Web Services (AWS) meant businesses could outsource their computing function to third-party hosts. This saw the average startup cost drop to just £50,000 in 2009.
- As developers began to start their own companies between 2009 and 2011, the starting costs for the average tech company fell by a factor of ten to just £5,000.
The phenomenal reduction in costs means today’s marketplace is flooded with lean and aggressive tech startups — all looking to undercut their competitors through reduced prices and enhanced user experiences.
Technology-enabled business models are eating every industry. In 2011, four of the top five publicly-traded companies (by market capitalisation) were either banks or oil companies. Five years down the line, all five are now technology companies who have thrown the rulebook out the window.