Why Success in Frontier Tech Is Tricky

September 16, 2016

6:00 pm

Frontier tech is the collective term for significantly ground-breaking new tech in a variety of fields: artificial intelligence, the Internet of Things, virtual reality, augmented reality, drones, robots and self-driving cars all qualify. Basically, it’s whatever tech is the awesomest new gadget that might change the world.

The potential of investing in frontier tech is obvious: If VR becomes the new internet, whoever is the Facebook of VR will make billions. Which is why Facebook wants to be the Facebook of VR.

But the potential pitfalls are also huge. Here’s a breakdown, from a longer post by venture capitalist Matt Turck, of the dangers behind investments in frontier technology.

1: Frontier Tech Needs to Be Literally Built

All this tech is cool because it’s new. But that means it’s unproven. Major kinks need to be worked out in a way that startup working within a proven system, like an app or a service, don’t worry about. From Turck:

“It most often involves building some ‘deep tech,’ rather than assembling pre-existing pieces. That can take a long time. Things get even trickier whenever hardware is involved, which happens quite often.”

2: Traction Is Low

Just as the physical product needs to be built, the audience engagement needs to be massaged. Unless a massive, Pokemon Go-style viral hit happens to pan out (something that by definition can’t be planned), the frontier tech will have a low traction rate and poor metrics when compared to other tech markets.

3: You’ll Compete With Heavy Hitting “New Incumbents”

In the ’90s and ’00s, startups dealt with slow legacy companies. Now there’s a new breed of incumbent on the block: the ones that disrupt the slow ones. As a result, competition has never been tougher:

“The list is well known: Amazon, Apple, Google, Facebook, Salesforce. Others, like Uber, Tesla or SpaceX, are rapidly joining the club.

Those ‘new incumbents’ behave in a very different way from the old ones – they’re digital natives, they’re aggressive, they’re fast. They’re obsessed with their own disruption, and they’re willing to take moonshots. And they’re all looking at frontier tech and saying: ‘mine’.”

AI in particular is a huge battlefield, but it will be hard to find a niche in any frontier tech today.

So How Can You Win?

Turck rattles off the imposing qualities he looks for in frontier founders: Deep intellect, a laser-guided customer focus, and plenty of patience to hold one’s ground. Frontier tech may be in inevitable future, but for startups in these areas, it won’t be an easy one.

Image: Flickr / arbitragery

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Adam is a writer with an interest in a variety of mediums, from podcasts to comic books to video essays to novels to blogging — too many, basically. He's based out of Seattle, and remains a staunch defender of his state's slogan: "sayWA." In his spare time, he recommends articles about science fiction on Twitter, @AdamRRowe

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