The Startup Genome has released the second instalment of its findings on transformational entrepreneurship, including why start-ups should include a domain expert in their founding team.
Based in the United States, the Startup Genome aims to increase the success rate of start-ups and accelerate the pace of innovation globally.
It was founded by entrepreneurs Bjoern Herrmann, Max Marmer and Ertan Dogrultan.
In an essay titled Transformational Entrepreneurship: Where Technology Meets Societal Impact, Marmer described how technology entrepreneurship and social entrepreneurship are converging.
The Startup Genome has now released the second essay in its transformational entrepreneurship series, titled Reversing the Decline in Transformational Ideas, also written by Marmer.
According to Marmer, there is a lack of big, transformation ideas in the start-up scene, partly due to “homogenous” founding teams.
“Billion-dollar companies do not happen if the founding team is not extremely well suited to the market,” Marmer wrote.
“In the past, the magic formula was two engineers or an engineer and a businessman. Most of the big successes followed this pattern.”
“Hewlett and Packard, Jobs and Wozniak, Gates and Allen, Ellison and Miner, Larry and Sergey, Thiel and Levchin, the list goes on.”
“Combine a lone technical genius with a mesmerising sales guy and you had the DNA for a billion dollar technology company. But times change.”
In the past seven years it became clear this duo was no longer enough, according to Marmer, because a new competency began to appear in the DNA of successful founding teams: design.
“Design… synthesises complex technology with a deep understanding of end users’ motivations and abilities into a unified, intuitive product experience.”
“But now I believe the designer-led team is on the verge of irrelevancy, too.”
According to Marmer, the only way out of this “innovation gridlock” is an expansion in founding team diversity.
“The missing piece from the DNA in the founding teams of transformational companies is now the domain expert, who has deep insight into the industry they are trying to disrupt,” he said.
“Without a domain expert, attempts at disruption are unimaginative and incremental at best.”
Marmer believes tech start-ups have an opportunity to disrupt a wide range of industries including education, healthcare, business, art and government.
“But where are the domain experts ready to be paired with a team of rock star engineers and superstar designers?” Marmer wrote.
“Most of them appear to be wandering around attempting to spread their ideas through books, speaking engagements, university lectures and consulting gigs, unaware of the possibility now available to them to integrate their ideas into software applications.”
Marmer said product teams seem to believe all that’s needed for innovative disruption is to add “soup du jour” technology features such as friending, following and sharing.
“This implicitly imbues primitive, uninspired theory into the design of products,” he said.
“If we want to continue to create products that scale into billion dollar companies… we need to add domain experts to the founding DNA of technology companies.”