Demo Day 2020 had an interesting mix of startups. We had a government procurement business, a tea company, a luxury lighting company, an artisan gift registry tech platform, a Nordic style bath house, and a specialty pharmacy. Our marketing pro did a nice write up on the Chamber’s site, so I won’t rewrite that, but look there if you want more information about these startups. Well, here’s who pitched:
Sara Delaney of Silverback Beverage
Nick Moen of The Bright Angle
Andrew Nehlig of Sauna House
Alexandra Herman of Elaine-Marie
Dr. Jay Worthington of Appalachian Specialty Pharmacy
Dan Whisnant of SDV Office Systems
Instead, I want to write about two trends I noticed in four of these startups: Kaleidoscope Thinking and the Corridor Principle.
Kaleidoscope Thinking
I dig a good Kaleidoscope, it’s a simple yet immersive experience. The experience of a Kaleidoscope is basic, a viewer that only lets light in at one end and through refraction, jewels, glitter, beads, etc…creates beautiful images. Similarly, entrepreneurship is like looking through a Kaleidoscope, the unique and specific alignment of resources, certifications, qualifications, policy/regulations, and market opportunity can enable and protect certain businesses. A colleague called this “threading the needle”.
The two startups that have built significant competitive advantages using Kaleidoscope Thinking are SDV Office Systems and Appalachian Specialty Pharmacy. SDV Office Systems is only 1-of-9 businesses locked into a 10-year contract with the V.A. That doesn’t happen by accident. It involved a Supreme Court ruling! They saw it coming, and were positioned to capitalized on it.
Appalachian Specialty Pharmacy explained their entire business model to the audience at Demo Day. They showed how their sausage is made. And even after giving it all away, you still could not go out there and start a business to compete with them. They utilize federal programs, build relationships with clinics, purposely chose complicated medications to focus on, and based their business within a population with an above average concentration of “customers.”
Both these businesses recognized an opportunity where most of us wouldn’t have seen one. Again, the unique alignment of resources, skills, and opportunities by it’s own nature create high barriers to entry and their competitive advantage.
Corridor Principle
Coming out of a 1988 paper by Babson Professor Robert Ronstadt, “The Corridor Principle states that the mere act of starting a venture enables entrepreneurs to see other venture opportunities they could neither see nor take advantage of until they had started their initial venture.” The pursuit of opportunity is like walking down a hallway (or corridor) where each doorway leads to a new opportunity. One more quote, “the net effect of creating multiple ventures appears to produce a longer entrepreneurial career.”
Two ventures pitched at Demo Day that grew out of existing ventures. The Bright Angle pitched their pivot from table ware to luxury lighting. Elaine Marie pitched a new tech platform, an artisan gift registry, that grew out of the digital wedding planning business, Asheville Wedding Collective.
This is so much more than a pivot for either company. It shows maturity from our founders. It shows these founders listen to the market, they don’t get in their own way, they are adaptable. And as Ronstadt finds, these entrepreneurs tend to perform better too. Early stage investing is as much about the founder as it is the venture, and these two startups have both fronts down.
Check out the ventures above. And if you have a venture in need of some Kaleidoscope Thinking or find yourself down a Corridor thinking of opening some doors, let us know. We’d love to support you on your entrepreneurial journey.
