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Depending on who you ask, you'll hear that 90-99% of startups fail. In the startup world, it sounds like there are only two outcomes: unicorn or bust. That's what headlines will lead you to believe.
But here's a secret: you don't have to be a unicorn. And you don't have to go bust. In fact, what if we told you there's a type of startup that succeeds every 3 out of 4 times and lands its founders a cushy 3-6x multiple of its revenue, leaving them with anything between USD 5-100 million?
That's what emerging tech services are, and they're the underrated heroes of tech entrepreneurship. There are quite a few good reasons why we encourage tech founders to start their journey with an emerging tech services company.
The Risk-Reward Continuum
We've talked about this before, but the way media hype and tech startup circles work will often paint your options as far more black and white than they actually are.
In reality, tech entrepreneurship exists along a risk-to-reward continuum. You have the high-risk high-gain end of the spectrum with unicorns aiming big and often going broke. You also have the low-risk low-gain end of the spectrum where the traditional, everyday software services companies compete.
But right in the middle, you have a considerable portion where the risk and reward are both a happy medium. And that’s where emerging tech services exist, distinct from both traditional tech services and unicorns.
Less Gambling, More Chess
How to run a business is a specialized skill. It mixes marketing, psychology, technology, project management, and a host of other disciplines. We may have the ambition of building a unicorn, but we may not have the skills to do it. Some of us do possess that specific blend of talent and luck where we can pull it off and build a billion-dollar empire on the first attempt. But realistically, the likelihood of success is fairly low - especially if it's your first time.
Instead, starting an emerging tech services company makes a few problems, like finding product-market fit, significantly easier. This allows you to succeed and, in the process, learn the skills to run a business. These timeless skills you can take to your future endeavors. In a traditional SaaS startup, you may never get to the point where you learn useful skills and end up having to iterate on failures multiple times.
Have a Business - and a Life
Founder life isn't easy. But it's especially difficult if you're trying to build a billion-dollar enterprise from scratch. If you want to have your own business, but you also have a life (or want to have a life) and don't want your personal responsibilities to suffer, an emerging tech services company offers an excellent vantage point as you start the journey.
You can be successful - and earn your chops as a founder - without missing out on the moments that make your personal life meaningful or failing to uphold your personal responsibilities. The fact that you don't need to wait until revenue rolls in to take care of your personal needs also puts you in a great spot.
Fuel for the Future
A starter business is supposed to be just that - a starter. Emerging tech services provide the perfect transitional experience from what is most people’s initial professional experience - as an employee, or even a student in a highly regimented educational context - to the wide open world of entrepreneurship.
But we’re not just talking about gaining experience running a business. ETS companies give you a chance to aim for and learn from smaller successes while earning a nice bundle of money to derisk your personal life. They provide a far more secure path to life-changing financial exits that you can then use to provide resources for more ambitious future ventures.
When you're not worried failure will leave you and your family on the streets, you can be free to aim for bigger (and riskier) opportunities. Bringing your reputation along with you from your previous successes running a business is also an added bonus, helping open doors that might have stayed closed otherwise.
Wrapping Up
In a world of black-and-white hype, don't let the pressure of being big or the fear of failure hold you back from starting your entrepreneurship journey. There is a third option, and it's emerging tech services. If building unicorns is high-stakes gambling, building successful ETS companies is a lot more like playing chess.
Emerging tech services exist at the cutting edge of technology but with the substance and stability of services companies. They don't need you to prove people want what you're building - they're already in demand. What they offer is a chance to refine your strategy, networking, and management skills with a solid payoff and a 75% chance of success. That's exactly how a starter business should be.
If you're thinking of launching an ETS startup or if you already have one, check out our whitepaper about the 3 reasons why your tech services startup might scale slowly and what to do about it.
