Having been in the trenches of technology startups since the end of the last millennium (ouch), I’ve seen a lot (more than a thousand)  startup pitches / plans and have led six startups, consulted on a dozen or so, advised and mentored a few dozen, and invested in very few.  
Along the way, I’d like to think that I’ve gained some insight / wisdom about how to build businesses and experience some success along the way.  Hopefully that is true as I spend a few days a week mentoring early stage entrepreneurs on exactly that. 
I generally operate within deep tech, across a lot of different areas including AI/ML, special purpose or very high performance compute across digital, analog, and sometimes photonics, energy tech, and a few others, but as broad as these sound, they are actually all within the area where deep knowledge and expertise matter far more than a company’s scale or the amount of available capital.  In short, opportunities where concentrated expertise can outperform the market.

Inventions and innovations are closely related, but not exactly the same.  One mistake we technologists often get caught in is convincing ourselves that lot’s of invention equates to innovation, it doesn’t in practice.  

Webster would say that Innovation means.

1. the introduction of something new
2. a new idea, method, or device

The practical definition of innovation for an entrepreneur looking to start or scale a business is the introduction of something new that solves an experienced problem in a new and unique manner that provides an advantage to the market and / or to you the provider.  This is the type of innovation that will provide an advantage to a small group with deep knowledge and expertise an opportunity in the marketplace.  

So talking about the Genesis of Practical Innovation, there are really three key variables that must present: 

1. deep understanding of a market problem 
2. an innovation, enabled by invention or construct, that uniquely or advantageously solves the problem 
3. a method of providing that innovation to the marketplace

Though there are a lot of people who seek to be entrepreneurs, I strongly advise them to develop deeper understanding of the market and the challenges within it.  Some markets have very clear challenges like data processing like faster, lower power, and more secure.  Others are far more difficult to find challenges that are high enough on the customer pain list for the market to engage with them.  Once they more fully understand the pain point, then and only then are they likely to create a solution that is viable.

The innovation, often coupled or supported with invention, needs to address the challenge without too much additional pain and effort by either the entrepreneur or the customer.  For example, in compute I have seen many startups that provided processor architectures with far better characteristics than Intel, ARM, or DSPs, but few have been even marginally successful because they required new software, toolchains, or had other major constraints on use.  The few that were successful, including two of my own startups allowed the customers to use existing code without recompilation to experience 10-20 times performance gains.  One of the companies that I advised that was acquired provided 3X performance gains as a compilation step.  The companies that required software to be changed either had little to no success.

 Lastly, a great product with no viable path to market is not a real product or at least is not a good foundation for a  company.  Sometimes this overlaps with technology integration, but often it is a lack market entry points or no viable method of funding to reach the market.  Startups must be able to provide the innovation to the market within the time and funding constraints required by the market.  

So in short, focus on innovation that can have major impacts to the market that can be demonstrated and proven with minor amounts of time and resource.  Focusing on these factors will save you years of working on projects that will ultimately fail and increase the value of your time.  While working as an EIR (Entrepreneur in Residence) at a $3B venture firm in Austin, I spent a lot of time meeting and strategizing with startups that had okay, sometimes great, technology, but they were solving a problem that the market did not view as top three challenges or they required far too much time and capital to prove it out.  Some we were able to refocus and drive to success and others realized that they had not really created a startup worthy innovation and moved to better things.

In closing, having created a number of startups, 75% or so with actual exits, I will say two things.  If you want to be an entrepreneur, understand what is really required for success.  In short, don’t just have a cool idea or technology, but understand what it requires to be successful in funding, building, and exiting a company based on that technology.  The second, though admirable to challenge yourself to be entrepreneurial, the decision to make that leap should be driven by a demonstrated need in the market and an opportunity to innovate with key unique expertise or insight into key challenges of a market.  I’ve seen too many entrepreneurs fail because they either had a technology or a market need, but they did not have both.

If this post raises questions or comments, please reach out ( jederrick@icloud.com ). There are a lot of tools available to start work on fleshing out a startup and some are highly recommended like Lean Canvas, Kaufmann Foundation business model templates, etc..  but I’ve also developed some simple tools to answer fundamental questions like “does this make sense as a startup” around capitalization models, customer / market models, and process flows for key activities in deep tech entrepreneurship, to aid in understanding what is vital to success.  I have used this approach for a few dozen opportunities over the years and glad to discuss and share freely.