Lesson #12 in building B2B healthcare startups (learned the hard way)
There is zero shame in building a "tech-enabled service as a business" instead of building a “product company". You just have to recognize it and run the business very differently.
Every one of the 50+ entrepreneurs I have spoken to this year, (especially those with tech backgrounds), want to “solve hard problems that have high impact and can scale to 100s of customers. Quickly.”
That’s a bit like saying that ”All living matter is made of Carbon”.
Some things are just not going to be scalably productized. For example, solutions that are process improvement based for high-variance processes, require behavior change that is bespoke to organizations, where the labor component is a large part of the process - are often best packaged and sold as “tech enabled services” rather than B2B software products. Yes tech can help but you will be leading with the people, the domain expertise, the "consultative hand to hand combat" and "client first" thinking instead of "tech first".
I understand the issues with the label of a tech-enabled business: “Valuation multiples will be low”, “scalability will be limited”, “GTM will be harder” and many more that I hear from excited entrepreneurs wanting to go from 0 to 60 mph in 4 seconds.
Unfortunately wishes are not horses. Heavy services orientation might just be characteristic to the problem, the industry and the user + buyer set you have chosen. If you are trying to “package process improvement in a box” you will “get found out” by the market, your investors and your team over time because your numbers will show it. None of us can wish away genetics or the laws of physics, at least in this universe.
These sorts of problems is the reason consultants exist - to do one off things where software might help improve the outcome (even a lot!) but by definition it requires significantly customizing it to your “client”. There is a BIG difference between “client” and “customer”. The sooner you understand and accept that the less the pain you’ll experience, the less money you’ll need to raise, and the more likely you’ll be all that you can be.
The good news is that there are hundreds of successful, cash rich tech-enabled businesses, and yes they take longer and may not appear as "sexy" to you.
Image hat-tip: Julianne Ponan