So far we’ve looked at the way in which the explosion of Cichlid species mirrors the explosion of tech companies in Silicon Valley and discovered that in both cases, there was an initial catalyst for evolutionary divergence followed by rapid speciation fuelled by intense competition resulting in exploitation of a wide variety of niches along but at the same time the need to protect your own innovations in order to avoid hostile mimicry and predatory tactics. The questions now become:
1) what do you do if your technology is no longer competitive within a particular niche?
2) At the same time, if you are a start-up with a new and improved technology, how do you get it noticed amongst a sea of similar technologies?
3) Finally, if you can’t get noticed straight away, can you still develop your business?
Our favourite fish, the Cichlid, have a number of ways of answering these questions. One method is to attract mates by building an impressive territory (some species actually build sandcastles as large as 4ft high!) and defending rigorously against potential competitors. The idea behind this strategy is that at the same time, you are able to drive off potential competitors and lure strategic mates thereby crushing competitive innovation and fuelling your own development. This may be a viable solution to the first question posed above however, the problem with this strategy is that it requires an inordinate amount of resources and thus it is not really possibility if you are a fish trying to enter a new territory or a start-up company trying to enter a new market. So, basically, I have told you that if you want to get laid in the valley you need ‘a big, impressive territory’ and I’m guessing that most of the people reading this are slightly lacking in this department.
So what do you do, if you don’t have the resources to maintain and promote such a territory? Again the Cichlids have an answer but at this point, I am going to jump out of the water and into the sky to tell you the story of a sexual legend, his name is Gibbon.
Gibbon is a ‘Superb Fairy Wren’ who lives in the Botanic Gardens, Canberra Australia. Don’t let the name fool you, this guy was an absolute machine with the ladies, and he makes Casanova look like Dilbert. Male Superb Fairy Wrens (pictured above left) are strikingly beautiful little birds, with flashes of brilliant blue across their face and breast. Females (pictured above right) on the other hand are kind of dull, brown and dreary. Superb Fairy Wrens live a simple life, they find a partner and settle down into a monogamous relationship for the rest of their lives… Hang on! I thought you said Gibbon was a lady killer! Appearances can be deceiving, whilst to the untrained eye it may seem that all is happy on the home front with deeply in love monogamous pairs having babies and raising a family together, below the surface, almost 100% of the babies in a particular population of Superb Fairy Wrens were fathered by… you guessed it, Gibbon (see the fantastic research of Andrew Cockburn and Mike Double who taught me biology at ANU).
What makes all the females in this population want to invest their eggs in Gibbon? It turns out, that they are almost exactly the things that make a female Superb Fairy Wren all hot and bothered are the same things that give a Venture Capitalist a ‘hard-on’.
- He makes a great elevator pitch by singing early in the morning
- He has a great demo, his feathers are brighter blue than any of the other fairy wrens in the population
- He has a big market, Gibbons feathers stay blue for longer than any of the other fairy wrens in the population
- Gibbon has a proven track record. He has driven off competitors and produces high quality offspring time and time again.
If you want to find out more about how to give a VC a hard-on, I thoroughly recommend the hilarious presentation from Dave McLure. As a brief sidenote - the Cichlid fish also use bright coloration to attract mates (investment).
Ok, so now onto the final question, what do you do if you don’t have a ‘big impressive territory’ and you leave VC’s feeling limp?
When you first looked at the picture of the Superb Fairy Wrens above, I bet you didn’t really pay any attention to the drab, dreary brown bird on the right did you? In telling the story of the fairy wrens I gave all the credit to Gibbon, but in truth, Gibbon got lucky, he just happened to inherit the genes that would make him a highly investible proposition. Let’s flip the story around and think about the females not as investors but as small start-up companies in their own right. Now clearly, they are not as instantly attractive as Gibbon and by themselves they don’t have the resources to build and maintain a large impressive territory but if you think about it, they are the masters of building strategic alliances and networks. In much the same way that small bio-tech companies have relied on building strategic alliances to acquire resources that they could not hope to acquire on their own (see Audretsch & Feldman), the female superb fairy wren - she builds a strong alliance with her monogamous partner (the female actually often has sex with her partner very soon after returning from her romp with Gibbon to make him believe that he has paternity over their offspring), enabling them to maintain a strong presence in their territory (market) and grow their family (company) but she also builds a strategic alliance, albeit less strong, with Gibbon utilising his high quality production capacity.
Thus there are numerous ways to get laid in the valley, if you’re not a big company, and you can’t secure VC funding you can still build strategic relationships and alliances, in fact this strategy may get you laid more often and more consistently than any other.
Conclusion
If you have been following from the start and you are still reading, you might remember that I was trying to work out why firms differed in their conduct and profitability and whether this could be better understood by examining the networks of relationships they were in. Having taken a journey spanning 12,000 years from the great Lakes of Africa, through World War II Germany, into the Silicon Valley and finally to the Botanic Gardens in Canberra, the answer to this question is clearly yes. The conduct of firms is heavily influenced by the ecosystem they find themselves in, the network of other firms surrounding them affects their conduct by competing for the same resources, filling niches that might otherwise be available to the firm and through knowledge transfer, a key gene that is transferred between organisms can be the catalyst for a massive speciation event or explosion of companies within a certain industry. From a strategic management perspective, it is important to be aware of the way other firms in your industry are conducting themselves and to be aware of the choices you can make that might give you a competitive advantage either by filling a profitable new niche or by enhancing a pre-existing niche by developing strategic alliances.
You might also remember that my aim was to write an interesting article with rich links and multimedia, so if you enjoyed it leave a comment and let me know, if you thought it was absolute rubbish please also feel free to let me know. Finally, what I really wanted to do was convince my lecturer to join the 273 team on Kiva so Magnus, if you’ve made it this far, how about it? $25 to make a micro-loan to an entrepreneur in the developing world, if you want to find out more about Kiva - check out this video or just go to Kiva.org.
