The opportunities & challenges of launching a startup in a boring industry

by
Olivier Pailhès

This article will discuss some opportunities and challenges of launching a startup:

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Four months ago, we launched the beta version of Aircall, an online phone system for SMBs that lets you create your phone line in 40 countries and start managing your phone calls as a team, in a few minutes. When we got the idea, it sounded so obvious: every single small business faces issues to set up its phone-line, although it could be so much easier, someone just needs to build a user-friendly, smart product using the (now mature) web-RTC technology. Things got complicated – as it’s the case for all startups – and one of the reasons for that is that telecom is a boring industry.

A lot of the main stakeholders in the phone industry are old school players, big telco companies, offering terribly designed products. This market domination does not fuel innovation, and therefore, is not very welcoming for innovative startups. Furthermore, telephony is just not sexy for many people, it’s just a matter of perception: most people will tell you that that they don’t like phone calls because it can be time consuming, interrupting and expensive. They more and more prefer to communicate over email, social networks or messaging apps.

To us, telephony is impregnated with what Paul Graham calls Schlep Blindness: everyone sees there is a huge issue that needs to be fixed, but everyone would rather build a recipe website startup than fixing this problem. They just do not want to do the unpleasant task of fixing this issue – and the worst part: it is an unconscious process.

And yet we launched a startup in this market. Everyday we ask ourselves: “Are we crazy? Or are we geniuses?” – I guess the answer is: a bit of both. Here is what we’ve learned from launching a startup in the boring telephony industry.

Challenges:

  • Less leverage to create new habits

When you are tackling such a market, your aim is generally to change things and make them better. Changing habits is both extremely hard and extremely complicated.

Your leverage to make people change their minds is much less important in a boring industry than a “sexy” industry. First, don’t think that people will change their habits only because what you offer is better: habits are not based on “logic”. You need to either build trust or build hype. In both cases, it’s much harder in a boring industry:

-People perceive their phone solution as something “robust”, that can only be related to companies that are old-school, that they trust, also because they use them for their personal phones.

-Try talking web-RTC or Voice over IP at a family dinner: it might create an even worse effect than your cousin who talks about insurance. No business owner wants to hear about innovative phone systems, and therefore, when it comes to choosing one, there is a great chance he or she will opt for a “traditional” phone solution.

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  • Harder to get public attention

When launching a startup, particularly a Software as a Service, your #1 concern is to find users. There are many ways to do that, from direct sales to PR and inbound marketing. In a boring industry, most of them become harder.

– Forget being a “press darling”

Press can bring a lot of users to young startups: since we offer a product that is suited for startups and SMBs, there are a lot of medias that are specialized in these targets that could be helpful. Yet journalists simply don’t want to write articles about boring topics: we’re not launching a photo sharing app, we’re launching a phone system. Getting press attention requires us huge efforts, that we’d rather put somewhere else.

– Good luck with your content strategy

Inbound marketing is an important channel for user acquisition when you are a SaaS startup. Luckily, we have a team dedicated to it in the startup studio we work in. They know how to make SaaS and B2B software cool and interesting, but creating a real philosophy and a cool “content brand” is definitely a challenge. We spent months making boring content about the tool instead of our product. It is harder to find a nice angle to create attractive content.

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  • HR management is more difficult

Not being a press darling and having difficulty pitching your product without boring your interlocutor also makes it harder to recruit. Hiring outstanding profiles (in tech, sales and marketing) is our #1 priority. But among all the great startups out there, yours need to have an awesome culture if you want to be “the place to be” for talents, and make up for the fact that you are part of a “boring industry”

Being a non-sexy startup makes it also more difficult to cheer up your team in case of a pitfall – and we all know it happens a lot in a startup’s life. Make sure you build an awesome product that really solved a problem: it the sanest basis any startup can have, and will always be there in bad times.

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Opportunities:

  • Boring industries crave for beautiful and well-designed products

Let’s not forget that people generally don’t like being bored. If you are capable of showing that you can make something beautiful inside a presumably boring market, chances are you will impress the gallery.

Every time we show Aircall we get a strong “wow effect” because people are so used to having horrible looking phone products. In our team, we like differentiate ourselves from websites featuring pictures of happy people wearing headsets or showing a thumbs up: we solemnly declared we would never use that kind of visual identity, and the rest of our UI follows this philosophy. It’s way easier to get a product “wow effect” – on the design point of view – in a boring industry than if you are competing in the social networks space for example, which is considered a “sexy industry” with many high-caliber designers working there.

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  • Fewer startup competitors

Since these industries appeared to be “boring” fewer startup founders will actually launch a product there.

Once again, it does not seem to be related to logic: there is a greater market need for phone solutions than, let’s say, photo sharing apps. Yet how many people launched and crashed their sexy photo sharing app? It’s not a question of need but simply of “hype”.

If you combined this opportunity with the one previously mentioned, you have all the more chances to avoid competition: a slick UI and nice branding can stifle competition pretty efficiently in a boring industry.

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  • Easier to get investor attention

As we said it will be harder to get attention from the press and end users but it will be easier to get attention from investors and potential acquirers. As fewer startups are operating in this space and as you build real industry expertise you have more chance to get attention from them (compared to the number N photo sharing mobile app).

After all, our target market – that is to say not telecommunications at large but phone lines, for SMBs, at our price range – is $21B. Considering we have few competitors, a irrefutable product need and a real market-fit, let’s just say we do not sound so boring to investors.

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In the end, what does Boring mean?

BORING

  • Highly technical, backend issues tend to overcome frontend issues
  • Crowded by clumsy solutions, typically B2B
  • Commoditized market
  • Perception that it doesn’t change people’s life / unconscious need for a change

Examples

  • Payments
  • Waste treatment
  • Telephony

FANCY

  • Everybody understands
  • B2C more than B2B
  • Linked to high money or emotional value
  • With a clear impact on people’s life / people realize easily there’s a pain to fix

Examples

  • Fashion (for instance: Selectionnist)
  • Taxi VS Uber
  • Team collaboration (for instance: Slack)

Now we’re celebrating our 100,000th call. There are many more challenges ahead of us, and hopefully many more opportunities. We would love to hear other stories of startup founders who have launched or are considering to launch in an industry considered “boring”.  Please comment this article or ping us on Twitter @aircall!

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