Coconut shells and the Holy Grail

Editor’s Note: Welcome to Reality Check, a feature for RCR Wireless News’ new weekly e-mail service, Mobile Content and Culture. We’ve gathered a group of visionaries and veterans in the mobile content industry to give their insights into the marketplace. In the coming weeks look for columns from Mark Desautels of CTIA, Laura Marriott of the Mobile Marketing Association and more.
“Monte Python and the Holy Grail” has made me laugh every time I’ve seen it. But recently it has provided an uncomfortable metaphor for the plight of startups that dare to try and sell to, or through, the ever-larger wireless carriers.
The movie starts out with King Arthur and his loyal servant riding non-existent horses across the English moor to the clip-clopping accompaniment of coconut shells. Most startups in fact do start out with vaporware and arm-waving, and I am immediately empathetic. In the movie, at the first imposing castle wall, Arthur becomes hopelessly ensnared in meaningless debate with gate-keeping guards about whether or not coconuts can be carried by migrating sparrows. Eventually he clip-clops off in disgusted discouragement. Again, it’s hard not to see the correlation.
But it’s also hard not to keep trying. For a startup, selling to a carrier is, in fact, the almost instant zero-to-millions Holy Grail. But as carriers become larger and naturally more deeply layered, and consolidation sucks more and more of the formerly nimble smaller carriers into the bureaucratic swamp, it’s getting really hard to get up for the Quest. It’s so hard that several venture firms I know, and like to invest with, have stopped backing companies that have to sell to carriers in order to succeed.
In fact, according to Rutberg, investments in carrier-related applications and infrastructure companies have declined from 51% of total wireless non-transport investments in 2006 to less than 33% in 2007. So far this year that’s over $400 million and accompanying talent going around the walled garden, not into it. That may or may not be bad for the entrepreneurs, but it has got to be bad for the carriers.
The wireless industry has gone from scrappy startup to by far the most exciting telecommunications sector in the past 25 years. Bell Labs may have kick-started mobile technology, but entrepreneurship has fueled the growth. If it becomes too difficult to get today’s wireless carriers to buy the next great innovations, who will?
The answer is tomorrow’s wireless carriers. Companies like Clearwire, Apple, Google, unheralded Wi-Fi networks everywhere, Internet portals and handset manufactures are all hard at work trying to out-innovate and run right around the walled gardens. And they are getting lots of help from venture capitalists and the startups they fuel to do it. If we in the carrier-centric startup community, as well as today’s wireless carriers, don’t want to become reluctant participants in our own version of the movie’s Black Plague-driven, “Bring out your dead” scene, what do we have to do?
I have the following advice:
Startups
–Develop and sell only products and services with staggeringly large value propositions. Kineto’s Unlicensed Mobile Access (UMA) and SNAPin’s on-phone customer-care products come to mind. A little better won’t work. You have to be nearly, but not quite, unbelievably better.
–Understand and respect your customer’s bureaucracy. You won’t get a real order and relationship without going through the RFI, RFP, Trial, Pilot and finally Deployment Tango with the requisite and voluminous documentation before, during and after each step.
–Deliver your product as if your life depended on it-because the individuals you are selling to in the carriers believe that theirs does. You may feel like an innocent white rabbit, but they look at you like a terrifying, career-limiting Killer Rabbit.
— Make sure your investors have enough money, patience and experience to stay the course before you even think about sallying forth on your Quest.
Carriers
–Create organizations whose job it is to identify nearly, but not quite, unbelievably good startup technologies and products, and then shepherd them through the first steps of the Tango. Alltel’s Strategic Applications Group and T-Mobile’s Ventures Group come to mind.
–Help the startup understand your processes. Don’t lead them into the abyss by shielding them from the truth. Stop letting na