By: Phillip Bogdanovich
When I co-founded Hyperion four years ago, I knew we were stepping into a multibillion-dollar LED market. Not $5 or $10 or $15 billion, but $45 or $50 billion in the US alone over the next 15 years. Because of the connected nature of the current business landscape, and the burgeoning global marketplace, Hyperion had global reach from the moment we started. With advancements in contract manufacturing and supply chain management, we could establish a global beachhead—and support it too. And that $45-50 billion per year in market opportunity is now projected to be $120+ billion in the next 15 years.
So what does this mean? It means that Hyperion needed to secure .0001% of the market to be a $12 million-a-year company. Think about that for a minute. The odds of me developing cancer are .01%. I was 100 times more likely to develop some type of cancer at 30 than to make less than $12 million a year in the LED lighting market. More compelling still is that over the four years that followed the formation of Hyperion, we developed an ecosystem of products and filed for intellectual property that aligned Hyperion with the entire green tech market (including internet of things applications, LED lighting, wireless controls, energy monitoring, and big data). The combined market values for our ecosystem of products reach a staggering $700+ billion globally. Now we need to control .000017%. There’s no way this fails!
We built a raft and named it Hyperion. We constructed it out of great customer service, innovative product, a forward-thinking business model, and terrific IP. We set off into the ocean of opportunity. Right about the time we lost sight of the shore, we realized that we were too far out to turn back—and that although we were surrounded by water, we hadn’t figured out how to drink it. We might actually die of thirst surrounded by water.
This realization is panic-inducing. We realized that to take advantage of the potential surrounding us, we would need tools and brand awareness. Talking to other entrepreneurs, I learned that this problem is common during the formation and management of a first or even a second company. To the uninitiated, opportunity looks a hell of a lot like probability. It’s the “why not me?” quandary: prospects are there—why shouldn’t they be mine?
In our first year we met with executives who are also close family friends. There was a potential sale there, but also something that ended up being more valuable: brutal honesty. I was told that in our industry, we needed to expect at least six years of near-starving before we would even have a shot at success. I could have disregarded that advice, but I chose to accept it as matter-of-fact. And immediately our future became manageable. We knew what to expect. We could begin to plan as opposed to dream.
Like often occurs with life rafts, things you can’t control will affect your course. You may even be in the raft in the first place because of something outside of your control. Once you are out to sea, control over externalities becomes even less likely. For instance, Hyperion was at the finish line with a $4 million opportunity and it fell through because the company buying the product changed ownership. We also lost a huge potential channel partner because our point of contact, the CEO, made a poor decision in his personal life that led to him exiting the company. No more opportunity for Hyperion. The list of storms like this experienced by Hyperion is long and in some cases bizarre.
I’m not saying you shouldn’t start a company. What I’m saying is that you should go in eyes wide open. Plan for the first few years to be difficult. Plan for the worst and hope for the best. This will keep you motivated and your successes will feel like successes as opposed to handouts. The startup world is supposed to be terrifying. And it’s awesome. The fact is that the entrepreneurs who will change an industry or contribute to a space love the stress and figure out how to manage the process. They wouldn’t have it any other way. For the ones who make startups a career, nothing is more fulfilling than solving the perpetual problem of driving a startup to success. Nothing is more rewarding that surviving a trial by fire. Or water, as it were.