SmartCone CEO: The Right Kind of Customers are Key to Early, Sustainable Growth

By the Hyperspace Challenge Editorial Team

Some of the most consistent advice you’ll hear when launching a startup is to make sure that your company is solving a problem.

But often the problems are with the startup itself: How are you going to get financing? How are you going to find your first customer?  How are you going to grow your company?

Traditionally, those ‘hows’ were solved by investors and the money they provide. But for startups with relevant technology, government accelerators can help solve these ‘hows’ in a better way.  

“They listen to what you offer as an entrepreneur, to what problem you are solving, and who you are and, if they like it, they open up a channel to helping you solve those ‘hows,” says Jason Lee, Founder and CEO of SmartCone Technologies, which participated in the Hyperspace Challenge accelerator’s inaugural 2018 cohort.

SmartCone is a data sensor company that commercializes Internet-of-Things (IoT) technologies to make safety more intelligent, cost-effective, adaptable, scalable and mobile, all at the highest standards of security and privacy. 

Specifically, Lee explains, government accelerators allow startups to identify demand and find the customer at the same time. (And as those who have marketed to the federal government know, finding the right buyer in the byzantine world of the military industrial complex is no small task.)

Unlike traditional client relationships, these customers offer additional benefits: giving companies unique and specific insights into the problems they need solved and significant leeway, support and feedback in developing the best possible solution. This dynamic essentially extends the government’s role beyond mere customer, and positions them squarely in a partnership capacity.  

“A special customer is one who is willing to be an investor – not just a cash investor – but someone who is giving you a need, but also has a forgiving hand,” said Lee. “As a startup, you are going to crash and burn many times over. You need a customer willing to be with you through the good, the bad, and the ugly. There has to be a bi-directional benefit…a reason both sides are doing it.”

Hyperspace Challenge, in particular, places substantial emphasis on identifying the most relevant startups for government scientists, technologists and procurement officials it works with, which means that the customer is highly motivated to support startups in more of a ‘partnership’ capacity.

But Jason has a warning for other startups tempted by the large size and long length of government contracts: make sure you don’t become too reliant.

“I can’t tell you how many companies I’ve known that lasted seven years long because that was the length of their government contract and they couldn’t pivot when they found out the contract wasn’t being renewed.”

So, the best practice is to secure commercial contracts in addition to government contracts, but as you do, endeavor to find similarly forgiving clients.

“If you’ve got something worth doing (and they like you), customers will take the gamble and help you. They will foster you. They will give you an order, an LOI or a prepayment,” Jason said. “Satisfying someone with a need and giving them confidence you can deliver — that always sells.”

 

“The other part of getting the right partnerships, is to set the tone that you’re not perfect. Forgiveness is a big thing. A lot of people are afraid to look bad, so they misrepresent themselves. Don’t be afraid to make a mistake. Have integrity. Loop people in. Set the expectation early, and you’ll be fine.”

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