Substance Over Sizzle: Strata Identity’s Approach to Building in the AI Era

Discover how Strata Identity’s founder leverages lessons from the .com crash to navigate AI hype, offering B2B tech founders a framework for evaluating substantial opportunities in emerging technologies.

Written By: supervisor

0

Substance Over Sizzle: Strata Identity’s Approach to Building in the AI Era

Substance Over Sizzle: Strata Identity’s Approach to Building in the AI Era

The parallels between today’s AI gold rush and the .com bubble aren’t lost on Eric Olden. In a recent Category Visionaries episode, the Strata Identity CEO drew a sharp distinction between hype cycles and genuine market opportunities, informed by his experience navigating both the rise and fall of the first internet boom.

The .Com Era Playbook

“What we’re finding at that time was how to sift out the bad ideas and find the ones that were substantial,” Eric recalls of the late ’90s. While companies like Pets.com and Webvan chased trendy but fundamentally flawed business models, Eric’s first company, Securant, focused on solving real security problems for Fortune 500 enterprises.

Applying Historical Lessons to AI

Today, Eric sees similar patterns emerging in AI: “Now we go into the modern technology landscape and the new hotness is AI… people are now just saying whatever the business problem may be, and they’re going to throw some AI onto it, as if that somehow makes it a good thing, and it doesn’t.”

This observation has shaped Strata’s measured approach to emerging technologies. Rather than chasing trends, they focus on validating real market needs through extensive customer development.

The Three-Part Problem Test

Eric’s framework for evaluating opportunities involves three key questions:

  1. Is it a top priority? “When you’re talking to them, the question is, okay, of all the things that you’re doing without me telling you what I want you to say, what are the top three things that you’re concerned with right now?”
  2. Will they invest time? “If you’re talking to people who aren’t your friend network, right, go to arms length people. And if you’re talking about something that really is a problem, you’re going to know it because they’ll take your call, they’ll do the meeting, they’ll hear your pitch.”
  3. Will they invest money? “Would you purchase that? And if you were going to purchase it, is this a $1000 problem or a million dollar problem?”

The Counter-Intuitive Value of Difficulty

Perhaps most surprisingly, Eric suggests that ease of implementation might actually be a red flag: “If it was easy, anybody would do it and we wouldn’t have an opportunity. So if it’s going really easy, probably isn’t going to work.”

This perspective influences how Strata approaches product development in 2024: “We’ve really oriented our go to market message around a very concrete, tangible set of value propositions, solving very tactical things.”

The Category Creation Paradox

For founders creating new categories, Eric highlights a crucial paradox: “The product expands, but our message contracts.” This means while your technology might become more sophisticated, your market message should become more focused and concrete.

Looking Beyond the Hype Cycle

Strata’s approach to emerging technologies is grounded in three principles:

  1. Focus on substantial problems that enterprises will pay to solve
  2. Invest in deep customer development before writing code
  3. Build for the long term, not the hype cycle

For tech founders navigating the AI era, Eric’s experience offers a valuable framework: don’t chase trends simply because they’re trendy. Instead, focus on finding and solving substantial problems that customers will pay to solve.

As Eric puts it, you know you’ve found a real opportunity when “the alternative is to do things by hand and that costs tens of millions of dollars.” That’s the kind of substantial problem worth building a company around, regardless of whether it involves the latest trending technology.

Leave a Reply

Your email address will not be published. Required fields are marked *

Write a comment...