“Moonshot Culture” is Strangling Deeptech
While deeptech innovation breaks some rules, "moonshots" throw all the rules out of the window
Whether you call it “emerging tech”, “tough tech”, or you embrace the most common moniker “deeptech”, this area based on major technical innovation is quickly drawing in more talented entrepreneurs and VC investors. This is a very good thing, benefiting our society at large by attempting to solve some of our greatest problems while generating an attractive financial return for investors. It also applies our brightest minds to work on important innovation beyond just another photo sharing app or ad optimization technology.
Unfortunately, our thriving deeptech ecosystem is now at serious risk from an increasingly popular trend: “moonshot culture”.
Yes, deeptech breaks some rules but adheres to “startup physics”
Innovation has always been about questioning the status quo, rethinking how things work, and being “disruptive”. In one of my past UBQT blog posts, I used some of my favorite quotes to reflect on the nuances of being a disrupter. One quote warns of being the unfortunate first mouse caught in the mouse trap vs. the happy second mouse who gets the cheese. Another one from Steve Jobs is a reminder that the rules around you were written by people no smarter than you. Founders thrive by rethinking “lessons” from the past, so we must never forget to keep forgetting (another past UBQT blog post).
With that said, all startups operate within the laws of physics – both Newtonian but also “startup physics”. Every entrepreneur embarks upon their journey with a bold vision, but the best entrepreneurs embody a mindset based around a hypothesis tree. They lay out the various risk items that stand between them and a massive, successful product and company:
Fleshing out versions of their product over time
Having early customers try it out
Beginning to charge customers
Scaling to more customers, etc.
Entrepreneurs then thoughtfully sequence these risk items against a timeline of capital raising to answer the biggest questions as early and cheaply as possible.
Their goal is to avoid bringing on large amounts of capital and lots of teammates until they can sufficiently de-risk the endeavor. While this may seem smart and considerate, it’s also usually required by VC investors and capital markets. VC funding is staged out in phases - often 12-18 months apart in line with these risk reduction milestones and termed pre-seed, seed, Series A, etc.
For the most part, this system of staged capital and smart risk reduction works really well for mainstream tech startups. What’s relatively new is that deeptech innovation can now fit within this same set of “startup physics” (staged capital, smart risk reduction) thanks to some hard-fought developments over the last 5-10 years (miniaturization, increased tooling availability, ecosystem development, improved industry-academic partnerships, etc.). This is a big deal because we can innovate more successfully in deeptech by employing these techniques well-honed from decades of use in tech startup methods.
But as we pursue harder things, some are getting carried away and throwing away the entire playbook by invoking a new word: “moonshots”
Unfortunately “moonshot culture” offers a hall pass to ignore ALL the rules
In startup pitch meetings, I pose questions to entrepreneurs about their “startup physics”, and we collectively work through a plan of how to line up their risk reduction milestones with increasingly large capital raises and team growth over time.
In stark contrast, when I pose these “startup physics” questions to a moonshot entrepreneur, they usually have a different kind of reply:
“No, we’re a moonshot so we don’t have to worry about that”
“We’re thinking really big, so we can raise enough capital to not have to answer those questions”
“This is a huge moonshot so we will just raise all the capital upfront and focus entirely on building for a few years”
It’s with mixed emotions that I see moonshot entrepreneurs drafting off the rapid rise in deeptech and the magical word “moonshot” to unlock large amounts of capital for sloppy plans. I love innovation and breaking some rules, but I am wary of a complete disregard for “startup physics”.
Smart entrepreneurs are experts at managing risk and figuring out how to surgically take very specific risks. It’s important we apply this approach to all startups, especially ones using innovation to attack some of our most important and hard to solve problems.
Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focused on startups solving real-world physical problems with "software beyond the screen", often using smart hardware or machine learning.
If your startup fits this description, fill out the 60-second Ubiquity pitch form and you’ll hear back shortly.
Totally agree. My startup Solid State Propulsion is developing solid fueled ion thrusters that use solid metals as fuel. This ties in with our ultimate goal of one day refuelling from asteroids (our moonshot idea if you will). However our focus is 100% within startup physics. Our first product is the worlds smallest ion thruster (which is made possible by the metal fuel as we don’t require fuel tanks) which will deliver real value to real customers (developers of very small satellites known as pocketqubes and cubesats who have no propulsion options due to limited space onboard their tiny satellites). As we sell these thrusters and they are used in space it will allow us to fund the development of our larger higher power thrusters for much larger satellites 🚀