Technology Inflection Points

We’ve now reached the last of the “Inflection Points” series. Let’s recap the five inflection points that we’ve observed:

To recap, inflection points allow the startup to very quickly move from a small group of people who believe in it to a mass market amount of people who believe in it. Or, put another way, a secret shared by a small few becomes mass market consensus. In an inflection point, that shift happens VERY quickly. 

The last inflection point is a Technology Inflection Points.

Technology Inflection Points

✅ Technology inflection points represent a point of demarcation in a given industry. The market defines categories of the “old way” and the “new way.” ✅ 

We have had technology inflection points in our American history. For example, Alexander Graham Bell with the telephone:

Or, the Wright Brothers with the first flight:

Truth be told, technology inflection points are rare. Because of the significance of the achievement, often years are involved in development of the technology. Nevertheless, they are necessary for the technological advancement of humanity.

They tend to be patentable innovations, but sometimes are not.

Tundra Angels has invested in several companies that represent technology inflection points in their respective industries. I’ve observed the process as well as the market reactions to the startups’ technologies.

Additionally, I have also spoken to a number of startups that have the potential for a technology inflection point, but a critical piece is missing, which I will highlight.

With that background, I wanted to highlight two main observations on:

A) How breakthrough technologies can be discovered, and

B) What creates a technology inflection point in the market.

1. How a Breakthrough Can Be Discovered

What is interesting about technology inflection points is that the majority of them are not zero-to-one in the true sense of the word.

✅ Rather, often a breakthrough tends to coalesce an existing technology or series of discoveries to develop a new technology that creates much more utility and value than those isolated discoveries had achieved. ✅

All of the co-founders of the startups that we have invested that have had these breakthroughs have referenced an existing technology, or series of discoveries, that have shown their respective inventive step to be possible.

It is then the inventive step of the astute co-founder to coalesce these variables into a solution that provides much more utility for the market.

To illustrate this point, I’ll share a perspective on Tundra Angels’ portfolio company, Immuto Scientific.

Immuto Scientific’s Breakthrough Technology

Tundra Angels invested in Immuto Scientific in August 2021.

In Summer 2023, I had a very special moment when I visited Immuto Scientific’s lab in Madison for the first time.

Co-Founders Faraz Choudhury and Daniel Benjamin gave me a tour of the lab. As I watched the technology in action, Faraz and Dan explained to me something that I found very intriguing - the chemistry behind what they were doing had already been proven by a separate inventor a number of years ago. Yet, the limiting factor of that previous discovery was that it was very low throughput and thus the output of value was only possible to achieve in a very incremental way. The inventive step of Immuto Scientific's technology came in the ability to perform the intended process in a high output, highly scalable way.

 ✅ Hence, Immuto Scientific developed a technology to make the prior chemistry discovery attain a high throughput state, making the process highly scalable. Through this breakthrough technology, Immuto was able to layer on a monetizable business model that is transformative for their industry. ✅

Without going into the details on our other portfolio companies with breakthrough technologoies, the narrative is largely similar.

The breakthrough narrative is like this:

“This [prior discovery or breakthrough] had been achieved previously. That proved that [what had been unlocked on a first principles level]…

But, it’s insufficient by itself because [characteristics that make it insufficient]. So, what we need to do to create utility is _____________.”

 ✅ Even for SaaS startups or other startups whose products may not be considered breakthroughs, notice one very important fact:

The vast majority of them do not re-create the wheel. 

The question you should rather be asking, then is,

“What wheels remain unfinished in the given market?” 

Whoa.

More specifically, “How can you build onto what has already been achieved and coalesce those variables together in a way that creates utility?” ✅ 

The fact that founders can start with a few punches already on the punch card is quite encouraging. Founders just need to be thoughtful about finding the right variables and how they coalesce them into a solution that provides utility.

2. How a Technology Inflection Point Can Occur

Some startup founders believe a fallacy. The fallacy is that the breakthrough technology by itself is sufficient to win in the market.

I talk to many startups that have a “breakthrough” technology, but lack or never achieve a technology inflection point. 

👇 The missing piece? 👇

👉 Highly networked distribution. 👈

✅ Typically with those breakthroughs that can transform an industry, it requires an existing industry network for rapid distribution. ✅

Many breakthroughs never reach their full potential because they do not get widely distributed.

But the ones that do, they have the entire industry talking about their technology.

Notice something subtle about the Alexander Graham Bell picture above. It’s a full room of people. Perfect context for the network required to evangelize the technology with rapid distribution.

Let me contrast two startup examples.

A Breakthrough that Didn’t Become a Technology Inflection Point

At one time, I had been approached by a startup company that had a breakthrough in a particular industry.

The co-founders were seasoned executives. They had efficacy studies done on the product and how it would be superior to the existing alternative. The studies were impressive.

I was drawn into the potential of the technology. But I observed that the startup struggled with one major thing - a network of investors and a network of potential customers.

One of the co-founders had experience in a space adjacent to the customers that the startup would sell to. However, the startup was largely a play where two seasoned executives had a technology in an industry where they did not possess magnificent network connections.

The story started to turn a bit like a like a Hollywood documentary with a binary outcome - either this could actually be something remarkable for the world and two people from outside the industry would make it happen, or it would pass into anonymity.

I ended up passing on the startup after a few conversations.

As time went on, I continued to watch as they couldn’t get the tinder of their company to light.

They continued to hit a wall - their lack of industry network connections. They didn’t have easy access to the leaders at the top organizations in their respective industry to create a technology inflection point.

The breakthrough technology just stayed a breakthrough technology.

Contrast this with Immuto Scientific’s journey.

Faraz and Daniel, the co-founders, spent years on their research becoming well acquainted with the market problem and developing this technology.

Immuto Scientific went through the NSF’s I-Corps program which is like an accelerator that connects promising technology with the top companies in the respective industry for conversation and customer discovery interviews - that was how the co-founders gained their network.

Lastly, Immuto had another co-founder that had previously had a strong exit in the same space.

When I first encountered Immuto in Summer 2021, they already had several Big Pharma customers in place. If I recall, several of their initial customers came from the network gained in their I-Corps program!

To sum it up, Immuto Scientific had WAY more than just a breakthrough technology.

They had an industry network that they could leverage for rapid distribution. 

Immuto Scientific is early in their journey but has amassed many thrilled customers in the Big Pharma space.

Their technology represents a point of demarcation in drug discovery. There is now an “old way” and a “new way” of determining one crucial step in developing drugs.

What separates a breakthrough technology from a Technology Inflection Point is this: 

A breakthrough by itself is significant. No doubt. But just as the saying goes, “If a tree falls in the forest, did it make a sound if no one hears it?” Just like the above example of the startup that possessed a breakthrough technology that simply stayed a breakthrough technology.

A technology inflection point is where the breakthrough technology becomes mass market consensus and the “new way.” That rapid market distribution is only possible via a powerful industry network.