Building a Tech Startup in the 3D Space: 3 Lessons Learned
This page summarizes some personal learnings I experienced when building a deep tech startup in the 3D graphics domain. At the time of writing this article, in 2024, it has been already 6 years since my co-founders and I created DGG - our tech startup to build awesome 3D pipeline technology for the world. We are working on B2B technology that is made available via on-prem and SaaS, providing pipelines for automated processing of 3D computer graphics models, for use with various current and emerging applications.
The journey so far was most times fun and exciting, sometimes tedious and brutal, but never boring. Some of the lessons learned during this journey will most likely be transferrable to other B2B tech startups, while others will be more related to the field of 3D graphics technology. In this article, I am summarizing my personal main 3 lessons learned after 6 years of being a managing director / CEO of a deep tech startup in the 3D space.
Table of Contents
Lesson #1:
Help people understand the Why of your deep tech
No one might know (yet) what exact business problem your deep tech product solves
This, I think, is by far the most important issue I had when starting off back in 2018. Even knowing that back then that deep tech startups must go an extra mile to explain to clients why they could benefit from the product, I still think I could have been better at tackling it. Especially, serving primarily emerging use cases such as 3D eCommerce, we were clearly in a so-called cold market (not many existing solutions). Example to illustrate the issue around explaining the technology:
- For a B2C software startup like "AirBnB, but focused on people with pets", everyone will directly understand what your value proposition is. So, even if it's still important to illustrate those value propositions clearly (example: "Never have to leave your dog at home again when going on holiday!"), it's at least easier to get the basic point across without knowing too many details about your client.
- For a B2B software startup in a hot market, you are competing with existing solutions. Therefore, you can easily explain what you're doing by comparing and outlining your benefits (example: "Matomo is a GDPR-complient alternative to Google Analytics"). Your target audience will understand this well. This is probably the easiest case, since most of your clients are already "sold" on the idea of your software (through your competiton).
- For a B2B software startup in a cold market, people at big companies will often have nothing to compare your solution to. Therefore, you have to go an extra mile to explain them the business benefits of introducing some new tool or platform like yours. That can only work when you know these benefits exactly - and since they have nothing to compare to (in contrast to hot markets), that extra effort of selling requires you to have insights into your clients' internal processes and clear benefits (example: time and money saved) when going with your solution.
Knowing a lot about technology can make you neglect the business side
Being in a B2B cold market can be challenging for first-time founders coming from a tech background, like I was when I did my CS PhD in 2018, who will have to switch their mindset to business development and business intelligence.
For me personally, this also meant overcoming a huge bias: I had done my PhD in the field of 3D graphics and geometry processing, and at Fraunhofer IGD (our alma mater), I was surrounded by smart people who knew already so much about 3D-related topics. In addition, I went to conferences such as SIGGRAPH where most attendants also knew very well about our space. So, most people in my bubble would perfectly get why our tech was great (it was fast, automated and extremely capable!), but they would not really worry about why that kind of technology would be needed (the business case) - that was the job of other people who didn't usually go to deep, tech-focused conferences, for example. That our technology is horizontally applicable (say, in eCommerce, Gaming, Automotive, etc.) didn't make it much easier, because we didn't want to narrow down on only one market. Our fear was that our tech would loose its generality once we start building for only a certain sector. So, with that original setup, finding a good go-to-market strategy had cost us some time.
Lesson #2:
Sustainable market growth does not follow hype cycles
Hype cycles are dangerous and can work against you
3D technology has been around for decades in sectors such as VFX or gaming. For eCommerce, for example, it is still a rather new thing, especially when we're talking about real-time 3D (such as product configurators, 3D and AR in online shops, and so on). Some early adopters do it quite well, but the process of "crossing the chasm" to the early majority takes years. And then, when you're trying to enter the VC-funded space, there is this thing called hype cycles.
Hype cylces can work for you, if your idea fits well, but they can also work against you in many ways, at very least in two ways:
- Once a hype cycle starts, it might be hard to pitch something that does not perfectly fit in with what's currently "hot".
- Once a hype cycle dies, if they associate you distantly with the hyped-but-now-uncool topic (example: "everything that is 3D" -> "metaverse"), investors will be extra careful.
Hype cycles create unrealiable bubbles
VCs are often smart people, but they read about industry trends in blogpost and newsletters or from word of mouth in their bubble and usually have a hard time understanding what new technology will really be adopted in industry, and which one is more experimental and maybe doesn't have a clear real-word mainstream use case yet (to say just a keyword, crypt0). In addition, many ambitious founders feel intrigued to "pitch what (we think) investors want" (already a big mistake), which then further amplifies this trend: investors, who are publishing their "thesis" around a new buzzword, receive pitch decks from startups labeling their idea with that buzzword, hoping to get easier access to funding that way. VCs then get the impression that their investment thesis is being confirmed, because there are so many pitch decks coming in with those buzzwords - until the bubble collapses. In our founding team, we were being just tech-minded people with deep experience in 3D graphics tech, and we always tried to completely bypass these hype cycles. That, however, isn't always easy, because others will always try to position you according to their mental model. This is true especially for investors, but can also apply to consulting firms or big corporations.
Concretely speaking for our case: In 2021, some people labeled us as a "Web3 / Metaverse" startup (to which I always strongly contradicted), then later we were called an "AI startup" - which is only true depending on what particular definition of AI you use, and the way the terminology is used noawadays is 95% BS, honestly. 3D graphics tech in eCommerce, in contrast, is something that is constantly growing since our foundation in 2018 - but at a much slower pace than, say, the crypt0, Web3 and Metaverse hypes started and died.
Hypes can distract from real-world business problems
All in all, I must say - especially when fundraising - we spent quite a bit of time discussing about more "esoteric" topics like "where the Metaverse might be heading" and other great questions that, frankly speaking, are quite secondary at this stage - especially when you're a tech expert yourself in your field. It's kind of funny - pretty much like the bias mentioned above about being good at tech bearing the danger for you to neglect the business side, believing in a hype can make you blind for what really matters too. In other words: If the only tool you have is a hammer, you tend to see every problem as a nail. So, once you're obsessed, with, say, AI, you will see use cases for AI everywhere, and even in areas where a non-AI solution might be much better suited. However, the only thing that really matters at the end of the day, and that is hence worth getting obsessed about, are your customers.
Lesson #3:
Marketing is more important than market growth
Marketing is critical and it doesn't solve itself
With all said about the development of markets, one thing that is easy to forget is that marketing itself is a quite important activity. As experienced founders and advisors will point out, this topic is very often strongly underestimated, especially by technical founders. If you're an early-stage technical founder and you read this, you might think one of the following:
- "Marketing is the business of marketing people. When the time is right, we'll just hire an agency and they'll take care of it."
- "We could just get a student to post stuff about us on social media and then we'll get exposure."
- "We have to be careful that we don't market too early, as our small team will quickly be overrun by requests once we put something on the internet."
Now, in case you are considering any of these points, especially the last one, I hate to disappoint you, but: none of this is matching reality. In fact, once you start putting out marketing material into the real world for the first time, such as website, SaaS free trial, or printed flyers handed out at a fair, you are most likely to experience... the sound of crickets. As an anecdote on this topic: We had a feature launch once where we did a dedicated landing page, a contact form for early beta users, a welcome video and instructions for getting started, and, last but not least, a presentation at SIGGRAPH with a lot of physical gimmicks (demo screens, flyers, giveaways). After a week at the fair, the number of people who asked to sign up for the beta program was less than 20. This was a large disappointment, but the lesson learned from this is simple: If you haven't marketed to your audience yet, your product is new and you are concerned you would get "too much exposure too quickly", forget it. It doesn't happen so quickly - instead, focus on setting clear marketing goals (such as 100 sign ups for a trial), and try to achieve them. You'll then quickly see what works and what doesn't, and that will allow you to get better at setting realistic goals, and at reaching those.
Marketing activities help you learn about your product market fit
Another thing to keep in mind is that marketing puts us in touch with new leads - and that's not only relevant to do business with them, but also to learn if there is actually a good fit with those! For example, you might be rather sure that your product is very well-suited for automotive. However, what if you put out your ads and after a few conversations you realize there was something about that industry that you didn't have in mind which turns out to be a problem for your go-to-market? And what if, based on some outreach in overall area of dealing with companies that do vehicles, you suddenly realize that there is a perfect match with a segment that you didn't have in mind originally, say, RVs or motorcycles? Without constant outreach, there is a significant risk that you are just working inside your own, opinionated bubble, and testing markets through targeted outreach can help you verify or falsify your theses.
Marketing must be targeted
The last important part of this lesson learned is the realization that marketing cannot function if it is not well-targeted. Again, our technology is and always has been horizontally applicable - which means it can be used in many different verticals, and that's great! However, I think I have been naive to implicitly assume in our early days that experts from different industries would somehow automatically find us on the Web or at genereal 3D graphics & AR conferences. One reason for that misunderstanding was that addressing everyone and no one worked for a while. A very few big corporations are early adopters and send people to highly specialized events such as SIGGRAPH. And after good conversations and a few deals coming out of those, we thought that this might be the way to get leads in the future as well. However, for a successful go-to-market, it is usually necessary to break out of your own tech bubble and figure out which audience you want to address next, and where to meet that audience. After all, your early-stage startup will have very limited resources, so how could you even target different verticals well with your limited options for marketing activities? An advisor of mine once put it like this: it is typically smarter to be the greatest fisherman in a single little pond than trying to fish in a lot of bigger (and more crowded!) ponds at the same time.
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