making it work u of manitoba

Making it Work!

News From the Front Lines

Extended Version

Rob Adams

© Rob Adams2

Making it Work

Good ideas are scarce I know my customer I have to ship the killer product I must raise a lot of capital quickly Investors fund business plans Investors want their money back quickly Advertising is the hallmark of a good marketing plan I can use partners to sell my product

© Rob Adams3

Making it Work

Good ideas are scarce…• Ideas are commodities• 1:8:20 rule• Get to market first fallacy• No competition fallacy

Characteristics of a solid concept• New approach to an existing business process• Real, existing corollaries today• Solution today has market potential of $ 1 billion• Multiple adjacent markets just as large• Start up team with execution skills in the space

© Rob Adams4

Making it Work

I know my customer…• Deadliest of all myths• Market validation from friends• Ready, fire, aim approach to products• Consumes capital at a furious pace

Market validation• Right product, features and markets sooner• Natural alpha, beta and first customers emerge• Helps recruit savvy employees• Raises smart capital• Optimizes company’s capitalization

© Rob Adams5

Making it Work

I have to ship a killer product…• ‘Boiling the ocean’ feature sets• Delays time to market, and the market always is moving• Uses large amounts of capital

Build it, buy it, partner for it• Prioritized market feedback from validation• Get to market faster and with less capital• Go after partners like you go after customers• Ship ‘minimal functionality’ products

© Rob Adams6

Making it Work

I must raise a lot of capital quickly…• Lots of capital before any value is created• Causes dilution• Produces a spend mentality• Output versus execution orientation

Focus on value inflection points• Validate markets and business models• Customer traction• Bring on key executives and advisors• Raise enough capital to get through the next set of value inflection

points

© Rob Adams7

Making it Work

Investors fund business plans…• Typically #1 on the start up to do list• Lots of energy and time• Output orientation• Companies get funded without them

How to handle the business plan• Put it last on the list• Validate markets and business models• Hire a team with ‘execution expertise’ in your space• Mitigate risk• Develop your investment pitch• Then the plan writes itself

© Rob Adams8

Making it Work

Investors want their money back quickly…• Common misperception• Liquidity events do not produce liquidity for founders… or investors• Quality investors expect a return, but want it from a quality company

Who to raise money from• Professional investors know how to build quality companies• Go with investors who can continue to fund the company – through

good times and bad• Pick your partners carefully

© Rob Adams9

Making it Work

Advertising is the hallmark of a good marketing plan• Marketing issues are the highest risk components of early stage

companies• No early stage company needs mass marketing

How do you address this?• Bring on marketing resources early• Get your entire company to focus on customers and market validation• Early stage companies do need marketing – focused on product

management, company buzz and customer acquisition

© Rob Adams10

Making it Work

I can use partners to sell my product• Many technology focused companies rely on others to ‘go to market’• Companies forget sales is a form of ongoing market validation• Partners work only after you’ve established a strong market position

How do early stage companies sell?• Three basic sales models for early stage companies; direct, telesales

and OEM• Prove an economic model that has reasonable customer acquisition

costs• Understand your sales cycle, sales model and who in the organization

are in the decision chain

© Rob Adams11

If You Want More…

Presentation content from research done for this book

Random House/Crown Books All major booksellers

• Amazon

• Barnes & Noble

Contact information• Rob Adams

• rob.adams@mccombs.utexas.edu

• 512-633-5955