Young start-ups need two things to survive: customer orders and funding.
The challenge, however, is that customers and venture investors often decide to "buy" based on very different messages.
To succeed with customers, start-ups need to articulate clear, focused value propositions. Often the nature of early stage product development is such that the product is of limited functionality and can best be sold by "narrowing the focus to broaden the appeal;" clear use cases, incremental value wrt products already in production, easy to install, and quick to show value.
Focus is often the key to early sales traction.
Investors on the other hand can often have a pejorative view of focus - VCs question nichey looking business plans ("is this a feature or a company?") and the proverbial "what is the TAM" and "can this thing scale" are often orthogonal to the product marketing challenges of selling version 1.0 products to skeptical customers.
In my experience as a VC and ex-startup CEO, young companies need to remember to develop and tell two stories. The first targets customers and explains specific, tangible, and focused value made possible via the currently available product. The second story targets the VCs and addresses the real concern with respect to scale, TAM, and a road map that supports the emergence of the company from a niche-product to a real company.
This challenge of orthogonal messages and the need to develop them simultaneously is similar to the age-old, "pat your head and rub your tummy" trick.
Some companies tell great customer stories and never get funding. Others are great at raising money, yet never seem to be able to sell the customer. It is the rare, and significant, early-stage company that can tell a story of relevancy that resonates with the buyer, while also painting a longer-term vision to VCs wrt how to build a large company that will make VCs a healthy return.
Any comments or experiences here would be great to share!
Monday, August 15, 2005
Thursday, August 11, 2005
Fraternal Props
My brother, Rich, played a KFOG concert tonight in SF. The band sounded great and thanks to KFOG we enjoyed a wonderful evening of live music in front of the ferry building in downtown SF.
Rich is featured (track #2) with other emerging Bay Area artists on a really great CD, KFOG Local Scene 2. Check it out.
This new CD from KFOG features a variety of artists and bands from Northern California who deserve to be heard. Proceeds from "KFOG's Local Scene 2" will go to Music In Schools Today, a local charity that helps fund music education in Bay Area public schools. The CD is only $6 and supports a great cause, while introducing the listener to some great new music.
Rich is featured (track #2) with other emerging Bay Area artists on a really great CD, KFOG Local Scene 2. Check it out.
This new CD from KFOG features a variety of artists and bands from Northern California who deserve to be heard. Proceeds from "KFOG's Local Scene 2" will go to Music In Schools Today, a local charity that helps fund music education in Bay Area public schools. The CD is only $6 and supports a great cause, while introducing the listener to some great new music.
Tuesday, August 09, 2005
NSCP - 10 years later
Today is the 10th anniversary of the Netscape Communications IPO. (see link for great set of Fortune articles).
16 month-old Netscape Communications went public on August 9th, 1995. The stock priced at $28, peaked at $75, and closed that day at $58 valuing the young company at a cool $3.3bn.
1995 also brought us Verisign, Yahoo, and Amazon, among others.
1995 represents a seminal year in technology innovation. In many ways it parallels 1959, the year Jack Kilby and Robert Noyce independently invented the integrated circuit and gave birth to the digital age.
Reflecting on the staggering impact NSCP, VRSN, YHOO, and AMZN have had on our lives, economies, and careers reinforces the promise and excitement of innovation, while reminding us how hard it is to appreciate non-linear developments, and harder still to foresee their ultimate impact.
As investors and technologists, let's all hope that 1995 is a spring board for changes still to come, and let's us also hope that we have the foresight to recognize "it" when/if we see it.
16 month-old Netscape Communications went public on August 9th, 1995. The stock priced at $28, peaked at $75, and closed that day at $58 valuing the young company at a cool $3.3bn.
1995 also brought us Verisign, Yahoo, and Amazon, among others.
1995 represents a seminal year in technology innovation. In many ways it parallels 1959, the year Jack Kilby and Robert Noyce independently invented the integrated circuit and gave birth to the digital age.
Reflecting on the staggering impact NSCP, VRSN, YHOO, and AMZN have had on our lives, economies, and careers reinforces the promise and excitement of innovation, while reminding us how hard it is to appreciate non-linear developments, and harder still to foresee their ultimate impact.
As investors and technologists, let's all hope that 1995 is a spring board for changes still to come, and let's us also hope that we have the foresight to recognize "it" when/if we see it.
Thursday, August 04, 2005
State of the blogosphere
David Sifry, Technorati's CEO and founder, just published a series of State of the Blogoshpere posts.
Summary Stats:
Technorati was tracking over 14.2 Million weblogs, and over 1.3 billion links in July 2005
The blogosphere continues to double about every 5.5 months
A new blog is created about every second, there are over 80,000 created daily
About 55% of all blogs are active, and that has remained a consistent statistic for at least a year
About 13% of all blogs are updated at least weekly
Wow. Simply amazing growth and well worth watching as investors and business people.
Summary Stats:
Technorati was tracking over 14.2 Million weblogs, and over 1.3 billion links in July 2005
The blogosphere continues to double about every 5.5 months
A new blog is created about every second, there are over 80,000 created daily
About 55% of all blogs are active, and that has remained a consistent statistic for at least a year
About 13% of all blogs are updated at least weekly
Wow. Simply amazing growth and well worth watching as investors and business people.
Tuesday, August 02, 2005
Strategic Planning
As a BOD member, non-profit volunteer, and employee here at Pequot, I am often asked to attend strategic planning sessions. This post shares my observations on common pitfalls and methods for using time as a group to add value and solve real issues.
Strategic planning sessions often fail to be either strategic or helpful in planning for the future. The expense in time, energy, and dollars can be significant. And yet, often the process leaves people frustrated and unfulfilled.
Why? What to do?
In my experience, the most effective offsites benefit from utilizing a mental model or framework that bounds the discussion, defines the assumptions, and helps people with a common lexicon and method for discussing issues and deriving answers. The absence of a framework or model for decision making and discussion and the lack of a common lexicon to discuss issues results in people talking past one another and endless loops that lead nowhere.
I am always amazed how varied peoples perceptions are to issues and the degree to variance can only be overcome if a common vocabulary and framework is agreed upon. This is especially true when you bring people together from completely different functional backgrounds.
For example, I recently served on the strategic planning committee of my church. Ten very smart people, well maybe nine, were asked to come together and define a three year plan for the church and its ministries. The first few meetings were pure hell. We talked endlessly about how to organize the committee, what the deliverable would be, and others simply jumped in and attempted to solve "key" issues. We got nowhere and lost energy.
We finally saw real traction when we all read a book that provided a framework for the process - with templates, a timeline, a sample deliverable, and a model for discussing the issues at hand. As soon as we adopted the model and the associated language, context, and logic, we made amazing progress and finished in no time at all. A shared approach that defined the problem and provided a path to deriving a solution allowed the group to think as one and it provided a baseline that made each individuals contribution additive.
In business setttings, the same lessons apply. Unless people buy into a mental model or construct of how to define, discuss, and solve the problem(s), conversations are endless streams of non-sequitors and serve only to frustrate the people involved.
Accordingly, I am a firm believer in
Strategic planning sessions often fail to be either strategic or helpful in planning for the future. The expense in time, energy, and dollars can be significant. And yet, often the process leaves people frustrated and unfulfilled.
Why? What to do?
In my experience, the most effective offsites benefit from utilizing a mental model or framework that bounds the discussion, defines the assumptions, and helps people with a common lexicon and method for discussing issues and deriving answers. The absence of a framework or model for decision making and discussion and the lack of a common lexicon to discuss issues results in people talking past one another and endless loops that lead nowhere.
I am always amazed how varied peoples perceptions are to issues and the degree to variance can only be overcome if a common vocabulary and framework is agreed upon. This is especially true when you bring people together from completely different functional backgrounds.
For example, I recently served on the strategic planning committee of my church. Ten very smart people, well maybe nine, were asked to come together and define a three year plan for the church and its ministries. The first few meetings were pure hell. We talked endlessly about how to organize the committee, what the deliverable would be, and others simply jumped in and attempted to solve "key" issues. We got nowhere and lost energy.
We finally saw real traction when we all read a book that provided a framework for the process - with templates, a timeline, a sample deliverable, and a model for discussing the issues at hand. As soon as we adopted the model and the associated language, context, and logic, we made amazing progress and finished in no time at all. A shared approach that defined the problem and provided a path to deriving a solution allowed the group to think as one and it provided a baseline that made each individuals contribution additive.
In business setttings, the same lessons apply. Unless people buy into a mental model or construct of how to define, discuss, and solve the problem(s), conversations are endless streams of non-sequitors and serve only to frustrate the people involved.
Accordingly, I am a firm believer in
- defining the problem to solve
- agreeing on a model or framework for discussing the problem and deriving a solution
- ie defining the logic path and process that result in an answer
- defining a timeline
- getting team member buy-in wrt the above
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