On Speed to Market

1. On Speed to Market MGT 709 New Venture Creation

2. Agenda • Adams • Strategies that Work • Legal Forms • R&R • Zipcars

3. Adams On Speed To Market • Myth: I have to ship a killer product • Instead: Get to market fast with a product that solves customer pain • Partnering/buying versus making • Deliver a minimally acceptable feature set • Contrarian: Information rules (Shapiro/Varian) • Versioning: program all major features then offer versions • New venture management is all about decreasing risk

4. Boiling the ocean • A good opportunity is by definition complex • Boiling the ocean – solving the problem in its entirety • There once was a PhD student… • Development costs and time will kill you • Startups don’t have the resources • When you start a company, you’re not delivering a product. You’re addressing a pain point.

5. Advantages • There is never enough money and time to fully address the customer pain • Address the top pain points with minimum functionality • Integrate others’ products through a value-added approach • Advantages • Continued market validation • learning by doing and proof people will pay for your product • Less capital expenditure and market risk • Ability to hire a stronger management team • Ability to raise more capital at better rates • Credibility with customers

6. Partnering • You can’t achieve success trying to bring a complete solution to market by yourself • What can you build in time/budget? What can’t you? • What sort of partner do you need? Suppliers of solution components • Strategic partners – marketing, investment, introductions • Investors • What’s in it for partners? • Pitch to partners like they were customers then show how they fit… • Concept of value-added solutions rather than products

7. Features • Identify a subset of the market • Recruit early alpha customers (as early as idea stage) • Focus your product’s functionality • Microsoft Windows as good enough • Market the path to the ultimate vision • Show how current version is a building block of the overall solution • Close gap between vision and functionality over time

8. Strategies that Work • By the time an opportunity is investigated fully, it may no longer exist! • Screen out losers • Focus on a few important issues • Integrate action and analysis

9. Screen out losers • Where do entrepreneurs get their ideas? • 71% of ideas replicate or modify an idea encountered through previous employment • 20% by luck, only 4% by analysis! • 41% of Inc 500 had no business plan, only 28% wrote a full-blown plan • Ability to roll with the punches much more important than planning • Doing it quickly and doing it right more important than brilliant strategy

10. Screening • Know your objectives • Niche or large-scale • Do you have the skill set • Proprietary or hustle business • Leverage external change • Easier to start in a new or changing industry • “We aren’t as incompetent as our competitors!”

11. The Ideal Startup • Relatively low capital requirements • Ability to keep large equity holding • Substantial enough rewards • Quick payback, options to cash out early • Something you can be passionate about • Ability to recognize failure early • Low shut down costs • Time, money, reputation

12. Analytical Priorities • Some critical uncertainties cannot be resolved through more research • E.g. truly novel ideas like copiers • Avoid research you can’t act on • Secondary analysis • Understand what must go right and avoid some pitfalls • Revenues are very difficult to predict

13. Action • Just do enough work to justify the next stage • Work around problems • Analysis should be focused on what to do next not what not to do • Combine selling with research • Evangelical investigation • Alpha/beta sites • Smart arrogance • Be smarter, more creative, harder working • Be prepared to change course and learn • Persevere

14. Legal Forms

15. R&R • Why was Reiss successful? • What were the external factors creating opportunity? • What were the barriers/obstacles/risks to success? • How did Reiss overcome them? • How successful was Reiss? • Consider risk and return • What should Reiss do about Whoozit?

16. Zipcars • Give an elevator pitch to the VC group on the Zipcar concept • Zipcar group • Take 30 mins to prepare a presentation to the VCs • VCs prepare questions based on: • People, Opportunity, Context, Deal • Exhibits 3 and 5 • Bottom line: • Is it a viable business model? What would have to change? Would you invest $1million?