Elements of a Sustainable Company✔ Clarity of purpose✔ Spectacular market✔ Alleviate customer pain✔ Team DNA✔ Incredible product focus✔ Real operating margins✔ Frugality✔ Inferno with a single match
What We Look For In A Plan 1. UNIQUE VALUE PROPOSITION/MARKET POSITIONING CLEAR, CONCISE, ABOVE THE NOISE; CUSTOMER VALIDATION? 2. EXPLOSIVE MARKET SECTORS, FULL OF DISCONTINUITIES AMBIGUITY AND CONFUSION ARE GOOD. HOW BIG? DEFINING? STRUCTURE/ACCESSIBILITY? READINESS? DISCONTINUITY—WHAT’S DIFFERENT? VALUE CAPTURE POTENTIAL? NO COMPETITION – OFTEN NO MARKET; ENTRENCHED PLAYERS: INNOVATOR’S DILEMMA? STARTUPS: HOW MANY? OUR TEAM? SOURCES FOR DIFFERENTIATION? 3. BREAKTHROUGH PRODUCTS/TECHNOLOGY SOURCES FOR DEEP SEPARATION AND ADVANTAGE? ORDER OF MAGNITUDE? DEGREE OF DIFFICULTY? ADOPTABILITY? COMPLETENESS? DEFENSIBILITY? 4. DEFINING TEAMS MAGNET QUALITIES? DOMAIN EXPERTISE? INTENSITY? DNA BLEND? SCAR TISSUE? 5. CAPITAL EFFICIENCY WHAT IS THE FULLY FUNDED PLAN? MARGIN? BUSINESS MODEL? DIRECT VS INDIRECT? EXPENSE MODEL? REVENUE ASSUMPTIONS?
Founder Attributes We Look For Very sharp, scrappy, frugal Obsessively driven, inquisitive, never satisfied Fixated on ―thrilling‖ customers Metric focused, always iterating and improving Not distracted by ego or title envy Not necessarily ―experienced‖
Why Are Capital Efficiency & Market WavesRelated? Microprocessors Computers Hard Drives Biotech Internet Cleantech
Is Your Business Dependant on the ―Kindness of Strangers‖?Government subsidies or (potentially temporary) regulations?The mass ―belief‖ in a market (before profits)?The presumed exuberance of later stage investors?The positive sentiment of the public markets?
Even For “Capital Intensive” CategoriesThe Likely Winners Will Still Stand Out from the Pack:• Will use dramatically less capital• Will use less people• Will get to market faster• Will be more profitableFor Startups, the ―Best‖ Technology Doesn’t Always Win
Conclusions Think Big… market size, ultimate market dominance gross margins, operating margins value to customers, ultimate value of the company…But Start Small… headcount, burn rate, money required singular focus, short time to market, …If you have the ―right stuff‖, it’s always a great time to start a newcompany!