1. Making it Work!
News From the Front Lines
Extended Version
Rob Adams

2. 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
2 © Rob Adams

3. 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
3 © Rob Adams

4. 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
4 © Rob Adams

5. 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
5 © Rob Adams

6. 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
6 © Rob Adams

7. 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
7 © Rob Adams

8. 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
8 © Rob Adams

9. 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
9 © Rob Adams

10. 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
10 © Rob Adams

11. 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
11 © Rob Adams