On Speed to Market
MGT 709 New Venture Creation
Agenda
 Adams
 Strategies that Work
 Legal Forms
 R&R
 Zipcars
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
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.
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
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
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
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
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
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!”
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
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
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
Legal Forms
Pass
Limited
Flexible
Investor
Different
Emp.
Through
Liability
Distrib#
Restricts.
Classes
Stock
Sole Proprietor
Y
N
N
Y
N
N
General
Partnership
Y
N
Y
N
N
N
Limited
Partnership
Y
Y*
Y
Y*
N
N
S Corporation
Y
Y
N
Y**
N
N
LLC
Y
Y
Y
N
maybe
maybe
C Corporation
N
Y
N
N
Y
Y
# losses up to capital contributed
* must have at least one general partner
** must be US citizens, no more than 100 members
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?
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?