This is the first in a continuing series of articles that examine the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.
By Francis Moran and Leo Valiquette
So said Ronald Weissman in a recent interview. And Weissman should know. He is chair of the Software Special Industry Group at Band of Angels, Silicon Valley’s oldest angel investment organization. The Band has seeded over 200 companies in the past 16 years, yielding more than 40 profitable exits via acquisition and nine via initial public offerings on Nasdaq.
Weissman is one of more than two dozen people we interviewed recently. Entrepreneurs, venture capitalists, angel investors, accelerator and incubator executives, technology transfer experts and other stakeholders in the ecosystem that brings technology to market gave us their insight into the prevailing conditions, moods and factors at play across North America and in Britain that impact each link in the chain between a great idea and a profitable product.
What, then, defines an entrepreneur as “successful?” Some may emphasize an acquisition that pays a premium to the startup’s investors, or an IPO that meets or exceeds the expectations of its prospectus. At Francis Moran & Associates, we contend that there is one metric that trumps all else: Bringing to market a product that addresses a clear need with a business model that is profitable and sustainable; a product that proves its merit by actually generating positive cash flow. It is not the first customer that matters, as important a milestone as that may be, but the legion that must follow to drive growth over the long term.
The challenges to achieving this are many. Some lie in the regulatory or public policy framework of a country, state or province that create punitive tax regimes and barriers to investment. Others are found in the prevailing market conditions that have, for example, hammered the traditional VC industry in recent years. But one consideration trumps any of these external factors: A strategic marketing program that emphasizes early customer engagement.
This is all that matters. We don’t presume to suggest that these other external factors are not significant, sometimes even fatal, impediments, but if a company puts the right emphasis on marketing and customer engagement at the outset, it will be able to face these other challenges from a position of strength.
“Few startups fail for lack of technology,” wrote Eric Reis, creator of the Lean Startup Methodology and the Startup Lessons Learned blog. “They almost always fail for lack of customers. Yet surprisingly few companies take the basic step of attempting to learn about their customers (or potential customers) until it is too late.”
A strategic program that focuses on syncing product development with a clear market need, getting that product into the market and ensuring it is visible to potential customers, is fundamental to success. To build a business around a technology, the only measure that matters in determining the greatness of the product is how many customers are lining up to pay for it.
The best of times, the worst of times
We can’t ignore the prevailing economic conditions that have impacted the value chain for bringing technology to market. If we compare today’s environment to the heady days of the dot-com boom, it appears to be a horrible time to launch a venture or engage in the process of putting a new product in the hands of customers. On the other hand, it can just as easily be argued that there has been no better time than now.
Which viewpoint is right? They both are. Fortune, as always, favours the bold entrepreneur who can look beyond the obvious, individuals with guts and vision in equal measure who can’t sleep at night because their minds are racing with ideas of how to overcome the challenges of the day, whatever they may be.
“If you’re an entrepreneur, there are never enough resources, but I think resource constraint is what makes people creative,” said Chris Shipley, chairman and CEO of the Guidewire Group, a global market intelligence firm based in Redwood City, CA, that works with early-stage tech companies. “Having an environment where you must build around these constraints often creates more interesting and innovative opportunities.”
In the months to come, we will explore the challenges, opportunities and considerations for bringing technology to market in today’s dynamic and volatile marketplace, from securing risk capital and finding exploitable technology, to best practices for startup incubation; from what it takes to be a successful entrepreneur to the role of government and other bodies. And, of course, we will focus on why marketing in its various dimensions is fundamental to the entire process. We will draw on the perspectives of various subject-matter experts from across the diverse ecosystem that supports technology commercialization, as well as feature guest blogs and multimedia interviews.
Our intention is to put forth ideas, yield practical insights and provoke thoughtful discussion. We want to hear what you have to say. Our treatment of these various topics will be by no means exhaustive. We welcome comments, opinions and alternative viewpoints.
Over the next couple of weeks, we will dive in by taking stock of the current trends in the angel and VC markets and what pressures these have placed on early-stage ventures. We will also feature commentary from Ottawa’s own Denzil Doyle, long-time California-based angel investor Frank Peters and others.