Positioning: How To Test, Validate, And Bring Your Idea To Market Now Available From Amazon
If there is one thing that VCs master, it is a refined ability to poke holes in a business plan. I once took a client with over $20 million in profitable annual revenue to Trinity Ventures for financing. Larry Orr, one of Trinity’s general partners, dissected the business – a semiconductor yield management software company – and by the end of the meeting, had sharpened his teeth on what he considered to be an inadequate TAM . He segmented, then sub-segmented the business, establishing that in our assumptions we had mistakenly included a set of unreachable segments. We eventually sold the company to a larger player in the category, without raising further financing.
This poking holes, unfortunately, is a skill I’ve now mastered as well. Those of you who have attended my strategy roundtables have experienced this first hand. I may have told you – straight to your face – that your vision is nowhere near 20/20.
There is, however, something enormously valuable in this exercise of litmus-testing. Simply: It eliminates bad ideas, and saves months, if not years of your life.
In my consulting, I remind people that my job is to help them ask the right questions. If I have achieved that, I have brought them three quarters of the way to the solution. In light of this, you will find in the appendix a set of questions to guide you through this process. Put your idea through this rigor before committing precious years of your life. And, if you have already leaped into the business with both feet, then this rigor will yield something else: strategy. You will learn, if you are truly open, what to avoid, and wherein lie the fastest market penetration opportunities.
But be honest. Be brutally honest as you seek answers to the questions. For while optimism is a requirement for entrepreneurial success, fanaticism is a surefire recipe for failure.