Page 129 - 6 Secrets to Startup Success

108 6 SECRETS TO STARTUP SUCCESS

THREE VENTURES, THREE APPROACHES

In thinking about your approach to planning, consider the maturity
of your venture. How fully developed is your product or service? Do
you understand customer receptivity and demand? Do you know
what will be required to successfully bring your offering to market?
The underlying issue here is the relative number of knowns vs. un-
knowns: the more predictable your path forward, the more valuable
a detailed, written business plan becomes. To illustrate, here are three
quick examples:

DECISION ONE MORTGAGE – While he was incubating his startup idea
as a senior leader at First Union, J.C. Faulkner knew that his new
mortgage venture would target a well-known core need (i.e., home
ownership) with well-established products in a rapidly growing mar-
ket that he deeply understood. He had built successful mortgage shops
and had been through many rounds of annual sales and cost projec-
tions. He knew the kind of people he would need and what he would
pay them. He could accurately estimate an overall cost structure. In
short, although he would encounter the unpredictable twists and turns
all entrepreneurs do, he faced more knowns than unknowns. For all
these reasons, he developed a thorough business plan with detailed
financial projections over a three-year period to give himself a high-
confidence roadmap for raising capital and growing the business.

MODALITY – At the time of his first round of funding, Mark Williams
was dealing with uncertainty by the bucketful. He was still in a prod-
uct development mode, having tested a raw concept with medical
students and possessing what he hoped was a fairly mature prototype.
He couldn’t yet produce, sell, or deliver anything of substance. And
his hypothetical customers swirled about in a poorly understood,
just-emerging market. Even if he could identify the right users, he
had no reliable distribution channel for delivery of the product (re-
member, this was pre-iPhone, pre-AppStore). And he still lacked the
formal blessing of his most important partner, Apple Computer, as
he patiently built relationships within the company in hopes that it
would not crush him like a bug.

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