Page 193 - 6 Secrets to Startup Success

172 6 SECRETS TO STARTUP SUCCESS

How well can you research and understand the market for your idea,
even pre-selling customers, before you cross the point of no return?

The opportunity here is two-fold. First, you will hit your runway
with much more than a raw idea, bringing a keener grasp of your con-
cept and projected path to profitability. Second, the more inexpensively
you can answer the above questions, the more capital will be preserved
for the critical process of iterating your idea in the real world, allowing
you to get your offering in the hands of paying customers, understand
their experience, and use this knowledge to improve your fledgling
business model. With this approach, you can accelerate down the run-
way efficiently and with greater focus, instead of spending precious
on-the-clock time bouncing untested ideas back and forth.

The most desirable point from which to launch a business is with
paying customers already in hand, generating cash from day one. Dri-
veSavers, a $20 million data recovery company based in Novato, Cal-
ifornia, was pulled into existence by a growing computer-based
problem in the mid-1980s. Founders Scott Gaidano and Jay Hagan
worked for a company that sold computer hard drives when the firm
went bankrupt and closed. Out of work, they began talking about
launching a seafood business, but they soon received frantic calls from
former customers whose hard drives had crashed. At the time, few
people knew how to recover data from fried computers. “There was
no manual. Nobody knew how to do it,” Gaidano says. As they began
helping customers retrieve data, word spread quickly, and a solid busi-
ness was born.2

My first consulting practice was the result of client requests.
While working with First Union Corporation in the mid-1990s, I was
considering a move to external consulting but needed a bridge, some-
thing to help me transition from the security of a regular paycheck to
the freedom and uncertainty of self-employment. Late in 1997, I re-
ceived inquiries from two outside organizations needing consulting
help. The resulting projects promised to bring a healthy revenue
stream over four to six months, enough time to build a healthy
pipeline of future business. These first clients gave me a solid bridge
to the outside world and allowed me to set up my consulting practice
with confidence.3

American Management Association • www.amanet.org