No one is psychic at TechCoastAngels. Yet, we believe there are keys to success for start-ups. For the past couple of weeks, myself and 6 other angel investors from TechCoastAngels of Orange County have screened more than 120 entrepreneurs in preparation for the “finals” of our fast pitch competition at TCA’s upcoming Celebration of Entrepreneurship event to be held on March 10. We have listened to these entrepreneurs’ 60 second pitches which would be provoking enough to take a meeting with them and listen to their pitch decks. In my last blog, I shared the early pitch decks of 7 Unicorns courtesy of CB Insights.
For this blog, I want to put it all together and share what I see are the common themes that came out of the pitches and the pitch decks. Now, while we have been focusing on start-ups, the principles enumerated in my 5 C’s of Clairvoyant Companies are equally applicable to on-going companies, large and small.
1. Conveying the story. The first “C” relates to conveying a story of what problem(s) the company is solving and telling a succinct story to entice the listener to ask for more information. If it is a start-up, the entrepreneur has to put the listener in the shoes of the person having the problem and convey the solutions. In the pitch deck (or business plan), the CEO (or presenter) provides the details on how he or she will execute on the plan and drive financial results. Conveying the story clearly applies to ongoing companies as well, particularly if the company wants to attract new customers and brand itself in the market as something special. Just think about the stories being conveyed by Nike and Under Armour or your favorite consumer or business product.
2. Customer Clarity. The second “C” relates to the target customers. Who is the ideal customer? Can you describe them and how do you find them? If you think about Airbnb, the customers are both the person wanting to rent his property for a short period of time, to the other customer, a person wanting to rent a room or house. The marketing and business plan should clearly indicate the problem the customer is facing and the solution offered. Additionally, the company needs to present a cogent case for their marketing tactics to drive awareness, adoption and use. Without clarity on the customer and how to find them and motivate them to action, financial success will not be achieved.
3. Competencies of the Company. This third “C” relates to the existing or needed competencies within the organization that can drive the financial results. It also relates to the intellectual property (IP) that is required to support the business or product. How do you acquire and sustain the competencies that are needed for success? Do you hire software developers on your team to build the product or can you outsource that skill? What is critical based on your strategy and your competition?
For an on-going company, this is equally as critical. A competitive analysis and environmental scan may lead to the conclusion that skill sets that were once required are no longer required and new skills must be added. That may lead the company to a training program, a partnership, or replacement of existing resources with new ones.
4. Competitive Advantage and Moat. This fourth “C” is pretty evident. No company operates in a vacuum. Both startups and on-going companies need to be aware of the existing and potential competition that exists. A competitor in the future may not be apparent today but may have the competencies, technology, leadership and resources to compete in a new and growing market. Five years ago would GM or Lexus have considered that Tesla would be a competitor or that Google would enter the realm of cars with their automated car program? A few short years ago, who would have thought that Red would be the camera of choice and used in three of the Academy Award nominees for best film?
With technology and apps changing so quickly, competition can change just as fast. Technology is the new enabler helping young entrepreneurs compete with established companies and with each other. Recall what Andy Grove, former Chairman of Intel said: Only the Paranoid Survive. Whether you are a startup or an established company, be paranoid and keep your eyes open.
5. CEO vision and passion. We at TechCoastAngels say that we have to like the horse (the business concept) but must LOVE the CEO (the jockey and her team.) As we screened the candidates for our upcoming event, we looked for a CEO with passion and vision and who can relate to us, the investor. We wanted to find someone who had a history of success, was decisive, yet approachable and coachable. We believe we found those characteristics in each of the 12 finalists.
Think back to the great leaders of on-going businesses or coaches and CEOS of sports teams. Who is your model for a CEO with vision and passion? I personally thought Lee Iacocca was great when he resurrected Chrysler. Jack Welch turned GE into a world class company with his vision to be #1 or #2 in his markets. Steve Jobs showed the world a new vision for technology. And Alan Mullaly took Ford after the great recession to a new level of respect and performance.
What else did these CEO’s have in common? They had the ability to execute a plan. They were also the keys to establishing a culture in a company that was hard to replicate. In many ways, they became the icon for their brands. And they were highly regarded by their employees and feared by their competition. In a startup it is perhaps hard to discern whether the CEO can execute, yet we can judge their past successes with other companies and who they select as operational execs, advisory board members, and board of directors.
As we near our Celebration of Entrepreneurship, I trust that these blogs and the ideas herein will help executives of start-ups be successful and also be used by executives of on-going companies to help them guide their companies to business success. I would be glad to continue the dialog on what makes a successful company. Feel free to reach me at firstname.lastname@example.org and if you enjoyed this blog please like it, repost, and retweet it.