Want to be a Shark?

This was the most interesting email subject line I had seen in a while, so I jumped at the chance to be a shark for a day, torturing–er, judging–business plan pitches from MBA wannabes at the local b-school. I do a lot of deal screens for the local venture club, so it was not too far afield, even though perhaps productization was not the number one concern on many of these new companies.

The flip side of that coin, however, is that business plans are, or should be, a top concern of many of our productization customers, especially in the clean-tech sector, where we work with a disproportionate number of startups.  As I commented on in a previous blog, it is challenging for clean-tech companies to raise money despite record high prices for oil. And from our own biased little corner of the world, a fair amount of capital is required to get a product into manufacturing.  Besides productization costs (shameless plug: including the services Zebulon Solutions offers)–DFx, tooling, industrialization, production test development, regulatory approval, design validation testing, supply chain set up, process optimization, etc.–there are boring yet expensive things like buying inventory. All this takes capital for a physical product (software is a whole ‘nother beast…).  So raising money is crucial for many companies, and it all starts with a business plan.

This is not a business blog–there are many such critters out there–but the quick basics of a business plan include:

* Market need: what the itch is that needs scratching

* Product solution: how the itch will be scratched

* Market details: how big the market is, what it looks like, and who the competitors are

* Go to market plan: sales channels and get to production strategy

* The team: investors are in violent agreement that this is the most important  part

* Financials: P&L and balance sheet summary (cash is king!)

* Investment opportunity: how much money is being solicited and what is being offered

As to the b-school competition, I did channel my inner shark , ripping gaping chunks of flesh—OK, more like gaping chunks of marketing lapses and financial gaps.  While many plans were a bit underdeveloped, there were in fact several companies with promise, companies that had made some progress, had a team and a market, and had promise for a return for investors.  Not for me to give details but the top two companies were into blimps and cupcakes respectively.  Two of my favorite things…

Chuck

3 Comments

  • Bill

    In our experience, “Productization” is a fundamental, and often overlooked, part of the getting a product in customer’s hands. You likely won’t find it as one of the items in the business plans you’re reviewing, but if the rule of thumb that “80% of a product’s cost is determined up front” is accurate, then the impact of properly done Productization will comprise a substantial portion of that amount. Keep up the good work!

  • admin Post author

    The other, only slightly flippant, rule of thumb I have heard recently was that productization is the 80% of the work left to do when the design is allegedly 80% done…

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