The other week I snuck along to my first NZVCA function where Bill Reichert of Garage Ventures was speaking on the future of innovation and advocating that the standard model for venture capital and entrepreneurship is changing.
Bill’s top 10 rules for investors and entrepreneurs entering this new world are:
- Fundamental Objective: Shifting from seeking to create wealth to create value. If you create value, creating wealth is a spin off of it. I guess this is a take off of Guy Kawasaki’s ‘make meaning’ concept. Entrepreneurs have traditionally sought to exploit areas that are hot where, meaning its easy to start and flick a company for a nice return. This is about to change.
- Getting Started: The founding individual now becomes the founding team. Bill mentioned that he has never invested in a one entrepreneur company.
- Shared Vision: Get rid of the mission statement (a series of meaningless adjectives compiled together into a generic sentence) in favour of a mantra, a short, powerful and unique statement.
- Management Plan: Plan the work, work the plan morphs into ‘get going’ and start talking to customers.
- Business Model: Instead of relying on raising VC money look to bootstrap your business. A typical place to look for money is your customers through prepayments or strategic partnerships. VCs need some sort of validation that customers are willing to buy your product first.
- Foundation of Innovation: Good old kiwi ingenuity needs to become good new global know-how. From day 1 the company is global.
- Competitive Advantage: First mover advantage –> fast adaptor advantage
- Marketing Strategy: Build it and they will come –> everyone needs to sell. Know how to focus on the customer.
- The Pace of Change: the pace of change/adoption is accelerating –> change takes time – progress is slower than we think.
- Source of Innovation: technology drives innovation –> people trump technology.
Bill has invested in 125 companies over 10 years. Most weren’t successful. Those that were, found a way to bring in additional capital when the cash reserves went dry – persistence and team togetherness in tough times.
The slides from Bill’s talk are now available online.
Graeme @ graemefielder.com