Venture Introduction, "We Have Liftoff"
H. Randall Goldsmith, THE JOURNAL RECORD
In the life of a venture-backed enterprise, there is a defining moment when the entrepreneur is momentarily on top of the world. It occurs when the lawyers for the investors and the entrepreneur complete their documentation, and the first check of investment capital is wired to the entrepreneur's bank account.
It is a truly a moment of exhilaration. It is the culmination of months if not years of extremely hard work, sleepless nights, headaches, heartaches, and financial crises. It is the end of an emotional roller coaster.
Reflecting back, the entrepreneur conceived a venture idea, proved its economic feasibility, developed the venture opportunity, and convinced investors to back the enterprise. Now the life of the venture embarks on a new level of commercial activity -- venture introduction, the fourth stage in the commercialization process.
The introduction stage consists of three activities: the pre- production prototype, market validation, and business start-up. The introduction stage can be considered the defining moment for the enterprise: the business is launched, limited amounts of product are produced and limited sales are made. However, it is a rare venture that experiences a perfect launch -- equipment setups are out of caliber, systems fail to integrate, suppliers are too early or late, advertising is wrong, or the bank fails to set up your line of credit. The objective is to work out the kinks as quickly as possible, maximize efficiencies, generate revenues, break-even financially and achieve profits.
Based upon the desired features of the product as defined in the engineering prototype, a production and operational process, whether it involves people or machines, is put into place to achieve the objective of a reliable, manageable, and dependable system. Alternatively, contracts are executed with outsourced providers. In either case, it is important to verify that the technical assumptions made in the business plan about costs and capacities are valid.
Completion of the pre-production prototype step will result in knowledge about the manufacturability of the product, the manufacturing processes, maintainability and reliability, materials and components lists, plans for field support, installation and production costs, safety and environmental factors, time schedules, and regulatory requirements.
If the venture involves a service product, the pre-production prototype activity will result in knowledge about the systems requirements, resource allocations, integration procedures, interoperability features, and customization needs. Once the assumptions are finally tested and validated, full production is launched or services are delivered.
Even though production is launched, no one would produce a million widgets without knowing whether the end-user was satisfied with the initial product. …