What is Stage One?
Sand Hill Partners defines Stage One to include everything that happens before a company acquires its first successful customer. This event is the first meaningful step towards validation that the vision and team might just be able to form a good business. While there are indeed many challenging milestones within Stage One, including product development, company identity, forming a core team, product launch, sales calls, and perhaps financing, none of them change the real state of the business like the first truly successful customer (and in this sense we refer only to a business model customer, as opposed to a successful user, which for some businesses, is an important constituent but not one that is paying you. Think of Google or Facebook, for example. )
It is very important to note that a full Sand Hill Partners assessment includes a more extensive test for how we define a “successful customer” (hint: it’s not the guys in the shop next door who are sort of using your stuff but ultimately paid you little or nothing.)
.Critical Success Factors
Most importantly, the Stage 1 transition point is carefully chosen so that no matter what you have accomplished to date, all citizens of Stage 1 state share the same critical success factors. The two most important are:
1) Forming a solid core team
The quality of the initial team brought together to form the company and provide critical mass for executing on the vision will make or break you in Stages One and Two. These stages are almost always hard, but they become impossible with the wrong people, no matter how good the idea. Stage One companies usually have ten employees or less, which means one wrong hire can just about kill the company (and that is not an overstatement. Say that line to any experienced entrepreneur, and you are guaranteed to get a good story.)
Sand Hill Partners transforms the vulnerabilities of a handful of employees with minimal resources into a high-performing team whose members love working together and command a tremendous competitive advantage. This transformation requires the judicious application of two big sledgehammers:
Early Stage Selection Process
Culled from time-tested principles and best practices learned and applied over 30 years in the selection of employees for new organizations (and key executives in large companies), Sand Hill Partners’Early Stage Selection Process balances a start-up’s need for speed and simplicity with proven methods for determining what someone will really do on the job. It shows you how to separate the start-up “pioneers” from the big-company “settlers”, and determine who will be an outstanding contributor and fit into your culture.
Speaking of culture, the early employees in Stage Two collectively form a canvas upon which the company culture is painted. This painting can either be done intentionally, or you can simply whistle past this canvas everyday and hope whatever splatters on it will work well. Either way, something will be painted and a culture will be formed. While the “whistle method” is often the approach taken by the typical technology start-up, Sand Hill Partners is a big believer in the intentional method. We show you how to create a great culture around attributes like speed, communication, customer focus and commitment. These attributes are essential to a Stage Two team that is attempting to isolate the repeatable business model for the next big thing.
It all starts with establishing and developing important areas of shared mindsets among the employees. As soon as a company grows beyond one person, it is assured there will be differences in how employees perceive the vision, strategy, reward systems and even their role in contributing to it all. Sand Hill Partners believes "organizations are perfectly designed to get the results that they get", therefore, we have found over time that business success comes from deliberate choices about the cultural attributes and intangibles which will differentiate an organization. Outstanding companies consciously design and plan activities to reinforce these choices.
A critical area of shared mindset is around the notion of distinctive competence. Successful start-ups and great companies all possess a deep cultural awareness of a company’s distinctive competence. Sand Hill Partners considers itself leading experts in how to create powerful shared mindsets and leverage them to focus productivity and improve the business.
Accelerate your journey to becoming a successful start-up by building the smart Stage One foundation. Contact Sand Hill Partners to get started.
2) Developing and launching a product that sells
What happens when a product launches, but the sales don’t ramp? It is often difficult to isolate the exact cause…
Are the product capabilities wrong?
Are we targeting the wrong customers?
Is our messaging wrong?
Is our selling process wrong?
At this point, there is usually an executive declaration that the problem is probably a combination of the above, which in reality is a thinly veiled admission that “we really don’t know.” This declaration also starts the timer on the ultimate question– will you figure out the real answer before you run out of money?
The timely discovery of the right answer is the thing that separates the start-up successes from the failures. One researcher found the most dominant factor in predicting start-up success was whether or not sufficient cash remained - after the first product release - to develop, launch and sell a revised offering.
This all happens because most technology start-ups approach product definition and product launch the wrong way. Sand Hill Partners finds quick answers to the above questions through a rapid-results methodology called the Breakthrough Product Model. It determines and tests the minimal product capabilities, target customers and messaging required for success. The process is designed to be performed in an emerging market before product development even begins; however, it can be successfully applied post-launch to quickly ascertain what must be done to fix anemic sales. Completing this process during Stage One will by itself dramatically improve the odds of business success, not to mention increase company valuation for financing.
The process leverages unique but effective methods for engaging the desired customers so they reliably guide us to a precise spec for the minimal solution that delivers the coveted Purchase Order. An especially important nuance in this process is knowing how to get past the customer “wish list” to accurately prioritize the capabilities and features to reveal what is really required. The process tests:
- Customer pain – is it real enough, felt enough and sufficient enough to sell into and build a business.
- Messaging – What words capture the problem and solution to capture attention.
- Available solutions and compelling price-points
- The minimum capabilities that make the product viable and sellable.
- The roles at the customer which will typically be involved in the buying decision
The entire process can be completed in as little as 3-5 weeks. Contact us to schedule a more detailed discussion of how Sand Hill Partners can help you create a successful start-up and a great company.
© 2008 Sand Hill Partners.
All Rights Reserved.