Over the last 15 years I've met hundreds of entrepreneurs who claim to have developed "the next big thing." Many of these people have good academic pedigrees, professional experience and technical skills, and yet very few of their ideas ever make it to market. Why?
The immediate answer that pops into most people's minds is: a lack of funding. After all, how can a visionary bring a concept to fruition without the financial resources to cover important pre-launch activities such as research and development, marketing and lead generation? While one can't underestimate the importance of funding, in my experience it's not the make-or-break factor that separates successful ventures from the also-rans. Rather, the most important issue is leadership. Simply put, companies need to have senior-level decision makers with the experience to understand how to navigate the unique and challenging path that start-up ventures need to take.
Getting entrepreneurs to think beyond their technology can be challenging, but it is an essential step they need to take if they want their companies to succeed. So what skills do innovators need to build viable businesses? There is no single factor that defines a great leader (it's hard to find too many common personality traits between Southwest's Herb Kelleher and Apple's Steve Jobs), but the number one asset for an entrepreneur in a start-up environment is the ability to see past the day-to-day development of their products and take a realistic "big picture" to building a business that is likely to get funding.
Once an entrepreneur has come to the realization that he or she needs to focus on building a business, as opposed to a product or service, the next step is to see if those skills exist internally. In many cases, founders of start-up ventures may have superlative skills in their areas of expertise but have no clue how to commercialize their products, get the attention of critical partners or cost-effectively attract customers. In my experience, probably 50% of the product ideas I’ve seen were decent ideas, but a great product or technology idea is not even 5% of the battle to successfully launch a company. If you want your company to be taken seriously, you have to prove that you have a leadership team that can tackle all of the business issues rather than just their technologies or products.
So, how does one make the leap from having a great idea or product to having a company worthy of funding? Obviously, this is a tricky problem, given that attracting a team and getting market traction requires funds, and angels and VC firms aren’t going to invest without a “team and traction” in place. We call that problem the “entrepreneur’s dilemma”. There is no "magic bullet" remedy for this cycle, but there are some important themes and ideas that entrepreneurs should consider as they prepare to move their businesses to the next level:
Matt Ridenour is Managing Director of Momentum Venture Management, a Los Angeles-based firm that helps early-stage companies achieve early business results and develop credibility in order to get funding and transform their ideas, technologies and products into sustainable, successful businesses. For more information, please visit www.mvmpartners.com.