Many entrepreneurs love technology, love programming, and love product development. They do not love strategy. Strategy is often seen in a negative light: fluffy slide-ware that is developed in the ivory tower of large corporates. This mindset is often apparent in investor pitch decks as well. These tend to show a well-articulated problem, many screenshots of the great product that is solving the problem, and the well-known hockey-stick graph that shows exponential growth in users, revenue, etc. That hockey-stick growth chart looks great, but really, what are you going to do to get there? What are your actions? In other words: what is your strategy? The answer to these questions is often missing from business plans and pitch decks.
Here is a thought: strategy does not need to be fluffy at all. Rather, it can be very tangible in the form of Go to Market strategies, the engines for growth that you can leverage, and clearly formulated activities to grow your business. Hence, building on my previous post on business model economics, this blog talks about the importance of strategy for entrepreneurs. What I am advocating is a more focused, targeted approach to strategy. One that is data-driven and leverages a deeper understanding of the underlying business model economics of your startup. This allows you to develop specific, targeted strategies to influence the key drivers and metrics that influence your business performance.
Let’s look at an example from a fast growing startup in Singapore, DropMyEmail. This company offers a very comprehensive email backup solution in the Cloud. As a very fast growing startup in Asia, Dropmyemail backs up emails, databases, websites and much more in the near future (chats, calendars, contacts, etc).
When growing their business, Dropmyemail takes a very data-driven approach. They know the key metrics that drive their business and work in a targeted fashion to move those metrics in the right direction. This requires a clear strategy with specific actions, as shown below:
These goal figures are indicative and may not reflect actual goals, but they give a good indication of how their strategy is not vague or high level. On the contrary, it gives a very clear direction on what needs to be done and what the business focuses on to continue on their strong growth trajectory.
It might look easy to do this. It is not. It takes a lot of process time and iterations for most businesses to get complete clarity on their own business model, the metrics they should focus on, and the strategies and activities they should invest in. All of this is a key art of any discussion with potential investors. However, it gets increasingly important as you move from angel to seed to VC funding. The next few posts will focus on this: what should be included in a good pitch and how does the emphasis shift throughout the funding lifecycle.
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