Finding the Right Time for Your Business

Michael Collins
Jul 10, 2017 · 2 min read

A lot of things must go right to build a successful business. It all starts by offering a product or service that does a job for customers much better than alternatives (JTBD). That’s way harder than it sounds, and there’s a lot of noise around this core issue.

But timing is also important. If you’re too early, the customer isn’t ready to overcome inertia (humans don’t like change) and switch to your offer. Or key parts of the value chain aren’t ready to support your innovation.

Remember, most products or services fit within a very complex web of supporting products or services that enable a job to be completed. Examples: Uber doesn’t work until everyone has a smartphone; Tesla doesn’t work until laptops drive down the cost of batteries. This article features some good, investible ideas that were just too early

You can also be late. This usually means a market that’s become obvious and where there are loads of competitors. Although every company thinks they’re special (just like a parent with their kids), at this stage actual differences are minor.

VC trick: Be wary when a company shows you a grid (random example below) of benefits over their competitors. First, that usually means there’s fierce competition. Second, you can bet the competition has a similar grid where the company pitching you comes up short.

VCs are herd animals and tend to like markets and companies where demand is proven and CEOs are like them. They pile in late. Case in point: Blue Apron’s last venture round (Fidelity-led) was at $14 per share. The company went public at about $10. Not so hot for Fidelity.

Timing is a key consideration for our funds when we look at deals:

  • Is there a feature grid in their deck?
  • Why now? What is coming together to make this the time when it clicks?
  • Should we pounce or take a pitch? There’s a bias in VC to think “this is our only chance to invest in this company — we’d better jump.” Often, this simply isn’t true.
  • What is coming together to make this the right time for this business?
  • Is this the time for us to invest? What is the risk/reward of waiting?
  • What has changed [to enable this business at this time]?

The Bottom Line: Keep timing in mind.

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