Startup Diagnostic Brief, a tool for more effective Startup Mentoring Sessions
Case for Metrics & Milestones
In FORGE, we firmly believe that Incubation at its core is primarily about creating enterprises by nurturing ideas from innovators who otherwise stand a very slim chance of achieving success.
From our experience, startup founders with very few exceptions generally lack the ability to define the most critical metrics to track, measure and manage their progress. This in a sense also reflects their not being fully aware of the important milestones in the roadmap — milestones that prove beyond doubt the realistic potential of the startup to become a successful enterprise and the execution capabilities of the founding/core team to realise the product/business vision.
Most often we find them good at defining product development and engineering milestones since they come with a strong tech background. Those with prior experience in program or project management do tend to define weekly/monthly project plans, manage their resources more effectively with better planning and those having exposure to business functions are good at setting and tracking metrics in the areas of marketing, sales etc. but usually done with the mindset and approach that suits an established product/business, and not a startup that is building proof and is executing towards achieving customer-market linked validation.
Note: Just to be sure, we are discussing this in the very specific context of startup founders who are essentially innovators of a new product idea (typically a hardware device, appliance, or system coupled with software and computing aspects), looking at launching this as a commercial product and looking to build a high-growth enterprise.
Therefore, during our incubation program, our primary focus is in supporting startup founders set, track, measure and achieve the most important metrics. They need guidance in becoming comfortable and effective in defining a roadmap with milestones linked to metrics, and managing their own role in anchoring the planning process and leading the execution of the plans towards these milestones.
Our aim is to ensure that the startup founders get into a process of setting/achieving metrics as the basis to evaluate their progress, and track their performance. In addition they use these metrics to validate the market/business potential of their innovative product ideas. To do so we will have to both help them understand the general framework of the most critical metrics form the point of view of ensuring the safe passage towards achieving a high-growth enterprise.
As the first step, we group startups into one of 3 categories, and these categories relate directly to the stage in the typical lifecycle of a startup attempting to launch an innovative technology/product in the market and to build a growth business.
Category#1 [Innovation-Stage] [Aiming to demonstrate Proof-of-Value]
Product Innovators working towards validating the willingness to-adopt, to-use, and to-pay for the value proposition delivered, proving the technical feasibility, usability/deployability of the product and demonstrating that the product is likely to have a 100% HCF for any target customer in a well defined target segment or even across multiple segments. In this stage, our role is to Accelerate Innovation, supporting the innovators achieve rapid progress in the areas of problem validation, customer discovery & development, co-creation, rapid prototyping, access to early adopter customers/buyers etc.
Category#2 [Incubation-Stage] [Aiming to demonstrate Proof-of-Business]
Startup Founders working towards validating product-market fit by demonstrating that the business model is able to achieve predictable/consistent revenues with positive unit economics, and is showing signs of a strong conversion throughout the customer acquisition and sales process, from marketing campaigns, demand/lead generation, distribution, sales all the way to post-sales support with strong customer satisfaction. In this stage, our role is helping founders achieve Production & Sales Acceleration, supporting them with becoming production-ready and integrating them with the supply-chain, helping them find the right channel partners for distribution/retail/sales-support, and build a strong core team to help the startup become ready to plan and achieve growth.
Category#3 [Acceleration-Stage] [Aiming to demonstrate Proof-of-Growth]
Enterprise Builders working towards validating the potential of the business model to achieve market-leading revenue growth at relatively lower fixed and operating costs, by scaling up the scope of business operations. In this stage, our role is helping entrepreneurs prepare for Growth Acceleration, supporting them with seed capital, and setting in place a strong metrics driven execution.
Case for Coaching Founders
To guide product innovators and early-stage startup founders through this structured process of planning and execution, we have decided to adopt a coaching model, using the combination of a playbook and a coach. Ultimately when innovators/founders graduate to becoming Entrepreneurs they should feel confident about being in total control of the process of setting vision, developing strategy, planning execution and managing operations, and the coaching process aims to ensure that they get to stage of self-sufficiency sooner.
For any enterprise, no matter which sector, technology, market, business model etc. the priorities, the metrics, the patterns of success and of failure are much too common, and so are the most critical success factors. Ultimately the best intervention for founders is to enable and empower them with the tools and techniques of enterprise creation and growth.
MVB (Minimum Viable Business) as a framework or methodology was created to do just that, and what we also firmly believe in is to entrust the founders to continuously acquire, develop, and enhance the skills and competencies required to put these tools and techniques to best use. You can refer to my other blog on the [MVB] Founder Guide, a framework for startup strategy and planning.
The Coaches are the STARTegists — the seasoned entrepreneurs, accomplished business leaders, and functional experts who come with the mastery of the tools & techniques that enhance the odds of success of enterprise creation and growth.
The Playbook is the MVB framework developed by FORGE that offers the 10 most fundamental elements of building technology powered and innovative high-growth enterprises, going through each of the 3 milestones — Proof-of-Value, Proof-of-Business, and Proof-of-Growth, highlighted above.
Office Hours with the Coaches for the Founders
Our approach overall is to enable the startup founders and to prepare them for becoming more capable entrepreneurs in the future and to set them firmly in a direction of development and progress. The discussions during the office hours help us set the course of future action and unless properly documented, there is no basis for more effective and outcomes oriented follow-up. In addition proper documentation also allows us to refer back later on the points covered to avoid confusion and repetition.
The success of this lies equally in the role played by the coaches engaged by FORGE in ensuring clear, concise and timely documentation as well as the support and contribution of the startup founders. In the absence of documenting their views, perspectives, interpretation etc. of what was discussed, defined or deliberated it is likely to become less effective in achieving the desired levels of progress from the program.
<TEMPLATE> Startup Diagnostic Brief
Each startup and the founding core team is evaluated on 5 broadly defined criteria, #1 Team, #2 Product-Business Vision, #3 Technology, #4 Defensibility #5 Pitch Quality, and a score between 0 to 10 is indicated for each of the parameters.
#1 Team
● Quality of the founding team
● Coherence between the team members
● Learning potential of the founders
Please comment on the overall team dynamics and personalities of the founders.
<long format response>
#2 Product-Business Vision
● A strong value proposition whilst addressing a critical and quantifiable problem/pain
● Potential to attract paying customers
● Ability to develop multiple revenue models/sources
● Vision for growth and the strategy to execute for market-leading revenue growth
Please comment on the startup’s potential to meet its product-business vision.
<long format response>
#3 Technology
● Relevance of their technology to the product-business vision
● Capacity to build their own technology
● Potential for strong technology led competitive advantage and entry barriers
● Potential for IP creation
Please discuss the fit between the team, its technology and their business aspirations.
<long format response>
#4 Defensibility
● How likely is the startup to defend its market?
Why do you think the startup has good chances to become a category leader?
<long format response>
#5 Pitch Quality
● How comprehensive is the pitch in terms of the overall coverage of the most critical aspects of the innovation?
● How good was the presentation in terms of visuals, clarity, confidence and body language of the presenter?
● On the basis of the pitch are you convinced that as an investor you would like to spend more time with this team/individual?
In addition to the criteria based evaluation, the coaches come up with specific recommendations for the immediate term planning and execution in order for the startup to improve its performance toward specific outcomes/goals, and to enhance the odds of its success by systematically mitigating the inherent risks.
#6 What are the TOP 3 Actions you will recommend along with a brief statement of purpose/reason and the specific outcomes/metrics to be used as basis for evaluating their progress/performance.
First 30 days
#1
#2
#3
Next 60 days
#1
#2
#3
#7 What are the TOP 3 connections you will like to make?
*Please provide Name & LinkedIN Profile and a brief purpose/reason for the connection
#1
#2
#3
#8 In what specific 3 ways would you like to work with the startup?
#1
#2
#3
