What is the Total Package Deal?
This is a four-part series on San Diego’s Total Package Deals (and why we’re seeing fewer of them these days). It starts here.
A total package deal starts out for an early stage investor as a good business. Good businesses solve real problems for consumers or businesses and they make a profit doing so. However, not all good businesses are scalable. Your average salon is a good business. Home chefs are good businesses. But neither are the total package. Here are the markings of a total-package deal:
They Have Hustle
A key component of a strong business is a team that is willing to work harder than its competition. This can be reflected by factors such as the management team sacrificing hours and pay to develop and scale a product. Hustle needs to be an integral part of a company’s ‘DNA’. Companies that are hungry for success and are willing to get gritty create winning attitudes that will accept nothing less than success. People who hustle don’t just set goals, they dream big and don’t limit their beliefs with excuses. They live and breathe their startup and it shows.
They Are Experts
Another strong factor of a ‘Total Package Deal’ is when the management team is comprised of experts in the industry. A young, inexperienced, and incredibly gifted executive is very rare. Teams that have leaders with technical and/or industry experience often prove that they have the knowledge and the background to create unfair advantages to their neophyte competitors. It’s also just as often the case that industry wonks are hungry to change the status quo. Neophytes can hog the limelight but the bulk of true change comes from within.
They Have a Great Idea
An integral aspect of a successful business is a great, innovative idea. Companies with a vision and a goal to tackling a solution often have the necessary accolades to navigate the rough waters of an early business. While the approach to the solution may change, the idea will not. Also, from a savvy investor’s perspective, pivoting is not such a bad thing. There are many angles from which any idea can be approached. The greater the idea, the higher chance of inspiring employees, investors and customers to gut it out with you in the early days.
They Have Positive Early Traction
A strong signal of a successful start-up are sales. Numbers speak volumes. When a company has a product new to market that is already generating revenue, they are making a statement that they have produced a product unique to the market. They are also able to learn and adapt early on flaws in the product and in the business model. What’s more, traction is a sign that there’s a great swell in the market as a whole. Stumbling upon an untapped trend makes investors happy.
They Think Big, One Step at a Time
Successful companies think big, but they also think strategically. They are comprised of people who are set out to change the world, but they do so in stages. Focusing on the fundamentals first — developing the product, the model, and the brand — and challenging the greater market as the company grows and the product becomes more disruptive. They understand that the path to success is long and what matters most in many cases is to have incremental successes. Many small wins with the right timing are leading indicators for a big exit.
They’ve Got The “X” Factor
Sometimes you meet someone and you just know they are going to be successful. They’ve got this “je ne sais quoi”. Call it charisma, magnetism, charm. Whatever it is, it’s identifiable instantaneously and when you see it and you usually walk away inspired and ready to invest.
This is a four-part series about total package deals. For the intro, start here.
Part 1: What is a Total Package Deal? (you are here)
Part 2: The Gulf of San Diego
Part 3: Crossing the Chasm
Part 4: Great Companies vs. Good Deals
