Lead to Win program overview and growth blueprint

Welcome to Lead to Win
October 25, 2011

Lead to Win

Day 1

Janice Singer & Deborah Dexter Welcome
(IRAP)

Tony Bailetti Program overview, portfolio
(Carleton) snapshot & blueprint to growth

Tom Duxbury Running on a shoestring
(Wesley Clover)

Corien Kershey Segment & target market
(Magnitude Partners) segments

Tony Bailetti Day 3 opportunity reviews
(Carleton) Day 1 takeaway messages

Slide 2 Lead to Win

Welcome

LTW for Women to:

• Increase number and success of women owned
business in National Capital Region (NCR)

• Make the NCR the premier location for women to
start businesses

• Create an ecosystem of growth oriented women
entrepreneurs in the NCR

• http://ltw-women.ca/home

Slide 3 Lead to Win

Program Overview

October 25, 2011

Tony Bailetti

Slide 4 Lead to Win

Highlights of LTW

• Become largest source of technology and knowledge
jobs in Canada’s Capital Region
• Community driven
• First phase selects right people and opportunities to
which we can add value
• Second phase is six day Opportunity Development
Program, cuts in Day 3 and 6
• Each business in Phase III to generate a minimum of 6
knowledge/technology jobs in next three years
• Fourth phase for businesses with more than 6+ jobs and
wish to lead a target market globally

Slide 5 Lead to Win

Lead to Win

Company founders get: Region gets:
• Stronger business • 6+ good paying jobs per
opportunity quickly company over 3 years
• Knowledge to establish and • Healthy ecosystem to launch
grow successful business and grow successful
• Confidence, encouragement businesses
and motivation
• Access to large and diverse
business network
• Foundation to sell to first
customers, raise funds and
attract talent Free to founders

Slide 6 Lead to Win

Ottawa-Gatineau experience
Jun Aug Nov Mar Jun Nov Nov Total
09 09 09 10 10 10 11
Applicants 82 66 98 69 41 49 52 457

123 Day 1 accepts 62 46 55 49 35 29 41 317
4 wks

456 Day 4 accepts 51 35 44 37 22 18 207

Admitted to Phase 3 (passed Day 6)
Opportunity
development
Founders 39 27 34 26 14 13 153
Deal
development
New startups 30 19 21 18 11 11 110

75 start-ups active as of
October 15, 2011

Slide 7 Lead to Win

Ottawa-Gatineau start-up groupings

1. Content
2. Hardware & systems
3. Health services & technology
4. Hosted services
5. Mobile applications
6. Services, consulting & applied technology
7. Software applications
8. Social & collaboration
9. Intellectual property
10. Specialty (do not fit in any group above)

Slide 8 Lead to Win

Strategic Associates

Slide 9 Lead to Win

Criteria to enter Phase III

1. Offer solves significant problem or pain to
identifiable target customers
2. Offer delivers more value to target customers when
compared to alternatives
3. Company provides good value to channels and go-
to-market partners
4. Can generate 6 knowledge jobs in region
5. Sound financial plan for company and founders
6. Develops options for growth in region
7. Core team has what it takes to deliver objectives

Slide 10 Lead to Win

Points of difference that add value to
participants

• Experienced entrepreneurs and risk-sharing
service providers deliver Phase II
• Expert and diverse reviewers provide
substantive feedback on business opportunity
multiple times
• Focused on reducing time to cash from first
customers
• Uses ecosystem approach to launch and
grow companies
• Immediate application to venture

Points of difference that add value to
Canada’s Capital Region

• Success = number of local knowledge jobs
created + amount of capital attracted
• Large number and high diversity of volunteers
• Stakeholders set strategy
• Content is freely available for use by others
• Platform on which to grow other initiatives


Blueprint to growth

October 25, 2011

Tony Bailetti


Agenda

• Two distinct functions of entrepreneurs

• Four key skills

• Blueprint to grow revenue

• Growth formula


Distinct functions of entrepreneurs

1. Responds to existing or future profit opportunities, all
of which consists of price differentials

P1 P2 Sales of:

Resources & Decisions to Expects P2 > P1
processes employ
resources &
processes

2. Acts to move away or destroy her/his present state
– Seeks autonomy
– Authors relationships
– Makes declarations

Four key skills

• Make decisions when future is unknowable
• Identify, create, shape, develop and refine
opportunity
• Acquire and combine resources
• Champion customer adoption of your firm’s
products, services, solutions, processes


Blueprint to grow revenue
• Raise bar
Get house in • Divest what adds no value
• Get legal, cash, IP &
order personal affairs right
• Act based on results/facts

Revenue Secure
Close deals
for 6+ jobs commitment
• Implement growth formula
• Increase # & diversity of • Create mind share around
players that make money when offers & “why” company
you sell Overcome does what it does
• Develop differentiators for consumption • Lever talent, technology &
which customers pay resources worldwide
• Keep pace delivering value to barriers • Lower cost of customer
customers & players • Skills acquisition & go to market
• Select right competitors •$
• Embrace customers’ changes • Access/reach
• Time

Overcome four barriers that constrain
consumption of your market offer

Skills • Make offer easy to consume
• Provide simple rules for non-experts to solve
problems themselves using your offers
$ • Reduce price & cost structure
• Help customers & partners make money

Access/reach • Make offer available in locations & contexts
where customers want to consume them
Time • Reduce time to consumption
• Reduce latency & delays

Good structure to order benefits from consumption of your offer


Define & implement growth formula

Growth formula Benefits
• A guide to replicate & • Makes it easier to make
guide behaviour that decisions that deliver
makes a company growth
money • Provides strategic clarity
• Ties & aligns work of • Reduces complexity
people • Learn through repeatability
• Lodged in company’s • New employees become
experience productive faster


Inventory of growth formulas for small
companies
1. Help strong customers grow
2. Bring innovation to market as complementary offer
to strong players’ offers
3. Apply good technology developed by others to
different markets
4. Sell services to niche first & then develop & sell
product
5. Demonstrate offer works, sell to first customers, &
identify profitable business model at the price first
customers are willing to pay
6. Demonstrate that offers provides value to users &
economic benefits to customers & can be delivered
at a profit

Inventory of growth formulas
(continued)

7. Make competition irrelevant by concurrently
delivering 2X the value at half the cost
8. Sell to narrow niche, cross-sell, then fill higher order
needs
9. Sell to customers in mature markets abandoned by
incumbents
10. Fill gaps that occur when migrating from an old to
new system
11. Resell services in geographies that are too
expensive for other service providers


Lead to Win

Running on a Shoestring
October 25, 2011

Tom Duxbury
Entrepreneur in Residence, Wesley Clover

tduxbury@wesleyclovertech.com


Running on a Shoestring

• Upon completion, you will know about

• The Zen of a cash-conserving mindset

• What needs to be done to get up and running from Day 1

• What can wait

• Common pitfalls


Agenda

• Getting Operational

– The Basics

– Philosophies

– The Nuts and Bolts


The Basic Flow

Early prototypes,
customer interest
Team works together Customers,
for ‘sweat equity’ & Team works revenue
future considerations together for
minimal pay, Team fully
attracts others operational,
starts to look
- Your Cash+Friends, normal
Family
- IRAP, etc -Angels+other seed
cash
- IRAP, etc First major
financing


Philosophy of Lean for Startups

• Conserve cash
– Cost avoidance or deferral

• Work smarter
– Minimize wasted time+effort

• Focus on what matters now
– Customers+funding
= prototypes, engagements, referrals


10 Bootstrapping Startup-Life-Hacks

From Ben, Craig, Adam via MaRS


It’s all about runway

• The more you have, the easier to get off the ground
• Cash is not just King – it’s the lifeblood
• Cash/Burn rate = Time to Live
– You need more cash , or lower burn rate, or ideally both


Basic Shoestring Principles

• Value creation with the lowest possible cash outlay
– Buy (new) only as a last resort- be creative and open
– E.g. team members provide own laptops, cellphones, etc. initially

• Negotiate everything against the ‘day when you get big’

• Don’t be afraid to ask for what you want or help you need
– A little humbleness goes a long way
– Your infectious enthusiasm will win over converts
– Network Network Network


Negotiating Basics

• Treat everything as an asking price
– E.g. Leases, salaries, software licences, payment terms

• Understand the BATNA for both sides
– Best Alternative To a Negotiated Agreement
– Startups have surprising leverage
– Do not go too far: the outcome has to work for all parties

• Many vendors offer considerable concessions to new
companies
– Cost of customer acquisition high
– Pay forward: once established, a vendor tends to stay in

• “If you can’t find the fool in a deal, it’s probably you”

Getting Running: The To-Do List

1. Mobilize a team and method for work
2. Basic incorporation
3. Assemble basic corporate tools
4. Build a corporate presence
5. Focus on the next milestone


Mobilizing the Team

• Work together when possible
– Home offices work surprisingly well
– Borrowed/shared office space
– Many companies are coffee shop based initially- that’s OK

• Ensure co-workers have attitude and commitment
– People may hold other jobs; set expectations
– Shared enthusiasm for the mission is key

• Seek out diverse expertise
– Someone just like you is probably one too many
– Looking for creative sparks


Mobilizing on a shoestring (2)

• Guerilla recruiting good people…
– Twitter/Facebook/LinkedIn
– Online web forums, user/discussion groups
– Friends & Colleagues (the weaker the ties the better)
– Investor references
– Networking organizations and events
• eg. LTW, TON, OTI, Ottawa Clusters, OCRI

• Job sites an option but costly (e.g. Monster,
Workopolis)
– Professional recruiters rarely appropriate at this stage
• Convene an advisory board
– They will help for the positive association

Basic Incorporation

• Should you incorporate now?
– Pros:
• Bona fide entity for opening bank accounts, transactions
• Can issue shares
• Can enter agreements, e.g., NDAs, assignment of IPRs
• Limited liability to you
• Taxes may be lower
• Prestige: easier to raise money, attract customers
– Cons:
• Some expense and housekeeping

• The pros outweigh the cons for all serious startup
ventures ( == LTW candidates)


Basic Incorporation (2)

• Decide on a unique name
– Often the hardest part but most fun!
– Do your own search: NUANS, Google
– Avoid obvious confusion with typos
– Check out online synonym, name generators!
– Never buy Your_favourite_name.com from someone

• No need for complexity– it all can (will) be changed
• Costs online – $300-700
• You can do this yourself… or some lawyers will defer
the fees in exchange for future business


Basic Incorporation (3)

• Keep a minute book
– Director’s register
– Member’s register
– Securities register
– All corporate bylaws
– Minutes of company meetings
– Copies of any forms filed with the government

• No obligation for a corporate seal, but nice to own

• Request a business number from CRA
– You must start charging GST over $30,000 in revenue


Shoestring Banking

• Open a Corporate Bank account
– Shop around for rates
– Meet your Business Advisor – a big ally
– Bring your Articles of Incorporation
– Nominate a treasurer
– Consider who has signing authority (2 is safer)
– Consider who gets banking cards (full access limited)
– You might photocopy the starter cheques instead of buying
numbered
– Initial deposit will probably be your own!

• Open a Paypal account as a payment option


Assemble Basic Tools

• Reuse templates for
– NDAs
– Assignment of IPRs
– Offers of employment
– Share subscription agreements
– Promissory Notes
– Get these from your personal network, cyberspace or
(deferred payment) lawyer


Open Source Seed Documents

• http://www.marsdd.com/entrepreneurs-
toolkit/Topics/Sample-funding-documents.html

– Term sheet
– Subscription agreement
– Articles of amendment
– Shareholder’s agreement
– Founder’s agreement
– Independent contractor agreement


Finance Operations 101

• Keep all receipts!
• Customize a standard expense form
• Do your own bookkeeping or find someone willing to
take it on
– Keep a detailed spreadsheet, or buy an accounting package
(eg, Simply Accounting, Quickbooks) < $200
• Do not get over focused on this aspect
– Maintain records + pay bills on time = good enough
• Do not think about hiring a CFO yet – there are many
options
– Smart bookkeepers
– Virtual CFOs


Guerrilla Marketing

• Gaining mindshare can be virtually free
– Online forums, LinkedIn Experts
– Speaking engagements
– Blogs, online newsletters
– Twitter/Facebook fans
– Submit print articles, commentary
– Community events
– Drive traffic to your website every chance
– Paint your car, etc

• Consider Google Adwords later


The Basic Corporate Presence

• Corporate Phone
– VoIP - eg. Vonage Entrepreneur plan, OneConnect, Skype
Out
– Should have a central phone number– not your cell

• Email
– Google Apps– free for first 50 users
– includes calendar, mobility, intranet

• Web domain name registration, hosting
– Many low cost providers, eg. GoDaddy

• Business Cards – moo; uprinting; vistaprint; zazzle

Common Pitfalls

• What worked before in an established company… needs
to be the same now
– e.g., private cubicles… instead of open working space
– e.g., bias for deep thought… instead of bias for action
– e.g., ISO, TQM, Six Sigma, waterfall processes.. instead of
lightweight
– “There is nothing so useless as doing efficiently that which
should not be done at all.” *

• Not thinking of cash alternatives
– e.g., hiring…instead of contracting for short term needs


Common Pitfalls

• Focusing too much on the inside semantics…
– e.g. Structure, processes, documentation
– Your job is to create an adaptable learning machine

• And not enough on the outside…
– Customers, opportunities, products, relationships
– Sales are what makes everything else possible

“A business exists to create a customer” *

* Peter Drucker


Questions

Speaker contact:

tduxbury@wesleyclovertech.com

Select and Target Market Segments

Corien Kershey
Magnitude Marketing/Magnitude Partners


Topics

• Segment the Market
• Create Segment Profiles
• Identify Critical Flaws
• Assess Variables
• Select Target Segment


Segmentation Divides Markets into
Addressable Chunks

• Segmentation separates potential customers
into groups according to different buying
criteria
– Mobile Knowledge does not address all possible
uses of GPS
• They focus on managing taxicab resources
– Spartan does not address all possible uses of on-
demand DNA testing
• They focus on genetic testing for metabolizing Plavix
– Corel tried to address everybody when they
bought WordPerfect
• They failed.


Target Segment is The Chunk That You Can
Dominate
• A startup has a much better chance of success if it
focuses on a single, unserved or underserved segment
that they can dominate fast
• The target segment is the one that gives you the best
chance to dominate
– Shopify is building success by focusing on small companies or
individuals looking for easy, low-cost e-commerce solutions
– Lululemon built success at first by focusing on wealthy urban
women who invested in yoga and gym memberships
– DELL built early success by selling computers to the price-
sensitive and convenience-sensitive home/home business
market
• These were unserved or underserved segments before
• Of all the possible segments that were available, these
came out on top after analysis of qualifying criteria

Choosing a Target Segment is Critical to
Success

• In general, studies show that between 70% and 90%
of all startups will fail in the first two years
• Most startups fail as a result of poor segmentation
and targeting practices

Good Knowledge of the Market and Single-
Minded Focus are the Number One
Reasons
for Startup Success


Model Illustrates Startup Challenge
Applies to product categories, NOT to companies

Refine

Compete A mature
product in a
Growth of mature
sales as the product
Educate
product starts
to gain
Introduction acceptance by
of the the larger
product and market
early buyers


The Challenge Is to Avoid THE GAP – the
Graveyard of Startups

Refine

Compete A mature
product in a
Growth of mature
sales as the product
Educate
product starts
to gain
Introduction acceptance by
of the the larger
product and market
early buyers


Let’s Look At This Another Way

Most unwary startups
look at their entire
addressable market
and then take pot
shots in the hope of
hitting something
good


Ready, Fire, Aim Doesn’t Work
• Most common start-up error is to attack a
number of segments to see which will work
best
– Often no “whole product” is ever delivered to one
market
– Resources are distributed among too many
segments and sales, marketing, development is
done poorly
– No segment can be dominated fast
– Defenses are weak and competitors can breach
the segment walls easily
– The people who buy your product first because it’s
either cool or they have a red-hot issue do NOT
Slide 68
reflect the majority of your market Lead to Win

Beachheads Provide Defendable Points of
Attack on the Addressable Market

Segment
4

Segment
3

Segment
2

Segment
1


To Mix Our Metaphors: A Beachhead Builds the
Bridge Across THE GAP
• Focus limited resources to establish leadership in a
single segment
• Gives strategic sales direction even in the very early
market
• Leadership in a single segment helps build credibility
with
– Analysts and media
– Investors
– The pragmatic majority market
– Employees
– Board
• Everyone, from consumers to high-tech companies,
prefer to buy from segment leaders
• Reduces the risk of failure – go find another beach
• Much better chance of being first in the “mind”

Seven Steps to Successful Segmentation for
Startups
• Step 1: Determine where you really, honestly are within the
startup life cycle
• Step 2: Regardless of Step 1, create as broad a definition of an
addressable market as possible and then break it down in to all
possible sub-segments. Even if your idea is based on a target
segment, it’s probably still too big
• Step 3: Create customers profiles for all remaining sub-
segments
• Step 4: Assess profiles again critical flaws criteria and eliminate
those that fail
• Step 5: Assess remaining profiles against selection variables
continuously until top segment remains
• Step 6: Test target segment against SWOT and performance
goals
• Step 7: If no segment apparent, repeat process

Stage 1: How to Know You’re Really Selling
to Friends – The Very Early Stage
• New company or technology with first product still in
development or at early release stage
• Angel, seed or small first round financial situation
• No customers or small set distributed widely across
different vertical or horizontal markets who are often
friends, acquaintances, people you’ve done business
with before
• Sales are growing but VERY slowly
• In the case of tech startups, buyers are technology
people within customer organizations
• Product “story” revolves around the “coolness” or
innovation factor – much market educating to do
• Sales-led with little marketing communications effort

How to Know You’ve Run Out of Friends and
You’re on the Edge of The Gap
• Sales growth has slowed
• Starting to see some competition perhaps that seem to
be doing better than you are
• You have to product changes every time to close a deal
• Prospective customers fail to understand the product’s
“technology” story or don’t understand why it’s different
or better
• Buyers are not coalescing around any particular vertical
or horizontal market
• Getting more investment in proving very difficult
• Often many partners and resellers signed up but little or
no results
• Struggling to identify product roadmap and technology
roadmap

Step 2: Define the Total Addressable Market
and Then Narrow Down
• Brainstorm the possible broad applications for your
technology OR brainstorm the possible sub-segments
within the segment you have defined
• Build hierarchies for each one until you have multiple
“application trees”
– Vertical waterfalls
– Cross-horizontal segments – vertical cuts on horizontal
technologies
– Suppliers and channels
– Think in terms of the buyer, NOT the organization

• Layer reasonably but go at least four deep if possible
• Some startup ideas will have many applications or uses:
others will have a more limited application scope

Use Variables/Qualities to Determine Segments
– Business Marketing Factors
Environmental influences: Organizationalinfluences:

• Level of primary demand • Company objectives – profit
• Economic outlook for the maximization, budget constraints
industry and the company • Policies and procedures
• Cost of money – interest rates governing purchasing
and cost of borrowing
• Supply conditions – scarcity and • Organizational structure –
reliability of supply impact on buying centre
• Rate of technological change dynamics
• Political and regulatory • Systems – evaluative criteria for
developments purchase decisions
• Competitive environment


Use Variables/Qualities to Determine Segments
– Business Marketing Factors
Interpersonal influences: Individual influences:

• Authority to make the buying • Age
decision
• Education
• Status – impact of the purchase on
buyer’s status in the organization • Job position
• Empathy – seller’s relationship with • Personality
buyer • Risk factors – fear of making a
• Persuasiveness poor decision or choice and the
consequences of that choice


Good Segmentation Narrows the Focus and
Leverages Resources

GPS Segmentation Example
Anyone Who Needs to Locate Anything that Moves and that is Big Enough
to Carry a Receiver and That is Outside for Any Length of Time

Vehicles People Animals Cargo Icebergs

Trailers Cars Rail Cars Earth Movers Ships Planes

Container Reefers Dry Cargo Tankers PressTank Livestock

Freezer Refridge

High Perish Low Perish

Flowers Produce Meat

Indies Carriers Corporates


Topics



Create Segment Profiles

• Upon completion
– You will know about
• Using customer profiles to understand segments
– You will know how
• To create a profile of a typical customer in a segment
• To determine the customer’s pain point
• To create a before/after picture of the customer’s pain
after adopting your solution
• To focus on the customer as an individual rather than as
a company
• To determine the potential value of your solution to the
customer and the segment
• To group segments into related segments


You Can’t Really Know What the Beach
Looks Like Till You Get There

• Beachheads have no ‘hard data’
• Company has little or no experience with the
beachhead target segment
• No similar products are serving that segment
• No credibility with which to gain information directly
from pragmatists in segment
• Very early buyers are different from the more
pragmatic, sceptical majority market and cannot be
used as models
• High-level market size projections are generally
untrustworthy and erroneous


Step 3: Create Multiple Target Customer
Profiles
• In most startups, the product is looking for a target
segment
– Usually begun with a technology bias
– Were this not true, far fewer startups would fail
– Even when the idea is based on a target segment, the
segment is initially too big to be an effective beach head
• With little useful and specific market data available,
turn to building a profile of the potential customer
– “informed intuition” rather than “analytical reason”
• Be wide and ranging in your approach
– Current early customers, lost deals, profiles in related
categories, your own experience, ask friends and family for
ideas, brainstorm, look at related companies and their
history, read analyst reports


Define the Prospect’s Current Problem with
These Questions
• What problem causes the pain or frustration? Sketch
a scenario in which the customer attempts a task and
feels pain as a result.
• How does the customer try to cope with the problem
now?
• What is causing the problem? What is interfering
with a speedy solution? What goes wrong and why?
• How much money is the customer losing, either in
additional costs or lost revenue? Quantify the pain.
• Who is the individual who feels the pain first and how
does it “waterfall” up or down?
• Who else feels the pain? The customer’s
customers? Suppliers? Partners? Investors?

Profile Example – Pain Scenario

Characteristic Their Pain Your Solution
Fleet mgrs misplace 5% of loaded
produce reefers due to admin and
Frustration Point driver problems

Avg. value of lost or spoiled
Costs cargo is $250K -- $12 million total for
avg carrier + high ins. rate

Insurance pays 75% of value
Current Solution and rest is written off as tax loss.
Some use cell to check on drivers.
Produce distributors; supermarket
Stakeholders owners; truck drivers; insurance
company; carriers

Many trailers being managed at once:
Inadequate admin techniques;
Cause careless reporting by drivers; late loads


Align Your Product to Their Problems With
These Questions
• Define the customer’s changed situation
– How does the customer approach the task
differently?
– Is the pain removed or is it lessened. For whom?
– Are new problems introduced as a result of your
solution?
– Is your solution better than any other way the
customer had of solving the problem? Why?
– How does your solution remove the pain?
– How much money will the customer gain as result
of your solution, either as cost savings or
increased revenues?
– Can you determine a time frame for payback?


Profile Example – Solution Scenario

Characteristic Their Pain Your Solution
Fleet mgrs misplace 5% of loaded By using GPS, fleet mgrs
produce reefers due to admin and can locate trailers before cargo
Frustration point driver problems every year spoils

Avg. value of lost or spoiled Cost for avg carrier including services is
Costs cargo is $250K -- $12 million total for $3 million, providing customer payback
avg carrier + high ins. rate in one quarter and savings of $10.5 M/yr

Insurance pays 75% of value
Current solution and rest is written off as tax loss. Problem is solved easily
Some use cell to check on drivers
Produce distributors; supermarket Distributors incented to use GPS-able
Stakeholders owners; truck drivers; insurance carriers; driver morale improves; insurance
company; carriers easier and cheaper to get; insurance push?

Many trailers being managed at once: Root causes difficult to eradicate cause
Inadequate admin techniques; based on human error: GPS-enabling
Cause careless reporting by drivers; late loads solves problem faster and cheaper than
changing behaviours


Create Groups According to Similarities
• Be creative and open in building profiles
BUT
• Unless you have unlimited time and money,
rationalize all the profiles into segment groups
– Out of 50 or so profiles, about 10 segments will likely
coalesce
– Look for key similarities
• Vertical markets
• Common problems and pain points
• Similar economic impacts
• Similar groups of users


Topics



Identify Critical Flaws

• Upon completion
• What the binary criteria are for success in a segment
• To assess segment customer profiles against each
criteria
• To eliminate immediately segments in which you stand
little chance of success


Step 4: Assess Profiles Against Critical
Flaws

• Assess each profile against 4 key criteria that can
“make or break” your chance of succeeding in that
segment
• Ask and answer a series of questions and rate the
answers on a binary scale of yes or no. Include a
sentence or two on why.
• Eliminate any that fail and set aside all related
segments


Do They Have a Reason to Buy?

• You may think it’s great, but will the customer?
• Is the financial impact of the problem severe enough
to drive the need of a solution
– There are lots of problems that pragmatists will live with
rather than take a risk that could have worse consequences
• Of all possible ways of solving the problem, is yours
the obvious choice from the point of view of
– Total cost – including “whole product,” installation, services,
training and adoption costs
– Speed to implement
– Ease of use and adoption
– Maintenance and support
– Stability of technology and company


What Do They Actually Need to Buy to Solve
the Problem?

• Is it practical to deliver the “whole product”?
• Do you have the right partners to deliver the “whole”
product?
• How well established are those partnerships?
• Can you establish the right partners and be
productive with them in the time frame needed to
enter and dominate that segment early and fast?
• Who do you need to partner with and is it reasonable
to assume that they will come on board with you?


Who Else Can They Buy From?

• Has someone else beat you to the beachhead?
– If yes, reconsider or develop a second-entry strategy
• Are there barriers to entry that protect you in that
segment for sufficient time?
• Are there players in related product categories that
can move into your space quickly?
• Is there potential confusion among categories within
similar segments?
• Is the segment characterized by a “single vendor”
approach?


Can They Buy?
• Does the segment have a ‘target customer’ who has
buying power?
– Is there a single person who feels the most pain?
– Is that pain tied to revenue loss or additional costs?
– Does the buyer have a budget for the “whole” product?
• Is the financial pain felt by someone with buying
authority?
• Trying to fix bad segmentation with smart selling
doesn’t work
– Lots of effort spent identifying and winning sponsors and
champions
– Endlessly long sales cycle
– Uncommitted budgets
– Uncommitted management ready to cut projects on a whim

Binary Answers to Critical Flaw Criteria

Segment: Produce Reefer Location for Carrier
Companies
Criteria Yes No Reason
5% of trailers misplaced, 3% stolen
Compelling
reason to buy √ Carrier liable for both, loss per avg. $275K/yr;
customers punish carriers with high loss
Deliver
whole product √ Make entire receiver; partnership with mounting
and antenn partners; have installation partners

Buyer with economic Risk managers and CFO feel greatest financial
power √ pain; drivers docked for misplacement

Cell-based communications services provide
No competition
√ location within acceptable margin of error where
service available


Topics



Assess Variables

• Upon completion,
• What assessment variables are important to selecting a
target segment beachhead
• How each of those variables can affect your success
• To rate each customer segment profile against the
assessment variables
• To determine your ability to overcome shortcomings or
change your ability to satisfy the requirement


At What Price Will They Buy At?

• Can you deliver the “whole product” at a price that is
consistent with the segment’s budgets?
• Is the price commensurate with the customer’s
financial loss?
• Is there enough margin in the price to ensure all
levels in the channel are adequately compensated?
• Can you deliver the “whole product” at a price that
will win share rapidly without going under?


How Are They Going to Buy?

• Do you have the right sales channel to reach that
segment?
• If not, can you establish timely relationships with the
right channel partners/
• Do you have any expertise with the segment or the
dominant vertical in the segment?
• Do you have or can you obtain someone with the
right rolodex to take you into the segment quickly?
• Can you compensate everyone in the channel
sufficiently to keep their interest and loyalty?


Why Should They Buy From You?

• Is the segment reachable?
– Is there a set of communication vehicles that can reach
them?
– Do you have the resources to market adequately?
– Will the channel participate in tactical marketing?
• Do you have any credibility with this segment?
– Can you deliver a “whole product” and can you commit to it?
– Can you build credibility fast enough to hold back bigger
players in associated product categories?
• Can you talk their talk?


Is the Segment Small Enough?

• Large segments are usually heavy with competition
• Choose a segment that is small enough for you to
penetrate to a critical mass and dominate
– This means capturing 50% of market share measured as
dollars and units
– Can you capture 50% with the resources available to you?
– Can you service 50% without burning out?
• Choose a segment that is large enough to meet your
revenue projections
– If 50% of the segment won’t meet forecast, dump it


Will the Segment Survive?

• Is the segment at risk for its own survival?
• Are there signals that the segment is failing in terms
of
– Product category adoption rates growing or failing
– Financial stability
– Competitive saturation
• Can you estimate the remaining lifespan of the
segment?
• Does the segment exhibit innovation characteristics
or is it know for technological conservatism?


Can You Identify Lead Customers?

• Does the segment have identified buyers who have a
history of innovation and early adoption?
• Have they deployed their early buys or kept them in
the lab?
• Do they have the support of their organizations?
• Have they a history of championing early
technologies publicly?
• Is there one or two organizations that feel the pain
more acutely?
• Will they participate in the design, development, test
process?
• Are they open to an over-time payment model?
• Do they have credibility among potential investors?


Are There Adjacent Segments That You Can
Jump To?

• Beachhead segment is the “head pin” in the bowling
alley
• What close segments are a natural segue? Refer
back to the application trees.
• Are they likely to still be available?
• At what point can you begin to attack the next
segment?
• Are there enough close segments to achieve
breakeven and profitability over time?


Step 5: Rate Remaining Segments According
to Variables

• Rank each variable on a scale of one to five
• Rank all segments and eliminate weakest 50%
– Use totals as an overall indication
– Weight variables according to your flexibility or ability to
change your situation
• e.g. software has much more flexibility on pricing
• e.g. no existing channels but ability to establish the right
partnerships
• e.g. offered technology will increase segment stability
• Repeat ranking exercise until top one or two
segments revealed


Ranking Example
Segment: Produce Reefer Location for Carrier Companies

Criteria Rank Weight Final Reason

No established price, dev is capitalized,
Price 5 5 25 direct sales, 90% software margin,
1 year runway
Preferred direct model, upfront cost
Channels 4 4 16 high, greater risk, no proliferation, total
control
Segment size large to achieve 50%
Segment Size 5 1 5 penetration and domination; no ability
to change; potential to narrow segment
Trucking industry conservative; satellite
Innovators 5 2 10 technology accepted; 2 known
innovative risk managers

Totals 56


Topics



Select a Target Segment

• Upon completion,
• The final tests before selecting a beachhead
• The importance of a SWOT analysis
• The importance of a financial goal
• The importance of performance goals
• The importance of assessing risk of failure
• To apply a SWOT analysis to the target segment
• To establish performance goals


Step 6: Rate Final Segment Against Final
Criteria – Can You Win It?
• Undergo a SWOT exercise in relation to segment
– Involve all internal stakeholders and decision makers
– Rate chances of success against corporate weaknesses and
strengths
– Assess segment honestly against core competencies
• Technology bias
• Marketing ability
• R&D ability
• Build one and two year financial models to assess
revenue potential, profitability, share, growth
• Can you live with the risk of failure
– What is the cost of failure?
– Can the company survive?


Establish Performance Goals

• Set in quantifiable measures
– Define the performance dimension e.g. absolute share,
increase in share, revenue
– Define the index – units, dollars, percentage
– Target – 50% share, $1 million in revenue, breakeven
– Time – within a year, a quarter, a month
• Ensure that goals are compatible and not mutually
exclusive
– High share goals do not live with high profitability
– High revenue goals do not live with short time frames
– Taking competitor’s share does not live with increased
penetration


And the Winner Is!!

• Critical that everyone buys in
• Deal with subversion early and quickly
• Promote a “disagree and commit” philosophy
• Establish short-term tactical goals to ensure meeting
overall product performance and corporate goals
• Begin planning for the next segment as you attack
the beachhead
– Understand sooner rather than later your next steps should
you win
– And should you lose
• Speed is critical to keep competition at bay and win
mindshare and real share


Day 3 opportunity reviews
Day 1 takeaways
October 25, 2011

Tony Bailetti


Day 3 opportunity reviews

• Criteria and process to assess opportunities set by
representatives of nine LTW Strategic Associates
– Part A - scoring
1. CUSTOMER VALUE
2. COMPETITIVE
3. PARTNER VALUE
– Part B - opportunity’s readiness for Day 4: Operations
– Part C - substantive feedback to opportunity proponents
• Scoring of 1/2/3
– Green: OK
– Yellow: OK with a specific action
– Red: Considerable work still required
• Reds are not invited to join Days 4-6


Reviewers

1. Consumer products 3. Internet services A
• Line Brabant (LINE • Hanan Anis (uOttawa)
International) • Mark Antaya (Investors)
• Chris Cope (City of Ottawa) • Rob Collins (YearOne Labs)
• Dan Istead (Fed Government) • Llynne Plante (IRAP)
• Christine McCrady (RBC)
• Jonathan Wells (Carleton)

2. HW & SW products 4. Internet services B
• Peter Carbone (PJCI) • Elizabeth Gilhooly (Nuvance)
• John Fielding (OCE) • Claude Haw (VentureCoaches)
• Farzi Khazai (Tech Gemini) • Harriet Waterman (IRAP)
• Raina Sharma (BDC) • Michael Weiss (Carleton)
• Stoyan Tanev (U Southern
Denmark)


Reviewers

5. Services 6. Special
• David Hudson (Carleton) • Diane Isabelle (National
• Saad Bashir (City of Ottawa) Research Council)
Fiona Gilligan • Karen Letain (ETIS
• (Fiona Gilligan) Technologies)
• Sophia Leong (Industry • Steven Muegge (Carleton)
Canada) • Ian Scott (City of Ottawa)


Process

• Presentations are made only to panel of reviewers
• 20 minutes is allocated to each opportunity. 20 minutes is a hard limit.
• Lead reviewer is responsible for:
– Distributing / collecting Opportunity Assessment Forms
– Assigning ID codes to reviewers to guarantee reviewer anonymity
– Keeping time and smooth running of the reviews
– Ensuring forms are properly completed
– Dealing with issues
– Improving the opportunity assessment process
• Each reviewer rates each opportunity independently before the next
group/individual is allowed into the room
• If reviewers and opportunity proponents wish to exchange cards,
arrange follow ups, etc.; they should do so during lunch or the social
and not take time away from the assessment process


Suggested time allocation

• Up to Review Panel

• We suggest
– Set up time and niceties: 2 minutes
– Presentation: 10 minutes
– Q & A: 5 minutes
– Day 3 Opportunity Assessment form completion: 3 minutes


Day 1 takeaways


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