Sherman McCorkle, President & CEO, TVC
Are You Among the 600?
Ask Sherman
August / September 2010
Volume 8 Number 4
I recently read an article about a governmental effort to help research scientists get through the entrepreneurial Valley of Death. Where is the Valley of Death?
Great question. The Valley of Death definitely means different things to different people. For an entrepreneur it is not the valley described in Psalm 23 or the Balaclava Valley as described in the Charge of the Light Brigade, but that wasteland between proof-of-concept and revenue generation at a level that can sustain the company.
When an entrepreneur, or a research scientist first starts out all they have is their idea and a lot of hope. As their idea matures and moves toward a commercial market some strange things occur. First, the funding for the idea becomes harder to raise. Many of the research grants that they may have relied upon to develop their idea, such as SBIRs or university funding, are no longer available to them or their personal funds may have been spent.
Unfortunately there is a lot of work between proof-of-concept and generating enough revenues to support the company. Most technology startups focus their dwindling resources on additional research and development to try to get their product to the manufacturing stage. However this strategy, while necessary, overlooks many of the other hazards in this Valley of Death.
Eventually the company will have to sell something that it produces. This means that someone needs to be actively selling the product or service in advance of it being completed. And if something is sold then the company will have to find a way to manufacture and deliver the product. Will systems be in place to support the products which have been sold? Will there be sufficient intellectual property protection around the product so that if more than one customer wants to buy it that a competitor cannot easily replicate the hard work that has been done to this point? Is there enough capital to create more than one? Are there operational and accounting procedures in place to track and deliver the product that get sold?
The hazards of the entrepreneurial Valley of Death are numerous but fortunately not insurmountable. The trick is to use your resources as judiciously as possible and leverage as much free assistance as you can. Traversing this wasteland begins with a good map, your well researched business plan. Simply “making it up as you go along” often leads to wasted effort and cash. Thinking through, researching and writing down your plan allows you to react more economically to situations as they arise. Also a well thought out business plan shows a level of sophistication to the investors and potential customers waiting on the other side of the valley. This may even help to shorten time you have to spend in the wasteland.
The second key is to use as many of the free or low cost resources as you can find. Many communities have invested funds in economic development resources that can be used by the entrepreneur. The Department of Commerce helps fund many local programs through the EDA (Economic Development Agency). The Small Business Administration is a federal agency that is tasked with helping business owners through a number of programs including SBDC (Small Business Development Corporation) and SCORE (Service Core of Retired Executives). In addition, many states and cities offer free help to startups and entrepreneurs.
Finally, be resourceful. Your product or service represents a great deal of creative thought and so should the solutions that you employ to get you through this tough time. Share your needs and your struggles with those around. You’ll be surprised how willing people will be to help you when you ask; no one ever said that you had to travel through the Valley of Death alone.
What’s the difference between guerilla and viral marketing? They both sound like something I want to avoid.
Don’t worry; both of these terms describe something that is not nearly as bad as it sounds. Guerilla marketing refers to any type of non-traditional promotion that can be used to raise the awareness about your company. Traditional promotion might include print ads, TV and radio commercials, a website or the sign in front of your store. Some recent examples of guerilla marketing that I have witnessed have included an employee dressed as a luchador (Mexican wrestling) standing on a street corner advertising lunch specials and a mob showing up in a train terminal to sing and dance a promotional song for a soft drink. A few companies have been able to use these types of techniques to get others to spread their message for them. The popularity of social media has enabled the people to rapidly spread unique and interesting ideas. When an idea, or advertisement, spreads rapidly it is said to be “viral.”
Send your questions to Sherman McCorkle, president of Technology Ventures Corp., at our contact page
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