Start-ups: Beware of Those “Pocket Aces”

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In poker, no opening hand beats pocket aces. So why would a player rather draw a lowly 2–7?

Because deciding what to do with a 2–7 is easy: Fold it! Pocket aces, on the other hand, create existential angst. Why? Because even when the betting tells you to fold them (they lose 70% of the time) tossing these beauties rips your heart out.

You’ll see a metaphor here if you’ve spent time at start-ups: 90% of them fail because founders can’t “fold their aces” when the game goes against them. They’re so wedded to their original ideas that they can’t pivot to meet the moving target of market demand.

Which gets to the real reason start-ups fail so frequently: Their ecosystem is so broken that they can’t afford seasoned talent until it’s too late; talent that knows how to pivot when original ideas go awry. Talent that knows how to productize ideas so they won’t go awry.

 

I’ve seen this time and again: Obsessed with preserving capital, start-ups often make shortsighted decisions that trap them in The Traction Gap™ — the crucial period in which start-ups must produce a sustainable business model and a go-to-market strategy and process for generating demand. (And sometimes they just don’t know what they don’t know!)

Getting caught in The Traction Gap™ prevents start-ups from scaling. And you know what happens when start-ups can’t scale-up:

They start faltering and often disappear.

 

By offering the right talent, at the right time, at the right price, Tigon Advisory helps start-ups through The Traction Gap™ without making an appreciable dent in their capital.

 

To this we add a fourth source of value: an approach to navigating The Traction Gap™ that makes it more manageable by dividing it into five discrete disconnects, any one of which can sink a start-up before it gets the chance to scale. They are:

 

1. The product/market fit gap: Because start-ups tend to throw themselves into product development before defining the company’s purpose (what problem does it solve?) they often launch offerings mismatched to customer demand. Said differently, they try to tackle product/market fit before solidifying their brand identity — a mistake that hurts them from the get-go by encouraging comparisons to the wrong competition, benchmarking against the wrong markets, and other avoidable mistakes.

2. The “define-minimum” gap: To be at least minimally viable, a product must be marketable — not evidence of technical prowess too impractical to sell. But how to make your vision marketable? After arriving at a minimum viable product and securing a handful of customers, start-up must prove minimum viable repeatability. This is the time to create an ideal customer profile and go-to-market process.

3. The customer-voice gap: Customers will tell you what they want. But you’ve got to leave the “lab” and listen or have someone who does; someone who knows what to listen for. This is the growth stage — the point at which your revenue-engine architecture must use customer feedback to standardize on what works.

4. The process gap: It’s all about “The Process,” says Philadelphia 76ers center Joel Embiid — the steps you take to systematize success. What’s true for a layup is true for a start-up: Success depends on establishing processes to make it repeatable.

5. The measurement gap: How to measure each function’s performance so that “success” is defined consistently across your company? There’s a science to it. There can be no sustainable growth without data-driven decision making — the management of revenue and profitability by segment, product, channel, marketing program, sales region, and sales person or customer-success manager.

A Chicago-based advisory firm with team members in Silicon Valley and New York, Tigon Advisory cures these disconnects to guide start-ups through The Traction Gap™ en route to achieving scale. We offer three core services to start-ups:

CXO as a Service. We offer start-ups seasoned CXO services at the right time and at affordable rates. We’ll take the lead in developing and communicating your vision, designing your organizations (pre- and post IPO), devising go-to-market strategies to drive sustainable growth, and designing metrics to drive alignment and accountability across the business. In all, we make startups better at achieving measurable business traction.

Customer Success as a Service. We equip start-ups to build a strong customer base through Customer Retention Optimization, Professional Services Growth Strategies, Sales-Offering Design, Education Offerings & Strategy, Customer Journey Mapping, Technical Support Strategy & Offering, and Voice of Customer (VoC) Program Establishment. We’ll leverage your understanding of VoC to create a springboard for accelerating growth.

Technology as a Service. We support non-technical founders with product design, technical feasibility, competitive analyses, user experience designs and more. We’ll contribute wide-ranging technological expertise: product ideation in emerging technologies, proof of concept, prototyping, minimum viable product development, budgeting, IP strategy, and tech ecosystem development.

I am proud to lead Tigon Advisory with a team of former founders and leaders of successful tech start-ups who’ve managed over $250M in P&L. We hail from many of technology’s top breeders of talent: Oracle, Adobe, Cisco, Google, Facebook, NVidia, Marketo, NetApp, EarthLink, Sprinklr, Jebbit, and Pypestream.

Care to ease your passage through The Traction Gap™? Contact me at tigonadvisory@gmail.com or @YuHelenYu

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