BIO: Geoffrey Moore is an author, speaker, and advisor who splits his consulting time between start-up companies in the Wildcat Venture Partners portfolio and established high-tech enterprises.
STORY: Geoffrey was a venture partner in an investment firm that decided to delve into computer storage. The company, against Geoffrey's advice, decided to expand the project but didn't have enough capacity to get the product to market.
LEARNING: Think about a venture portfolio as an exercise in 10-year liquidity. Some things are better suited to incremental change.
“Think realistically about time to liquidity instead of just thinking about dominating the market.”
Geoffrey Moore is an author, speaker, and advisor who splits his consulting time between start-up companies in the Wildcat Venture Partners portfolio and established high-tech enterprises.
Moore’s life’s work has focused on the market dynamics surrounding disruptive innovations. His first book, Crossing the Chasm, focuses on the challenges start-up companies face transitioning from early adoption to mainstream customers.
Worst investment ever
In 1998, an investment firm asked Geoffrey to join as a venture partner. To which he agrees. The venture then brought in an excellent professor from a prestigious technical university who had an idea about computer storage. Geoffrey and everyone else thought this was a brilliant idea. It turns out implementing the concept was a lot harder than anybody thought. There were just too many variables making it hard to turn the concept into an actual realizable product.
But the team believed in the idea, and they pushed on and had early market success. Investors wanted to go big, but Geoffrey thought they should take it slow. They ignored his advice and even changed management and brought in a leading personal computer firm guy.
Huge market risks marred the project expansion from the start. The company spent a lot of money on marketing and sales forces. The sales cycles would take forever. Eventually, the company gave up trying to market the product. They asked Geoffrey to help, but the product didn’t have enough differentiation to get it to the finish line.
Think about a venture portfolio as an exercise in 10-year liquidity.
You can’t transition from a complex systems business model to a volume operations business model in either direction. These two models are radically different; you must never try to combine them.
Get a team that is fit for the transition.
If you’re going to be disruptive, you’re going to be on a timer, so make sure you establish your business before the present catches up to you.
Some things are better suited to incremental change.
Ensure you have enough runway and resources for the venture to take off before the competitors do or before a solution comes out.
Think realistically about time to liquidity instead of just thinking about dominating the market.