I had a consulting career more than a decade ago and thought the typical project triangle was well known (google it). That has an implication for startups, and it is an important reason why VCs often ask about the “10x-factor”: Can you do something 10x faster? Can you do it 10x cheaper? Can you create 10x more revenue? Does your solution need 1/10th of the people?
Often, by the time you are actually operating at a significant scale, you’re realistically having a 3x advantage 😉 so we VCs start with 10x to end at least at 3x 😉
in your pitch, you not only have to convince VCs that there is a big market. You have to convince me with reasonable evidence that your customers will give you access to their wallet, their time, their people.
Wallet-Time-People Structure
We all know that businesses and enterprises manage operational resources: They have a budget, they have deadlines for projects or goals to achieve, they have people with certain skill sets. Likewise, consumers are juggling their own operational resources of wallets, time, and family/friends. You need to identify a need that is significant enough for your customers to change their existing Wallet-Time-People Structure. Which brings me to my usual key questions:
Wallet Share
Just because you’re coming out with a new product for consumers doesn’t mean the consumer suddenly has more money in their wallet. They have to spend less on other things to spend more on you. Enterprises have to either increase their budget in your solution sector (and spend less somewhere else) or reduce the budget for another solution. What will consumers spend less on because of you? What will convince them that this is a good money investment for future value? What solution or service will an Enterprise spend less money on? Why is this a worthy investment? Even if your solution promises a 1,000x return: Do your customers have the funds to pay for it? Is it the right risk-reward balance to take out a loan for your product and spend funds on that your customers had planned on spending somewhere else? Consumers and enterprises had countless experiences with false claims, meh results, or startups that died before the value could be realized.
Time Share
What app are you asking a consumer to use less? Consumers have an existing routine. They have limited phone screen real estate and attention capacity. Enterprises have scheduled work for their employees. What work or tasks are you asking the enterprise to do less? Is there a learning curve to use your product effectively? What work can the employees not finish, what deliverables or achievements or goals will be delayed during that learning curve? Why should a manager risk that delay? What is the risk and the return on that investment?
People Share
This is different from Time Share. There is usually a decision maker or champion for your product/solution/service. For consumers, you might require other family members to also spend time with the app (financial management, to-do lists, shopping, kids scheduling, education apps, …). For enterprises, you might need different skill sets within your team. That means either hiring new people or training the new skill. Both “hiring” and “training” involves wallet share and time share — but you are also asking the decision maker or champion that the skill necessary for your product is more urgent than other skills that might be necessary for other products, other development areas, other growth opportunities. And that skill will stay with the company for a while. What is the risk-reward and the opportunity cost for that decision?
Furthermore, you might be asking consumers and enterprise employees alike to change their habits or processes. That’s a huge hurdle.
