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Friday, November 02, 2007

Valley of Death (renamed!)

When the founders quit their job, they leave the heady Ideation stage armed with their Demo and enter the Valley of Death. Or is it? Earlier this week I had the pleasure of interviewing John Paul DeJoria for the Bootstrap Bootcamp DVD. JP spoke to Bootstrap Austin in November, 2005. He cofounded Paul Mitchell, Patron Spirits and is involved in numerous other startup ventures including John Paul Pet and DeJoria Diamonds. While agreeing with the Bootstrap stages, actions and principles, he made one modification, renaming the "Valley of Death" the "Valley of Opportunity."

And indeed, that's exactly what it is, particularly for the Evangelist cofounder. The VOO is where the potentiality of Ideation comes to fruition through customers. The precariousness and possibility of "death" propels the bootstrapper toward the absolute necessity of discovering their customer. And as I wrote earlier, constraint creates innovation. This crucible is vital for the business to emerge and also why investor capital is the enemy of the venture at this stage. John Paul recounted how the planned $500K investment for Paul Mitchell fell through; the founders continued with a $700 combined investment. The scarcity of capital caused a number of innovations such as the use of a black/white color scheme for the bottles and outsourcing production. They were also able to get get distributors on board by first securing orders from salons before approaching them.

The pitch is the all-important tool of the Valley of Opportunity needed to make the sale. It articulates the value proposition in terms of the customer's needs. The pitch is perpetually presented, amended and reformulated before the right one emerges. Pitches are presented to various customers before the right ones emerge. It's a trial-and-error process with ongoing feedback, both from the customer and the Maven. Eventually, the finely-tuned pitch takes the venture out of the Valley of Opportunity into Growth. Meanwhile, the product evolves from a demo to a customer-driven version 1.0.

Comments:
Valley of Opportunity resonates more positively with my current stage of pitching prospects and identifying the right telephony and technology to get my bootstrap (Cleantegrity) up and running. Very interesting, the power of the words we use, to our ourselves, and with others.
 
I like the idea of "valley of opportunity" but I wonder if businesses in this stage should really be "pitching" - To me pitching means "trying to persuade" - talking not listening. I advice my clients to leave the dogs and ponies back at the office and approach prospects with genuine curiosity and a desire to truly understand their needs. Then, let your solution sell itself and allow the prospect to buy. This is very different from "pitching".

Just my humble .02.
 
Pete, it's both. You have to present your pitch AND listen to the customer. There is a balance between the two and it's the coming together that results in the sale. Customers don't know what they need, but they do know what problems they have. It's the bootstrapper's job to provide ingenious and unexpected solutions to those problems.
 
With Alex's "Physics of Business" on my mind, I thought that a great name for this would be the Gravity Well. Not as negative as Valley of Death. Not as polyanna as Valley of Opportunity.

Velocity, Momentum and other terms that businesses have adopted will mesh with the Gravity Well concept.

Gravity is caused by things like competition.

I blogged about the valley of death some time ago, but Gravity Well would work in my depiction.
 
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