PONDERA INTERNATIONAL

February 20, 2102

There are many things you need to make it in the market as a start-up – the following 4 have proven time and again to be the most essential for achieving long-term success.

1 – Write a Business Plan!  You do not need to draft the 80-page, single space business plan of old – in fact, a 10 page slide deck is the max that should be done.  However, you MUST write out your plan.  Not only does putting it on paper in an organized, specific fashion force you to think through all of the important aspects of your business, but this document will be necessary for any financing, partnering or investment discussions that you will have in the future.  This document can- and should – change as you develop your business, so consider this a ‘living’ document from the start.  When I hear start-ups tell me they ‘don’t need a business plan,’ I pretty much stop listening.

2 – FOCUS, FOCUS, and FOCUS…  I have worked with a number of clients who see serving the social good as a goal for their business, and others who claim their platform will serve unlimited applications.  These statements may in fact be true – however, without a constant and dogged focus on their core business, the business will not get off the ground long enough to prove them out.  Before the social do-gooders can save the world – and these are among my favorites to work with – they have to establish enough of a revenue stream to become sustainable over the long term.  Otherwise, whatever good they do in the world – if they even get to the point of doing so – will be short lived at best.   Similarly, for those who wish to supply the market with an endless stream of useful applications, the market will not see any down the road if the start-up does not achieve success with the initial few. 

3 – Make IP Protection A Key Part Of Your Strategy.  For many start-ups, especially those with a technology focus, the ‘secret sauce’ that sets them apart in the market is based in some form of intellectual property – software code, a technological design, a specific formulation.  Yet many start-ups I encounter have taken few real steps to protect this IP.  The protection of IP should be a key facet of your overall strategy.  In some cases, this may mean taking no action at all – for example, if reverse engineering will have your technology out in the marketplace shortly anyway, it may not be worth the cost.  The timing of your actions will also be relevant – you will want to have at least basic protections in place (provisional patent filed, strong NDAs in place, etc.) before you start discussing details with third parties.  In either case, whether your IP is well protected can mean the difference between many $$ signs in your exit strategy or between survival and shut-down.

4 – Know your customer!  This last one sounds obvious, but there is a huge difference between ‘market’ and ‘addressable market.’  Many start-ups I have worked with design their marketing, pricing and forecasting with the former in mind, rather than the latter.  This can cause significant stumbling out of the gate, and a much larger spend run rate than necessary in initial stages.   This point goes along with point number 2 above (Focus!)  - do not try to boil the ocean and be everything to everybody out of the gate.  Be realistic about who you can really serve, who will really want to buy your product, and whose problem you are really trying to solve.  Focus on that segment, be successful, and then you can expand your customer scope from there.

Posted by Kristen Verderame on 10-08-11 as part of the Booz Allen Hamilton, Expert Voices Program

Former Director of National Intelligence and Booz Allen Executive Vice President Mike McConnell recently stated, “The nation does not even practice . . . what I would call {good} cybersecurity hygiene.  We could eliminate much of {the risk} if we just did the basic things – be aware, change passwords, and configure our systems appropriately.”

Statistics indicated that many don’t practice these guidelines.  In fact, a recent Norton study reveals that while 74 percent of respondents say they are always aware of cybercrime, only 41 percent of adults indicated that they have an up-to-date security software suite to protect their personal information online, and more than two-thirds fail to use complex passwords or even change passwords regularly.

So why don’t individuals or corporations take even the easiest of actions to protect themselves against the threat of cybercrime?

The answer is simple:  the market lacks the appropriate incentives to promote this behavior.

So what is it going to take to get corporations to invest in effective cyber security?

The answer is not rocket science – market incentives, if presented in the right context, can go a long way toward pushing companies in the right direction.  Proper insurance offerings and protection from legal liability are oft-cited incentives.  The House Republican Cybersecurity Task Force released recommendations today calling for these, as well as voluntary standards, tax credits and grant programs. 

But where is the market in all of this?  Do market analysts consider cybersecurity readiness in market valuations?  Is this considered as part of the routine due diligence process before investments or acquisitions are made?  The answer, I suspect, is ‘no.’ The obvious next question is, ‘why not?’

This warrants recognition by the market to better understand the risks, and reward for those who practice good cybersecurity hygiene.  With Norton’s estimated cost to the market of $114 billion last year, the market risks from cybercrime are clear.  What we really need is the market reward… we need investment bankers, advisors and analysts to step up and include cybersecurity in their regular dialogue, in their analysis and priorities.  This is what it will take.

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