Evaluating Business Opportunities Jamie Goldstein nbvp. com
Evaluating Business Opportunities • The Deal Scorecard • Real World Feedback • Q&A
The Deal Scorecard 1. Management 2. Market 3. Competition 4. Product/Technology 5. Ability to Forecast Results 6. Capital Intensity 10 1
Management 10 Senior Team Proven Record 1 No Operating Experience Good Teams have: • Done their jobs before (no OJT) • Experienced ramp from startup to big company • Relevant industry experience & contacts • Specialized expertise and insight • Ability to adapt to change • Brains and hunger • Example: Silver. Stream
Management A Good Incomplete Team • Vision • Energy and hunger • Efficient • Wants to be the best and hire the best • Appropriate role for each person • Acknowledges management gaps • Values muscle building over time • Example: High. Wired. Net
Market 10 > $1 Billion CAGR > 30% 1 Stagnant Attractive Markets: • Big • Adopt new products quickly • Customers that feel real pain • Customers that can be reached economically • The time is (will be) right • Example: Centra
Competition 10 Potential for Leadership 1 Several Established Players Leading Companies: • Typically first to market • Leaders define “Market” • Leaders get market share • Market share critical to success • Example: My. Team. com, B 2 B marketplaces
Product/Technology 10 Clearly Superior Providing Leverage 1 No Advantage Leading Products: • Difficult to replicate • Special technical skills required • Special domain knowledge required • Proprietary technology (patents) • Many man*months (time, $) • Improve rapidly with customer feedback • Example: Phase Forward
Ability to Forecast Results 10 High 1 Low Great companies create and execute operating plans: • Plan is financial expression of strategy • Defines business model • Shows interrelation of timelines, functions, hires • Reflects detailed understand of the business • Example: 2 nd Century Communications
Capital Intensity 10 Low A function of: • Capital expenditure needs • Working capital needs • Gross margins • Sales and marketing expenses • Example: Smarter. Kids. com 1 High
No Single Recipe A 1. Management 10 2. Market 3. Competition 4. Product/Technology 5. Ability to Forecast Results 6. Capital Intensity B C 1
Real World Feedback • Friends and family • Interviews with: Customers, Analysts, Potential hires, Potential partners, Other CEOs • Where is the pain? • Would you buy? • How many? • How do you buy? • What could we do better? • Listen, Listen • Example: Rajmataj
Q&A
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