Sacred Cow Dung

 

"Behind EVERY successful company lies an ACCURATE Market Hypothesis"
(ie That the other side of the Chasm either exists or will exist within the timeframe of a venture)

We can dream all we want about there being another side to a chasm but unless that side proves real over time -- it's not a Chasm it's a Cliff ...

(BTW, Geoffrey agrees with this -- he was really doing an analysis of hypergrowth in proven industries and, unfortunately, it has been mis-applied as justification to take "daring leaps" into "unproven" industries -- this was not what his study was about nor his intent)

Also, I wouldn't write-off the vision of VCs too quickly -- VCs need to share the vision of "the other side" with the entrepreneur -- for it is the VC who is making the financial leap and must be convinced that there will be a market on the other side of the abyss ..

Also, I believe that "luck and timing" is totally related to "the leap" ...
if you leap too early, you just went over a cliff ...
the luck has to do with the fact that -- no matter how much analysis you do to convince yourself and others that the another side exists or will exist -- you are always leaping into the fog and the luck is that it will hopefully turnout to be a chasm and not a cliff ... the competence of the team is irrelevant if the market hypothesis is wrong -- I've seen lots of competent VCs and management teams efficient drive their companies over cliffs -- all because their underlying market hypothesis was incorrect ...

This brings me to --

 

 

(or "a competent move in the wrong direction destroys a company faster than an incompetent move in the right direction")

It is this rule that gets VCs into the most trouble and gives them their bad reputation --
VCs bet on "pure-play" market hypotheses with highly tweaked management teams and highly effective execution strategies
so when the underlying market hypothesis bet is wrong -- the demise of the venture is usually rapid and quite dramatic

Excellent! I enjoyed reading your material. think in herds: http://www.quotationspage.com/quotes/Charles_Mackay , Few people are capable of expressing

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