Wildcat Venture Partners - Traversing the Traction Gap

BUSINESS & ECONOMICSEntrepreneurship

US $35.99 | CA $46.99

Startups Dont Have To Fail

Vision, groundbreaking ideas, total commitment, and boundless enthusiasm characterize most startups, but they require capital to go from promising product to scalable business. More than 80 percent of all early-stage startups fail. Most of them can build a product, but the vast majority stumble when it comes time to take those products to market due to poor market engineering skills.

Traversing the Traction Gap exposes the reasons behind that scary failure rate and provides a prescriptive how-to guide, focused specifically on market engineering techniques, so startups can succeed.

The go-to-market hurdle is insurmountable to many startups. Just when they most need to establish a foothold in the market, they run short on time and money. This is the Traction Gap, that period of time introducing a new product into the marketplace and being able to scale it during a rapidly closing window of opportunity. Traversing the Traction Gap is a practical guidebook for navigating the tumultuous early life of a startup. Based on real-life examples, the advice from Cleveland and the members of the Wildcat Venture Partners team, provides a roadmap and metrics for succeeding where others have failed.

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Copyright 2019 by Bruce Cleveland and Wildcat Venture Partners

All rights reserved, including the right to reproduce this book or portions thereof in any form whatsoever. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any other information storage and retrieval, without the written permission of the author.

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Library of Congress Control Number: 2018958128

First edition: February 2019

Hardcover ISBN: 978-1-63576-573-1

Trade Paperback ISBN: 978-1-63576-624-0

eBook ISBN: 978-1-63576-574-8

Manufactured in the United States of America

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Cover design by Mark Karis

Interior design by Pauline Neuwirth, Neuwirth & Associates

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I, along with the Wildcat Venture Partners team, wrote this book for you; the brave entrepreneurs who dare to change the world and make it a better place for us all.

CONTENTS

by Geoffrey Moore

T he whole point of this book, as Bruce makes clear in his introduction , is to radically reduce the failure rate of venture-backed startups, specifically during their metamorphosis from promising product in a potential blockbuster category to scalable business highly attractive to later-stage investment. This is the murky territory of detecting and securing market-product fit, a term Bruce introduces and defines in the book, at a time when it is critical for the entrepreneur and the sponsoring venture capitalists to be on exactly the same page.

Traversing the Traction Gap shines a very bright light on this transition in two important ways. First, it prescribes objective, quantifiable milestones that guide the journey through four stages, from Initial Product Release to Minimum Viable Traction. Secondand this is the unique contribution of the book in my vieweach stage directly equates to a step-function change in valuation for the budding enterprise. That is, not only are these market-development milestones, they are venture-funding milestones as well. As a result, the framework directly aligns the entrepreneur with the investor on how a specific funding event translates into a subsequent uplift in company valuation.

This connection between entrepreneurial innovation and venture valuation has never before been made this clear, and, as a result, far too many venture-backed startups wandered off course, not because they were doing poor work, but because they werent doing the right work at the right time. As a result, when they went to get their next round of funding, what they heard from investors was Youve done some very fine work here, but wed like to see you get a bit more traction before we invest.

Traction. That was the word that haunted their fundraising lives. What is it? Why is it so elusive? How do you get it? How do you demonstrate it? These are the questions that the Traction Gap Framework helps management teams and their investing sponsors address.

At Wildcat Venture Partners, where both Bruce and I work, we have been using this framework with every single one of our investments, first informally, and now formally via the Traction Gap Institute. It is proving invaluable both as a navigational device to chart courses through the unpredictable currents of disruptive innovation and as a communication device to keep us aligned with our funded CEOs and their teams. Along with Bruce and the rest of the partners of Wildcat, we hope that you too can leverage this guidance to entrepreneurial success.

T his is an unusual business book.

Unusual because unlike many business books, we have set out to provide you with a set of prescriptive techniques and tactics you can leverage with your own startupor with your portfolio companies if you are a venture investor. We are venture capitalists and entrepreneurs, not academics; our orientation is toward real-life business success, not interesting theories. We will always choose messy successes over elegant failures.

This book contains valuable lessons that my Wildcat partners and I have learned in our careers, combined with tried, tested, and proven techniques used by teams to successfully traverse one of the most challenging phases in a startups life cycle: we call it the Traction Gap. As you will see, this journey is almost never smooth. Thats why this is a guide, not a bible. Every entrepreneurs experience will be different.

Why should you value the advice in this book? Well, I, along with the members of the Wildcat Venture Partners team who have contributed to its contents, have been involved with successful Silicon Valley companies and the technology industry in some manner for at least twenty years.

I have held operating roles in several Silicon Valley technology companies that were small startups at the time I joined them. At Oracle, I began as a mid-level manager when it was a private company of 100+ employees located on Sand Hill Road in Menlo Park. At 27, I was given the opportunity to build a division, and in less than four years we grew from a startup inside Oracle to a major contributor to Oracles top line. After Oracle, I joined Apple and ran its Unix and object technology divisions. In 1996, I joined Siebel Systems as a member of its senior executive team just after it completed a $2M year; five years later, we generated $1.7B in revenue. All three companies are among the most transformational technology companies in Silicon Valley history.