Killer Opportunities

Where Do Great Ideas Come From and What Makes Them Great1

Marc MorinNov 25, 2003

Nov 25, 2003 Where do ideas come from? 2

Sorry, I couldn’t resist…

Nov 25, 2003 Where do ideas come from? 3

Disclaimer

This is my 2¢, take it for all it’s worth.

Nov 25, 2003 Where do ideas come from? 4

Short Background Education

BaSc, EE, University of Waterloo, 1987 MBA, Wilfrid Laurier, 1994

Work for others Hewlett-Packard, Focus Automation

Startup involvement… PixStream, sold to Cisco Kaparel, sold to Rittal VideoLocus, sold to LSI Sandvine SparkMatrix

Nov 25, 2003 Where do ideas come from? 5

The PixStream Legacy

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Lifestyle Business vs. CorporationLifestyle Business Be your own boss

Lone wolf Self funded Organic growth Slower growth Can re-invent

themselves No planned exit

Corporation Founder, not boss

Team VC/Investors Fund the plan Rocket ship If a miss, typically

flame out Exit strategy

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Focus of Presentation

Framework

Plan it

Do it

Build team Financing Execution Refinement/Adaptation

Identify major trends Synergies products

ideas Evaluate products

Expensive

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Inspiration Eureka! NOT! A lot of hard work Spend appropriate time

Avoid costly mistakesin bad judgment

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Identify Major Trends Identify major shift/discontinuities

Internet -> broadband -> distribution channel

Cell phones -> low cost wireless -> wireless everything

Analog->digital in entertainment Play “what if…”

Speculate on interaction within industries

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Will trends intersect? The more turmoil in a market

The more opportunities… New entrants Threat of obsolescence

Single waves… Possible line extension…

favors incumbents, watch out!

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Predict Interactions?

Individually•Easier to understand

Combined•More interesting results•Less obvious

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Watch the sizeMust match your capability level

Start here• Smaller scope• Too small for the “big guys” … with killer potential!

• Need time to acquire capability

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Watch the timescale Road to success

littered with startup roadkill

Need to still be around when trend peaks

Financing Tenacity Adaptability

Duration < 2 years, too late 2-5 years, ideal 5+ years, too early

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Watch the direction Big trends

heading for rocks Abrupt ends Volatile Dangerous

How stable is the trend to disruptions? External factors

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Evaluation Single major trend idea

Likely straight forward analysis of what will happen If tied to existing business/industry (most are), then this is line

extension for incumbent Stay away… there are sharks in the water!

Two major trends Interaction may provide insight… Not as straight forward to understand… Hope for new entrants

Three/More major trends Are they really independent trends? Difficulty in predicting with any degree of certainty the affects? What if trends don’t interact? How stable? Is it in the right timeline? It is too ‘wild’?

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Positioning examples Sandvine

Broadband growth Decreasing average technical capability of

customer base Application use changing (by subscribers)

P2P from email/browsing VoIP Streaming video/audio

Internet threats changing (against subscribers)

Virus/Worm/DOS/DDOS Increasing in sophistication Decreasing in required skill level (toolkits)

Arguably same wave, viewed from different angles

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More examples PixStream

Broadband DSL Digital Television

VideoLocus HDTV Video codec

RIM Cell phone -> low cost wireless Internet/Email strategic

Telco Triple play

HD DVD Player/Recorder

Blackberry

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Have trends… now products Have a solid and insightful model of

major trends affecting industry Need to embody the most significant

implications of these into products How will existing products be affected? New services? New needs? What skills required?

Do you have them? Can you get them?

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Searching for ideas What you know

Your experience Your company Your industry

Swim downstream Your customers

Swim upstream Suppliers

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Customers suffer from myopia

•Unlikely to hear “if you made X, I’d buy it.”•If you do, likely line extension type of response•Very focused on the immediate

•MUST validate assumptions, logic arguments, etc…•Want to understand their problems

•Likely to expose opportunities

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Evaluate Products/Plans 10x factors, Andy Grove Disruptive technology Overcome inertia gap

Customers will need a very good reason to buy from an new startup

Especially if there is a ‘natural’ provider What is required to dominate industry?

Technology, team, financing, execution, time Can you get there from here?

If you can’t, someone else can/will How would that affect your chance of success?

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The Role of Luck Luck is good You will need some Right place at right

time Accident? NOT

Luck is not a cause, its an affect

Solid planning Keeping in touch Being nimble

“The harder I practise, the luckier I get”Gary Player

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IrrationalExuberance

HolySh*t

Reality Maturity Obsolescence

Emotional Zenith

Reality HangoverReminiscing

Denial

Requiem

IrrationalExuberance

HolySh*t

Reality Maturity Obsolescence

Emotional Zenith

Reality HangoverReminiscing

Denial

Requiem

IrrationalExuberance

HolySh*t

Reality Maturity Obsolescence

Emotional Zenith

Reality HangoverReminiscing

Denial

Requiem

IrrationalExuberance

HolySh*t

Reality Maturity Obsolescence

Emotional Zenith

Reality HangoverReminiscing

Denial

Requiem

Time

Con

fid

en

ce

IrrationalExuberance

HolySh*t

Reality Maturity Obsolescence

Emotional Zenith

Reality HangoverReminiscing

Denial

Requiem

Business emotional lifecycle

Emotional Zenith

Reality HangoverReminiscing

Denial

Nov 25, 2003 Where do ideas come from? 24

Conclusion Build a model of major trends

How will they interact to change industry Want 2 major independent trends What opportunities are born

Develop idea/concept for first product Stay flexible, product line must evolve

Evaluate keys to success

Just Do ItTM