september 20 th, 2000 why internet start-ups fail? shayne gregg partner, e-centre

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September 20 th , 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

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Page 1: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

September 20th, 2000

Why Internet Start-ups Fail?Shayne GreggPartner, e-Centre

Page 2: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Who am I?

Partner responsible for e-Centre Business & Technology consulting for 12 years Developed Secure eBusiness practice Past-President of CIPS Vancouver Focus on acceleration and turnaround

Page 3: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Something to think about…

Ontario68%

British Columbia

10%

Quebec14%

Alberta8%

Manitoba0%

Ontario62%

British Columbia

16%

Quebec12%

Alberta6%

Manitoba4%

Ontario52%

British Columbia

20%

Quebec14%

Alberta8%

Manitoba6%

1998

1999 2000

Source: ComputerWorld Sept. 22, 2000

Deloitte & Touche‘Fast 50’

Why Internet Start-ups Fail

Page 4: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Why Are They Failing?

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 5: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

People

Visionaries who can’t stop After launch date Constant focus on new market opportunities

There’s no substitute for management depth and experience The COO must manage Structured minds hate chaotic environments Lack of focus can blur the landscape No sense of urgency… but everything’s at webspeed Human resource issues are not the last problem to resolve

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 6: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Product

Marketing myopia

Intuition should support the research, not replace it

Getting them used to a rhythmic release strategy

Launch date is not the finish line

Release strategies are made to be adhered to

Narrow, non-competitive vs. bundled, diverse offerings

Lack of understanding or experience in the marketplace B2B players don’t understand how industrial buying really works

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 7: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Technology

Architectural flaws are fatal in high availability businesses Poor project management & QA – a recipe for failure Bifocal technology strategies – short term growth / long term flexibility Ready, fire, aim Speed & specificity vs. generality Volume / load testing Demonstrate your security Lack of scalability Redundancy means more than backups Not everyone uses IE5.0 Bad software development practices breed contempt Document everything

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 8: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Alliances

Building the imputed stock value through credibility? Long term alliances must bring value:

Intellectual Property Capital Skills Credibility Customers

Poor partners made in haste Quality and value Integrity of character

Managing Expectations No risk & profit sharing model

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 9: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Market

Where’s the market research? Value Proposition – elevator pitches are about the customer Understanding the difference between:

Sales Force Strategy Branding & Awareness Strategy Marketing Strategy

No hybrid (traditional/cyber) approach Inexperienced help doesn’t help at all Strong reliance on few channels Inability to migrate up the market The VP of Marketing doesn’t work for the CFO

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 10: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Customer

Customer experience management

Reacting to feedback – more than having a ‘thick skin’

Losing control of the customer contact points

‘24x7’ means human availability

Limited knowledge of the customer

The investor is not a customer

Advertising dollars buy awareness but certainly not loyalty

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 11: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Financing

A formal business plan is a living document Detailed financial projections Sensitivity analysis Poor positioning Shopping the idea Ongoing financial monitoring seems to be a rare event The best stock option models may not be the most practical Investors like new ideas, not old ones re-packaged If it doesn’t make cents… it doesn’t make sense

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 12: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Competition

We’re the only one doing this Differentiation analysis Understand the substitutes as well as the competitors Build the IP fast Understand the barriers to entry Incumbents see the Internet as an enabler not a threat

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 13: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Structure

No structure is not the same as a flat corporate structure No bricks… no clicks Adopting the Fortune 500 structure Communicate, collaborate and eliminate the silos A common vision does not equal common goals Manual processes are ‘bottlenecks’ A complete website is not a back office Recognize an e-Business is ‘inside out’

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 14: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Time

Internet time waits for everyone Re-writing history takes time and patience Time to market is no excuse for poor business discipline First mover advantage is meaningless unless you’re ready Learning e-Business is easier than learning Business Incumbents get to mess it up many times, start-ups only

once

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 15: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Conclusions

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 16: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Some final thoughts… The dot.com era is over… the Internet era has only just started The real Internet companies have not yet arrived Disintermediation is not a threat when the customer becomes king Software companies and consultancies got it… both ways Pure-plays are becoming very ‘physical’ The network effect only works in true Internet businesses Its almost nearly impossible to institutionalize entrepreneurship Decide whether you are in it for the company or the cash Dot.coms will change their spots… to become invisible Everyone will become an internal e-Business consultant The “e” will soon be gone

“There won’t be any Internet companies. All companies will be Internet companies, or they’ll be dead” Andy Grove - CEO, Intel Corporation

Why Internet Start-ups FailCopyright ©2000. Deloitte & Touche LLP. All Rights Reserved.

Page 17: September 20 th, 2000 Why Internet Start-ups Fail? Shayne Gregg Partner, e-Centre

e-Centre

Questions

Shayne [email protected](604) 640-3261

Copyright ©2000. Deloitte & Touche LLP. All Rights Reserved.