Execution matters. In fact, most of the time, it’s what matters most, which is why we titled our previous blog post “Execution is Everything”. That post generated a lot of conversation, especially with our financing partners. I think it’s fair to say, it piqued their interest. The one question that stands out from the rest is, “What’s your prescription for building companies using an ‘execution-first’ outlook?” So, we thought we’d answer that question as a follow-up to close out 2016 and provide you with some execution ideas to help you win in 2017.
First, a quick review of what we do. Many of you may know our new operating model we call the Growth Engine, and some of you may have seen the recent article in Technical.ly Media D.C. about it as well, but for those new to this, here’s a quick recap. We pivoted away from our original agency business model into what we call a Growth Engine, which put simply, is a turn-key solution for growth companies. We provide all the necessary resources you need to grow and thrive in highly competitive markets, but I think what people are really interested in is that, when we partner with you, we take equity positions as payment for certain needs. This pivot was the keystone to our success in 2016 and we believe it’s a big reason JrPixels was ranked as one of America’s Best Small Business by Entrepreneur Magazine.
Our starting place is this: If your company wants to raise money, be bought, merge with another company, or compete in a new vertical, there’s a very real need to package and present the company in ways that make fundamental market-driven sense. Have a 10X non-linear value proposition? Great! You still have to show me the ‘Why’, the ‘How’, and the plan to achieve it. We’re in a “Show Me” state.
So, let’s be very clear, contrary to how things have been in the past, the basic standard for raising either initial (or new) money et al in today’s business climate is several orders of magnitude higher than it used to be. KPMG’s 2016 Venture Pulse Report speaks directly to this issue. Gone are the days of putting together a slick deck and raising millions of dollars … and before you say it, yes, it happens, but it’s happening less and less, and we can tell you with a high degree of certainty that this trend is on this uptick. As my hedge fund buddy once told me, “The trend is your friend. Properly prepare or you’ll get hurt”.
What does this mean for you? It means to maximize your chances for success, leveraging our Growth Engine is a good place to start. There’s no better example of this than the recent success Opkix has had with the closing of their fully subscribed Seed round. This success speaks directly to the power of the Growth Engine platform and highlights how your company can go to market in a much more cohesive and efficient way that potentiates greater degrees of success with funding, user acquisition, revenue growth, or whatever your specific endpoints happen to be.
The reason we created the Growth Engine is because executing well in today’s ultra-competitive marketplace means you must have, at least, these seven fundamentals completed, packaged, and correctly presented just to garner interest, much less to succeed. And, in case it’s not obvious, each of these represents core Growth Engine platform offerings; albeit, not all of them.
1. Financial Model – Proforma or Actuals. If proforma, they need to be created by a CFA. If actuals, you’ll need at least two years of ‘historicals’, ideally CPA and GAAP audited.
2. Business Model – At least a deck that synthesizes the financial model into an easily digestible format.
3. Corporate Strategy – Structure, cap table, vision, mission, etc.
4. Competitive Strategy – Sales, marketing, branding, social media, influencers, channel & partner development, demographics, etc.
5. Design – UI/UX of apps, websites, social channels, etc.
6. Development – Apps, websites, databases, security, servers, etc.
7. Team – Executives, advisors, consultants, legal, etc.
So, let’s talk about execution and Opkix. A year ago Shahin Amirpour walked into our office and pitched us his idea for a new mobile camera company. Shahin is an experienced business person with nearly twenty years of success building businesses. He heard about what we’re doing with the Growth Engine from a friend and decided to find out more, because, in his words, “It makes a lot of sense.” After getting all the facts about the potential business model, and then gathering the appropriate market research and consumer data, we decided it made sense to partner with Shahin to build the camera company, named Native Optiks (D.B.A. Opkix), with its first product called, Opkix 1.
The first two points (Financial & Business Model) are by far the most important and we’ll tell you the same thing we told, Shahin, “Success here is 100% about your plan”. Your plan must be airtight. You must be able to answer all questions about your business model, financials, customers, cap table, competitive strategy, demographics, you name it – you need to know it. Yes, the “problem”, “solution”, “team”, “competitive advantage”, and “milestones” matter, but they only matter vis-a-vis your business model, which should be driven by your financial model. And this, folks, is where the rubber meets the proverbial road. As stated before, execution is everything, but you cannot execute well without having the plan to do so, and you cannot plan properly without a firm understanding of what the financial model looks like both now and at scale. I’ve said this before, but it bears repeating, if you don’t know your numbers, you don’t know your business.
Yes, I know what you’re thinking. It’s too much work. It’ll take too long. I don’t know anything about it, etc. Stop. It. The Opkix team thought the same thing, and to some degree they, and you, are correct. Yet, it should be obvious that this is largely the point. Did we put Opkix through the paces in this regard? Yes. Did it take 3 – 4 hour calls three times per week for two months with our CFA to complete the draft financial model? Sure did. Did we receive calls from the Opkix team complaining about how tough the process was? Absolutely. But, here’s what else happened, now the Opkix team can easily answer any and all questions from anyone, anytime, about their business model, and what’s more, they can tie those answers back to dynamic real world data-driven metrics on a line by line basis throughout their business and financial models. This is clarity. This is transparency into your process and a true understanding of “How” you will execute. And, importantly, this is what it takes to ensure success. This is the new standard. Not coincidentally, this is the reason the current investors in Opkix are already committed to invest again in their $10.1M Series A round closing in 2017.
Now, by way of comparison, the rest of the bullet points (3 – 7) will seem fairly pedestrian but, don’t let that perception cloud your judgment. You still have tons of work ahead of you. Importantly, on number three, DO NOT ‘wing it’. In fact, don’t wing anything. Just because the steps seem to get easier post-financial model does not make them any less important or mean that you should take them any less seriously. Specifically, for Opkix, we mapped out a detailed roadmap for their larger corporate vision and mission. When you do this, they should be 1.) Fundamental to your core business, 2.) Reflect who you are as humans, and of course, 3.) Present the company with huge forward-looking challenges it cannot achieve anytime soon; sometimes these are called BHAGS. Additionally, it’s important to recognize the role your formal corporate structure may play in your future growth because financing an LLC is not the same thing as financing an Inc. or an S-Corp, for instance. As a basic point of reference, an Inc. is the better investment vehicle, but be sure to check with you attorney about what’s best based on your company’s needs.
Now, for the remaining points (branding, sales, integrated marketing, partnerships, design, and development), you’re going to let the financial model guide the basic framework because these require capital to perform. Keep in mind, though, that you’ll still have lots of granular planning work to do around each of these disciplines, as well as the full body of design you’ll need to wrap around all of them. For Opkix, we created strategic and tactical execution plans for each of these disciplines, and as per our own advice, tied them back to the financial model to guarantee we have the resources need to succeed. Some of these plans you’ve no doubt begun to see role out via their Facebook, Twitter, YouTube, and Instagram channels.
In upcoming blogs for 2017, keep a look out for articles that dive deeper into things like corporate strategy execution phases, the basics of unit economics and why they matter, and if we can muster it, perhaps even some articles covering financing, financing vehicles, terms, conditions, and structures … stay tuned.