Silicon Valley Review S3, Ep2: You’ll Get to Revenue When?
May 6, 2016 | By Kevin Vela
I loved episode two. Both as a fan of the show and an attorney. I thought the writers did a great job of injecting controversy and strife into the warm and fuzzy relationship between Richard and Jack Barker that Episode 1 ended with.
The core conflict is vision vs. reality; in this case, Richard’s vision for the company versus the demands of the Board being implemented through Barker as CEO. When pressed for his revenue plans, Richard states the he thinks the company could get to profitability in four years. Barker wants revenues now.
The time to revenue is a pervading topic for all startups, and you need to be aware of, and respect, what your investors’ interests are. The further along you get in your funding life-cycle, the more pronounced this becomes. Investors are (most likely) not investing in your business to change the world. They are looking for a return on their investment. That’s their business model.
So while it’s reasonable and expected to have an elongated timeline to revenue, four years is simply untenable unless you are building a medical device and will have years of clinical trials. The lean startup methodology is to get product out the door as soon as possible and to iterate based on consumer feedback. Don’t try to predict what your consumers want, show them something and see if they want it. The vast majority of our clients pivot in some form or fashion. It can be a small angle or a 180 degree shift. That’s okay. These shifts help to separate you from your competitors, because you have already learned something that they have not.
BTW – the Doctor was great. Not quite as great as Dr. Spaceman from 30 Rock, but a great bit character nonetheless.
Posted in Silicon Valley Reviews, Startups
Kevin Vela is the managing partner at Vela Wood. He focuses his practice in the areas of venture financing, mergers & acquisitions, corporate law, capital raises, and real estate investment activities. You can see Kevin’s attorney profile HERE.