The Formula For Success
This article was published in the Fall 2019 issue
by Niel Nickolaisen, CTO/CIO, OC Tanner
I am not a workaholic. I think someone once called me a workaholic – it might have been my wife though to be honest, I was not paying that much attention as I was busy working. Again, I am not a workaholic. Rather, I just love my job and really do not have outside interests or hobbies. If I have spare time, I work.
I am explaining this because about 12 years ago – in parallel with my being a more than full-time turnaround IT leader – two friends and I decided to create a small private equity firm. We convinced a broad range of investors to give us a decent pile of money and we used this money to invest in three technology start-ups – each of which had already gone through one or two rounds of funding. We three general partners each, in addition to working our full-time jobs, took ownership for shepherding one of the companies through their market, product, and scale-up issues. Our goal was to work our magic, build the value of these companies and then sell off our interest and generate a nice return for our investors – all in the space of 2-3 years. That was the plan. That was the dream. The reality was that the market, product, and scale-up issues were deeper and more complex than we imagined and we, just four months ago, finalized the acquisition of the last portfolio company and are now closing down our fund. Our investors did well but it took a long time (12 years) for them to do well. Along the way I created my version on the formula for success. That formula has the following three elements:
1. We must create a product/service the market needs and wants. One of the questions I now ask myself is “What are we doing that is better than the alternatives available to our intended market? And, those alternatives include prospective customers doing nothing or doing it themselves.” To answer this question, I ask and answer the Four Critical Questions:
- Who do we serve?
- What do they need and want?
- What do we do – better than anyone else – to meet these needs and wants?
- What is the best way to deliver our products and services (our deliver model could be what creates our market differentiation)?
Or, if I use the question that Clayton Christensen asks in “Competing Against Luck”, what job is the market hiring us to do?
2. We must have a way to connect our product to the market. I have advised too many companies that developed something compelling but then had no way to get their compelling something into distribution. Will you do that with an internal sales force? Through partnerships? Virally? And, have you packaged (pricing, commissions, support, content, et cetera) your compelling something in a way that makes it the best choice for your chosen distribution channel?
3. Do you have a management team that can execute? It is one thing to invent. It is another thing to scale. It is one thing to plan. It is another thing to execute. It is one thing to drive. It is another thing to lead. It is one thing to work hard. It is another thing to succeed. It is one thing to have confidence. It is another thing to learn and adapt. It is one thing to generate ideas. It is another thing to focus on what matters most. It is one thing to control. It is another thing to build and trust a team.
As the three of us made our investment decisions we focused our analysis on these three factors. Once we made our investments the shepherding of our companies revolved around these three factors. And these three factors ultimately led to success and now I use them across my entire life.
Read the rest of the articles in the Fall 2019 issue of Silicon Slopes Magazine