By Wildcat Venture Partners
5
22 ratings
The podcast currently has 11 episodes available.
Wildcat believes and invests in early stage companies that solve massive problems and deliver solutions for a better world. And those solutions can tap into powering those movements around economic equality, diversity and inclusivity. Ruby Ribbon is one of their portfolio companies that have done just that.
Clint McKinlay is Ruby Ribbon’s CEO. He believes that to determine how to cross chasms, there's a great deal of humility and listening that’s needed.
In this episode, Clint shares Ruby Ribbon’s story and values, the steps they have taken to realize their mission, and how the Crossing the Chasm framework has helped them along the way.
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Crossing the Chasm is a valuable framework to drive early stage venture investment decisions and serve as an operational guide for companies throughout their duration with Wildcat. But having a framework isn’t sufficient enough to build and scale a category-disrupting business.
Jennifer Trzepacz, COO and Partner at Wildcat Venture Partners says that it’s the talent that makes a company come to life. It’s necessary to deeply evaluate these entrepreneurs and their teams to determine who will have a higher likelihood of success in crossing the chasm.
In this episode, Jennifer, also known as JT, dives into critical talent characteristics that drive a higher likelihood of success in crossing the chasm.
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Crossing the Chasm is a critical framework that the Wildcat team has experienced as operators, executives and investors, using it throughout their careers.
Geoffrey Moore, Author of the best-selling book Crossing the Chasm, and Partner at Wildcat Venture Partners, shares that this B2B market development model is the lowest risk, highest return play in venture.
In this episode Geoffrey, Founding Partner Bryan Stolle, and COO & Partner Jennifer Trzepacz, known as JT, dive deeper into this strategic and operational framework.
Learn more, and find the complete show notes, at
www.wildcat.vc
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In early stage venture, determining those important signals that indicate investment potential and traction are critical.
One way to do so is through this concept of power as Geoffrey Moore, Author of Crossing the Chasm, Speaker, Advisor and Venture Partner at Wildcat shares...
“Power is an attempt to say, what are the leading indicators of success in business just as performance it’s a trailing indicator of success. And what you find in investing is, an investor buys a share of your future earnings, not your past earnings.
And so therefore how can they expect you to perform in the future? So you're always looking to say, how powerful could this company become? Cause that's, what's going to increase its market valuation. Now that's true in public investing, but it's even more true in venture investing because the power is so nascent.”
Power is actually a hierarchy and the prioritization of this structure is based on the impact each step has on a company’s future performance. In fact, this ordering comes from public markets and is adjusted to venture dynamics.
As such, this hierarchy can be leveraged as an investment framework to determine where the trapped value lies and how to identify the traction behind it.
Power Concepts - A Five-Step Hierarchy
There are five steps to this power hierarchy: Company power, Category power, market power, offer power, execution power.
Category power is at the top of this hierarchy because venture investing is focused on nascent categories that are expected to blossom. In fact, the category may not exist quite yet but the technology does. So when doing an investment, you inevitably start with the question “what categories are we in and are these categories getting traction?”
Market power is different from company power in that markets are defined by a set of customers and categories are defined by a set of competitors.
An early stage company delivers market power by winning devoted customers who advocate on its behalf, thereby speeding up sales cycles and creating a local market that can attract a local ecosystem. It’s growth from customer relevance because the offers address segment-specific concerns with domain expertise. And the end result is company power in a niche that is both persistent in its own right and a potential stepping stone to greater things to come.
Offer power is defined as the feature/function/performance status in comparison to competitors. In established markets Geoff tells us that product managers are always looking to have the best set of these points of differentiation in their competitive positioning charts. But in venture, it’s more asymmetrical.
Early stage companies need need to find at least one dimension where there is a 10X advantage, something that will warrant customers and ecosystems going through the pain and strife of disruption to adopt the offering.
The last step in this 5 step hierarchy is execution power. It’s about getting to the next milestone in a timely fashion because growth ultimately stems from managing those portfolio of commitments.
To create that necessary performance traction, the team must redirect its execution power from building and serving everyone in the early market to being very narrowly focused on a very specific audience segment, industry and use case to cross the chasm. It’s being able to transition from the interest of those early adopters of a product to the mainstream early majority.
The Power of Digital Transformation
One category the Wildcat team is laser focused on in particular is Digital Transformation. Bryan Stolle and Grahme Taylor shared insights on where they see the space going in episode six and seven.
This category has significant power based on where is capital moving into and where new technology displacing capital that used to be spent in an old way.
This is actually a meta category - a horizontal and vertical. It's happening in every single industry across the globe as the world now moves towards an experience where billions of people on the planet have the power of a mainframe computer in their pocket. This gives businesses the ability to communicate with them 24x7.
So the post-pandemic operating model for any industry and company needs to be a digital first model. Therefore an enormous amount of money has to go into that which leads to significant opportunities for incumbents as well as the next generation of venture backed startups.
Crossing the Chasm and Its Link to the Power of Company’s Traction
This hierarchy of powers: Category, company, market, offer and execution offers a framework for venture investors to truly understand those signals that can predict performance.
This investment framework is linked to Geoffrey’s B2B market development model of transitioning from the interest of those early adopters of a product to the mainstream early majority, as outlined in his book Crossing the Chasm. Crossing the chasm means creating the opportunity for hyper-growth and market success, and by doing so, a venture company ultimately delivers market power in a market that is big enough to matter, small enough to lead and a good fit with their crown jewels.
Where the Trapped Value Lies Through the Lens of this Investment Model
What should an investor consider when evaluating companies through the lens of this investment model and determining where the trapped value lies?
There are several ‘power’ signals which roll together in concert because growth is a function of power and the more power you have, the more you're going to grow.
Geoff indicates that the power of an early stage company cannot truly be assessed on the traditional performance metrics like the return on investment.. Prior to being at scale, what's important to assess is how that company’s revenue ties to them gaining power.
“You still measure revenue because revenue is how you're competing in the world. It’s how we know whether you win or you lose. So it's an important signal. What we're really trying to signal is not how much profit did you make because often you're still losing money.
People wonder, how is it possible that Uber becomes so valuable and loses money? And the answer is because the world believes that by losing money, they're gaining even more power and therefore they're even more valuable.”
Geoff also highlights that there are key measures that signal power. One is when a company lands at least one marquee client. Another is when they show dominance in their target segment. That momentum turns into partners who are looking to work with the company and build an ecosystem around them. Ultimately the company becomes the word of mouth choice for the segment.
Collectively it’s all these signals that become valuable markers that assess potential and investment momentum.
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Much has changed in the past year and there's no question that digital transformation initiatives across every business have been front and center. There’s been a lot of forced experiments that have accelerated the adoption of these technology efforts, as the pandemic has catalyzed a shift in how companies approach optimizing their operations.
Grahme Taylor, Associate at Wildcat Venture Partners is a firm believer in the power of technology companies to fight inefficiency at scale and solve massive, costly problems for industry and society alike.
In this episode, he shares key trends on the digital transformation front and perspectives on where the Wildcat team sees trapped value. Further, Grahme offers insights on factors that influence a portfolio company’s ability to capture its market opportunity
Learn more, and find the complete show notes, at
www.wildcat.vc
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Traction and Trapped Value is produced by Flywheel Associates
Where we work and how we work have been completely disrupted by the pandemic. Behaviors, processes, systems and tools have fundamentally changed, and this seismic shift in the way businesses operate is one of the areas that Wildcat focuses on.
It’s called digital transformation -- which the Wildcat team defines as how enterprises use technology to change their businesses processes in order to unlock trapped value and optimize operations.
In this episode, Bryan Stolle discusses the impact of Covid 19 on the working landscape, the future of data, privacy, and the customer experience - and the opportunities to be found in these areas.
Learn more, and find the complete show notes, at
www.wildcat.vc
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Traction and Trapped Value is produced by Flywheel Associates
COVID-19 has affected lives all around the globe and it’s no secret that it has dialed up digital adoption even in the complex, slower moving, highly regulated healthcare space.
As one of their thesis areas, Wildcat has tracked and analyzed the dynamics of the healthcare industry and sees how the pandemic has accelerated their predicted outcomes.
In this episode, Bill Ericson shares their perspective on the future of digital health - the trends, where there’s trapped value and understanding what’s hype.
Learn more, and find the complete show notes, at
www.wildcat.vc
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Invention and innovation have a powerful grip on our collective imagination, and in venture capital there is a front-row seat to the exciting ideas and companies looking to solve massive unsolved problems.
An area where Wildcat sees trapped value is in the financial services space, which Bryan Stolle, General Partner at Wildcat, defines as “everything in and around money.”
In today’s episode we are providing a view into what’s next, what the future could bring, and where the real value and opportunities lie. Bryan will discuss:
Learn more, and find the complete show notes, at
www.wildcat.vc
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Traction and Trapped Value is produced by Flywheel Associates
With rapidly increasing fund sizes and record-breaking dry powder in venture, putting early stage capital to work efficiently is challenging.
And as we learned from Bill Ericson in Episode 1 and Episode 2 regarding the ‘Evolution of Venture Capital’, bigger funds and checks aren’t better when it comes to driving outsized returns - in fact, they can be quite detrimental.
In this episode Bill is joined by another General Partner at Wildcat; Bryan Stolle to discuss:
Learn more, and find the complete show notes, at
www.wildcat.vc
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Traction and Trapped Value is produced by Flywheel Associates
In part 1 of our 2 part series on the Evolution of Venture Capital, Bill Ericson, Founding Partner at Wildcat, shared how industry dynamics have shifted to a point where the VC asset class now stretches the definition of “venture capital”.
With the current influx of non-traditional venture investors, coupled with the parallel growth in fund & round sizes, this will likely cause significant return compression over the next few years. So in part 2, we continue our interview with Bill, who discusses:
Learn more, and find the complete show notes, at
www.wildcat.vc
Resources:
Subscribe to Traction and Trapped Value:
Traction and Trapped Value is produced by Flywheel Associates
The podcast currently has 11 episodes available.