Christian Slater-Best Strategic Elements To Consider for Startups And Scaleups to be funded
Luca
Good morning, Christian. Thank you very much for having accepted my invitation to be my guest in this interview
Let’s start with the first question: What is more important between the financial projections, the results of our strategies and the qualitative elements of a strategy? i.e. considering a due diligence context?
Christian
It’s an interesting question. The financial statements are important; however, it is like telling a story, especially with the predictions, and they tend to create an illusion of precision for start-ups. And it is an illusion. In fact, we have seen what’s happened with the pandemic. Qualitative and quantitative elements are complementary, and they say the same story with different languages essentially and being speculative
Luca
Vision, mission and value proposition: What are the relevance of these three points in evaluating a company?
Christian
Vision and mission need to be considered as a story, and the strategic alignment needs to be flexible and adaptable.
Luca
I appreciate it, Christian. So, you were referring to the flexibility I can have an overall strategy, but I need to check to do the minimum viable product there, and I need to adapt, again, the overall strategy to take the next direction that is a market analysis, direction, and understanding what the trends are
Christian
We need to see some of them decide this is something we continue to do. And if we keep that, it is a new business stream.
Luca
My question for you now is what kind of knowledge and methods can be used today to analyse and develop a strategy in a rapidly changing environment?
Christian
What you need as a start-up is to have a functioning business model. It can be verified with the external support of other stakeholders using the open strategy. I mean, you try to reach out to potential customers, people from other industries, those who think very differently than you bring them together in a sort of workshop typesetting. The company pitches these ideas from everyone in the room, winding down what most people think is the best model. It’s a playful, gamified way of developing a business model. But he brings in lots of fresh and unusual thinking that usually you wouldn’t have when it’s just you and your co-founders.
Luca
Great. Thank you very much. The next question is related to market types. And in my perception, while experts try to simplify concepts for entrepreneurs, it can be confusing. And I think that classic definitions used in the consulting practice may be more effective.
I found these definitions applicable: the first is the existing market, where you can re-segment or produce an offer that can’t be replicated. The second is new markets where you can clone markets or find a new commercial use case. Do you think that these definitions can be acceptable? Or do you think that there could be some other ways to define the type of market?
Christian
Defining the type of market Yes. During the discovery of the minimal viable product, you discover that the first idea or the direction you pursued can change according to the discovery of the demand and that the problem to be solved is more extensive. Or you can recalibrate because of the testing of the product and create the minimum viable product. So, the market you initially have in mind might change maybe because it is not quite what it was thought or because it’s too expensive to reach this market. And then you think of a different way of reaching. Maybe, another market. Or you might come back to the original market once you have potentially some scale.
Luca
Thank you very much. Now next question: do you think that for a start-up analysing the competition, is a relevant activity that must be done like in the corporates? Or is it something that must be considered less important? What are your thoughts about this?
Christian
Okay, so that’s an interesting and somewhat challenging question because, on the one hand, of course, you need to understand what the competition is doing.
But one of the potential issues with that is that I start to become too like my competitors and mimic them too much, I really want to have something unique, and it is different. Competitors analysis should be more directed to the research of uniqueness of your MVP, and here the use of open strategy, bringing in the discussion external stakeholders, is excellent
Luca
Very, good answer. Christian. Thank you very much. And now, which standard strategies can be applied to the start-up stages: market penetration, market development, alternative channels, expansion, market segmentation, partnerships?
Christian
really any one of them could work. I am a big fan of alternative places as they work very well with my uniqueness. I certainly think that partnerships will often be essential because the resources of many start-ups are just not sufficient. But of course, you have to be careful with that. If your partnership is with a much larger organisation in two ways, you have to be careful that they don’t force you to do things closely aligned with the way they run their system of letters work. And you must be careful that they, at one point, don’t just more or less copy what you do, and you don’t see a dime for that. So that’s a couple of tricky things that you need to be very mindful of.
Luca
Okay, thank you very much.
What do you think about defining market projections and discovering customers?
Christian
One of the things I’ve come across that seems to be the most accurate way to make prediction Prediction markets work a little bit like a stock exchange, but on ideas where you have specific ideas, and they can be quite concrete. However, I have seen people get to try finding a particular niche, but nobody has produced any research
Luca
Okay, thank you very much. This could help to satisfy stakeholders and investors requirements. What is important to present for the product or service to the stakeholders or investors in a nutshell?
Christian
I think that typically, there are a couple of things that they really care about. First of all, you have some cool idea that meets a problem that I can solve. And that is scalable. That’s the first thing that they care about. The second thing that’s maybe the one that entrepreneurs sometimes forget is, what if one of the big companies does the same thing?
Can you somehow withstand that? Is it the elephant in the room?
And if you don’t have a good answer to that, they will instead not invest.
Luca
How detailed the business model should be to facilitate both strategies development and implementation. Do you think that the standard Business Model Canvas should have more information also to facilitate strategic thinking?
Christian
This might be a bit surprising from every strategy professor, but I would say initially just go out and try you have an idea, give it a shot, see how it works, but get some practitioners, and you probably have to make a few changes there as well. Just stories change slightly. Once you become a bit larger, particularly when looking at funding, you need these details because otherwise, investors will be not prepared to put money into this. With a detailed plan initially, you’re wasting your time. It is offered value to the accuracy of these plans much more over the speed of putting something out into the real world and what’s wrong. I think we must get things done, and then we’ll see what works because the accuracy, it’s an illusion anyway,
Luca
Wise and practical advice. Basically, it is not worth the work at the beginning of the business model itself. The BM is just a starting point to clarify the DSM, and then after the real-world experience, we can think about it that we need both we have more data, and secondly, we must be more accurate, because we need to develop a more detailed strategy.
Okay, now we move from launch to scaleup. We had revenues, but during the funding requests, we needed to highlight projections. This means that in addition to not being sure of the pain points we try to solve with our solution, we also need to estimate the number of paying customers. Thus the level of attraction and, in some cases, also estimate how we retain the existing customers. What can it be done?
Christian
Basically, how do you come up with this number? You need a story. It’s a logical process of how you arrived in number, and it becomes more believable.
Luca
How much is relevant for fast-growing companies the use internal resources to implement strategies?
Christian
The exercises we do are to create a resource matrix to assess whether the resources you have are valuable, rare, inimitable, and non-substitutable. And in that way, you can map those which meet all those four criteria turn out to be your key and strategic resources. If the things you want to do will not be matched by those key strategic resources, you either have to think of how you can get these resources. So, I could use and show the investors that I am successful because I have internal and external resources. If you can access them, they are as good as if you would have them yourself. In that sense, that’s very helpful. And companies need to be prepared to do that as well.
Luca
Let’s assume that you will be a consultant for due diligence. How much is the culture in fast-growing companies important to develop and implement strategies?
Christian:
So it’s good to remember the old quote that people assign to Peter Drucker: Culture eats strategy for breakfast. I think that this separation between a strategic idea and implementation is not necessarily a smart one. Suppose you involve people from the front line people in the factory floor people from the sales side to develop the strategy. It will never be a problem because there is an automatic link between the idea and the mobilisation. People will see themselves reflected in, and they will understand how as well. The opening up of the strategy takes care of this potential clash between culture and strategy. You can avoid it if you set up the whole process in a way that it’s unified.
Luca
Great Christian. Recently, I have seen many, not academic articles that talk about the relevance of intangibles to be evaluated. So, what do you think about intangibles in strategy development and valuation?
Christian:
As a strategist, when I talk about resources, it automatically includes all the intangibles. If I talk about strategic resources, and often they are the most important ones. Just think about you go for a pitch as a start-up, what will they care about? Possibly the most are what leadership team is. Yeah, who are the guys who tried to pull this off? If it’s a plausible team, then the investors are much more likely to invest.
Luca
Christian, we have completed the interview. Thank you for your time.
Christian:
Okay, thank you very much, it has been a pleasure.
