The Death Valley!

A business idea born in an individual's mind crosses several stages to become a successful product. Assume our guy conceives a business idea, he needs a round of initial investment called seed investments. In order not to liquidate his ownership over the company for want of funds, he goes to an Angel investor. After making a prototype of the dream product with seed investment as R&D product, he need to scale up to meet the stringent quality requirements/market requirements. Then Venture capitalists jumps in for his help. The main difference betweenVC's and AI's is VC's take part substantially in business development. VC's share calculated risks among their communities, you could have seen a consortium of VC's bail in start ups . Break. Assume our guy caught the market attention with a disruptive product. If product is compelling, the market expands like a nuclear fission reaction.

That's entry of Death Valley for the start ups. The death valley is a huge desert in California that finished off many pioneers who ventured towards west coast in horse clad wagons. The company moves from R&D paradigm to manufacturing paradigm. The company need to scale up to produce a prototype that can be manufactured in large scale. The ballpark numbers of the death valley in high techstart up business is around US $ 300-500 Million. For a successful chip company with market disruptive product, getting the initial 100's of million $ revenue is easy.

The company loses it sheen as R&D house in death valley. The typical problems associated with death valley are management issues like scaling up production, distribution of the manufactured goods, change the manufacturing process to increase the form factor, improve the efficiency of manufacturing and supply chain problems. The engineering community that had been attracted by the R&D nature of thestart up start leaving this mighty ship. The attrition increases. Most of the start ups merges or get acquired by big sharks in industry at the death valley.

The big sharks had seen this valley, had crosses this quagmire successfully. They will have sufficient management bandwidth set already to solve the issues associated with scaling and manufacturing. The big sharks need innovative products. Thestart ups with innovative products need management power of big sharks. That's the reason for big merger and acquisition going on in the industry.

This is one of my discussion topic with my mentor the other day. I am confident that setting up a start up is no more a-mere-dream. I am concentrating on learning to innovate with the knowledge that went inside bits and pieces. I am more interested in learning up the issues faced by the corporation while scaling up. After all this, establishing a successful business conglomerate is not under one individual's purview, it has to be a perfect team event. A perfect team is mix of people with right attitude with big visions and dreams.

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