Sometimes the dog really does eat it. And sometimes it's a big dog. Tom Perkins, in telling the Tandem Computer story says "when the first product performed as expected, the company went to $100MM very quickly."
We all have heard/repeated the investment mantra about "big, growing markets" with "unfair advantage IP" position. And I'd like to think that's a great place to start when thinking about ventures.
But it just doesn't happen that way as often as we'd like to think.
When we talk to entrepreneurs (or explain to others what we do) we often explain this in risk terms. Will the product work? How do we know how much the customer will buy and how long it will take? How big is the customer problem being solved? Are we displacing a major competitor or a lot of smaller players? How disruptive will this be, and therefore, how fast might adoption be?
It's not very often that all of these forces come together at the same time - as they did with Tandem Computer - and the company's growth explodes.
But that hoped-for explosion only the beginning. The company's ability to go to scale rapidly and (relatively) efficiently is going to be a very big part of any future success.
Growth generated by market demand and sales can be very complex.
Growth financing, for example. Investors would like to see lowest cost - but with certainty. That can mean a variety of venture debt-type structures - but servicing and cash flow will be really important. Working capital lags mean delivery lags.
Hiring the right folks with broad experience beyond what is immediately called for is a great idea - if you can find them and if they'll work well with the entrepreneurs.
We often forget that the first CEO at Apple was -- Mike Scott - not Steve Jobs. Mike Markulla came with the first investments - as a cofounder -- because investors felt the company needed leadership that could attract talent to be able to grow and he brought in Scott.
And manufacturing - most of the time means outsourcing. If the market demand ramps quickly enough there isn't enough time to consider much else. This again involves a complex series of skills and challenges.
And then the partners come calling. And that leads to all sorts of legal structuring issues. Making early long term promises to solve short term problems can often lead to real indigestion later on.
When an investor thinks about these issues, leadership is really the central inflection point.
An enthusiastic, capable, singleminded leader with an orientation to overcommunicate and build great teams dedicated to the growth process is perfect.