TSS Core event 4: Competitive Strategy - Monday 8th November

1. Competitive Strategy
Ray McConnell

2. Startup: Is it like this? No

3. Startup: More like this!

4. Who I am
 Founder of Four Start-ups, Focused on Semicon
 2 IPOs (LSE, AIM), 3 Plcs (high net worth network)
 Managed strategic patent portfolios
 Blu Wireless Technology
 Just filed 15 patents (Thanks ElementOne IP)
 Market is potentially huge: Now part of WiFi 1B parts/year
 Larger Strategic Technology Theme
 Built up a community of expertise over the years
 Embedded high volume applications are opening up
 The Silicon Cluster is the bigger picture

5. Competitive Strategy; What is it?
 Optimising and mitigating risk
 Risks are hard to quantify even if they are known
 Protecting yourself is mandatory
 No clear single method
 It's always different , you will know best
 Seek the experience of repeatability
 Avoid “Black Swan” advice
 Be familiar with the basics
 There is a lot of analysis, it might not feel relevant
 Take your time to understand it

6. Startup Focus: Duel Strategy
 Put some thought to understanding potential Exits
 For investment direction
 Useful to figure this and work the plan backwards
 An acquisition maybe your biggest customer
 Understand any potential conflict with your market strategy
 Your market
 Core competence
 Does your team have enough technology knowledge and skills?
 Product
 Does your team have enough market knowledge and skills?
 Engage early, it may feel like its slowing your development
 Much easier to sell a relevant product

7. Competitive Advantage; Michael Porter
 Cost Leadership
 Differentiation
 Focus
 Fairly obvious, mainly for established business

8. Disruptive Technology; Clayton Christensen
 Don’t try selling features alone
 Sell low cost + value add

9. The Hype Cycle; Gartner Research
 Actually many curves
 Investment expectation, you must time this right!
 Market uptake, plan your spend appropriately!

10. Crossing the Chasm; Geoffrey Moore

11. Crossing the Chasm
 Focus value proposition on single market sector
 Show the real £$ value in your customers terms
 Reduce market USP and communication to “two sentences”
 Establish your beach head
 Don’t be fooled by early market success
 Wider non focused activity can overwhelm and confuse
 Bowling pin analogy
 Hit the pin that propagates best
 Be crystal clear on sales channel
 Don’t get caught up in your own hype
 Keep a clear head

12.  Careful! Your investors might abandon you
 Try to get ‘Smart Money’
Hype with Chasm

13. Milestones
Team/IP
Value
Promise
Value
Valley of
Death
Financial
Value
Initial
Funding
Build Team &
Product Dev.
Samples
(Launch)
Production
Shipping Revenue
Ramp
RevenueValuation
Semicon Valuation Lifecycle

14. Partnering
 Can lower R&D Cash spend
 Can help you get funding
 Help you get to market
 Help define product
 Provide validation
 Intro to customers
“the thing that typically kills you is not technology, or
there wasn’t that gap in the market, it’s simply the
fact that you could not achieve enough scale to service that gap in the market
and a larger vendor can come along and apply more resource to it…the scale
that is required just to service these market opportunities is too big and a lot
of times that’s why companies end up getting bought out”

15. Patents
Good
 Protecting the technology
 Validating originality
 Increase valuation
 Adds value to your exit
 Can be marketed
 Helps clarify USP
 Good for CV
 Even if not granted,
 Prevent others patenting it
Bad
 Takes a lot of time
 Granting even more time
 Costly
 Exposure
 None before priority date
 Then broadcast to everyone
 Too small to leverage
 Ever?

16. Patent story #1 (not recommended)
 Created large UK filing for priority date
 Many claims
 US filing, UK priority date
 Took 7 years for UK and US patent office not process it!
 Modified UK to single claim for grant
 US rules allowed claims re-vamp
 Targeted specific companies products with new claims
 With original priority date!
 Most/all patent attorneys in US have conflict in interest!
 Litigation costs were estimated to be many $M
 Patents sold recently (multiple £M, still cheap though!)

17. Patent story #2
 Created abstract for filing date in UK
 Added claims within 1 year
 US filing within that same year
 UK patent office feedback:
 Not valid as a Software or Business process
 Continued in US
 Expecting US grant

18. Startup Competitive Strategy
 You have to ‘see’ it early
 If you are tech savvy this will be instinctive
 Has to be a ‘big’ opportunity, need to see where it fits on the hype curve
 Bring a different technology into the established market
 The ‘joining’ will bring new value and patentable IP
 Know your market and create the USP
 Market downturns are your friend
 Incumbents R&D is first to go!
 Incumbents will be left out if not partnering or acquiring
 Build your case
 Seek specialists, build team, offer equity
 Seek partners, offer equity
 Patent key concepts
 Build route to market
 Find localised biz development expertise, offer equity
 Verify Market
 This will take time, build credible numbers
 Seek funding

19. Some Tips
 The start-up fear is addictive!
 Don’t pick a niche market:- or a market that is post hype.
 Write a good business plan
 Think about the investors’ perspective:-
 Smart money helps
 Take time to pick your team:-
 Don’t grow too Fast - a poor hire hiring is a disaster.
 Find partners, they are out there somewhere.
 Get early customer engagement:-
 But don’t launch an immature product
 The market always takes longer to develop:- Spend appropriately
 Protect intellectual property
 NDA, copyrights, trademarks and licenses.