Thmpson’s seven essentials


 David Thompson has recently published a book on what is required in order to grow a $1B company in five years. Most European ICT companies set their targets a bit lower. I would submit that the Seven Essentials also apply for European ICT companies that are looking to reach the coveted $100M mark.

The Seven Essentials

1) Find or create a great value proposition

I would clarify that this not only covers technological innovation, but also positioning and value articulation. It is the positioning and value articulation that many management groups and boards already find difficult.

2) Find a quickly growing market. Rapidly growing markets (100%+ per year) tend to be much more forgiving of mistakes than slower growing ones.

Most Europeans do not need a 100%+ per annum growth market in order to “explode”. When you start from practically nothing virtually any global market approached successfully will offer explosive growth potential that will exceed a small VC’s wildest dreams.

3) Get some marquee customers. Having big customers help you figure out your business model is a smart move.

Direct sales always come before a channel approach! You need to prove to the market that the value prop sells and that you are able to deliver… and still make some money on the side. If you need to give the software virtually for free to get your local third party validation then do it!

If you fall of your horse on your to becoming big, you might have to remind the market that the value prop is still strong the product sells.

4) Leverage a "Big Brother" Partner.

Leverage being the operative word. Do not expect your Big Brother to sell for you. You still need to do that yourself. Ride their coat tails into meetings and bask in their brand equity.

Do not think that you are in any way strategic to your big brother. If you were they would already have bought you out.

5) Be capital efficient. It’s a myth that you need to spend lots and lots of money to build a Billion dollar business. Most companies are self-funding after a certain point (typically around $25M in annual revenues per the author), and they have high margins early on that are sustainable, and they don’t consume that much cash to get there.

In order to reach the $25 M self sufficiency marker investments are needed. Most European ICT companies fall on operating income when they exceed $2M in annual revenue. Seldom windows of opportunity are long enough to accommodate a growth strategy with so little early nurturing.

6) Get paired management teams. You need both an external CEO that focuses on the vision, product, marketing, and sales and an internal CEO/COO that focuses on delivering on that vision profitably.

The evangelist visionary and the executioner…

Too often companies only have the other. Evangelical vision without planned execution is doomed to fail miserably with fireworks and a fanfare. Execution without a youthful sense of adventure is doomed to struggle small, without ever exploding to the next level.

7) Have at least one board member on your board, outside of your investor or management team that has grown a company to a billion.

Professional board members expect to get paid a professional’s rate. It’s time to conjure up options programs to incentivise professionals. Companies (i.e. their owners) should strive to gain industry leading wisdom on their boards. If all your board members are of the same nationality, then ask yourself if all the wisest captains of industry in your domain truly come from a single country… especially if it’s a country of 5.5M people.

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