Lee Hower
One of the greatest challenges for seed-stage entrepreneurs is honing the big picture vision of their company. In those early days, most of your energy is devoted to the very short-term but incredibly important tasks of assembling a founding team, shipping V1 of your product, doing early customer development, and so on.
But perhaps hardest of all is not just finding the time to craft your “secret” master plan — but also actually communicating it to your team or potential investors in an effective way.
Elon Musk famously did this back in 2006. It’s worth reading his entire “secret” master plan, but in short, it describes two things:
- The underlying mission of Tesla: mass market adoption of electric vehicles to mitigate climate change.
- How Tesla’s first product (expensive, limited production sports car) would be the first of several steps towards achieving its long-term vision.
Since then, Tesla has remarkably followed this master plan almost to a T — From Roadster → Model S → Model X → Model 3, plus the tie-in with SolarCity — even if they’ve underdelivered on the specific release dates, production volumes, profitability, etc. They also face significant risks in continuing to execute this very ambitious plan. But many believe that achieving Tesla’s underlying mission is almost inevitable. Whether or not Tesla is a dominant vehicle OEM 10–20 years from now, it seems clear that electricity will replace or displace (gas/electric hybrids) conventional fossil-fuels in passenger cars and trucks over this time frame.
So for every other entrepreneur who isn’t Elon Musk, how should you articulate your long-run vision when you’re at the seed stage?
Defining and sharing these kinds of plans is extremely important both in charting your own course as a founder as well as attracting co-founders, employees, and early investors to your cause. But it’s obviously a balancing act between an ambitious set of goals and a credible plan you can execute. Here are a few pieces of advice to keep in mind.
1) Grounding Your Master Plan in Logic
This seems obvious, but it’s remarkable how often the 2nd or 3rd phase of a startup’s master plan really doesn’t dovetail logically with their initial starting point. “Our initial B2B IoT customer beachhead will enable us to develop a large consumer advertising business…” or similar. Regardless of whether someone else likes the master plan or believes it can be achieved, it has to be a logical progression of product/market/customer expansion.
When the NextView team meets entrepreneurs who describe their starting point as X and their end point as a business as very far afield of X, we refer to it as a “bank shot” venture. Can it succeed? Maybe, but it’s usually an extremely low probability outcome even when benchmarked against overall startup success/failure rates.
It’s possible to be “too practical” with the plan, especially at the earliest stages of a company’s development. Much will change as a startup progresses, but a well-thought-out, logical plan usually has some flexibility that accommodates the evolution of the company.
2) Using Analogies to Bridge Credibility Gaps
A particular investor may or may not believe your team can execute the master plan. But a way to bridge that gap can be analogous examples.
Take emerging technologies like VR. The installed base of VR headsets remains quite modest and usage outside of gaming is negligible. So a startup that is creating content or applications for VR has to find investors who believe VR will become widespread and convince them that they have a viable business until that happens.
A useful analogy for a VR company might be Netflix, which had aspirations of online digital distribution early in it’s life but began and existed as a DVD-by-mail business for a number of years before broadband adoption and faster speeds made video-on-demand viable.
3) Deciding to Keep Your Plan Top Secret (Or Not)
Elon obviously chose to make Tesla’s original plan public from the get-go, which makes sense for the audacious, big thinkers among us. Most entrepreneurs don’t want to or need to do that though. They typically keep the master plan at least somewhat private for discussions internally with their teams or with investors or other “insiders.” Sharing the master plan with this set helps rally early stakeholders to the cause. But by not posting for all to see, it can help a startup from tipping their hand to competitors or partners.
The occasions when being very public about the master plan can be helpful are typically when signaling long run ambitions causes other constituents (suppliers, partners, regulators, etc.) to engage with a startup earlier in its life than they otherwise would.
To go back to the Telsa example, comparatively early in Tesla’s life they convinced Toyota to sell them a massive advanced auto manufacturing plant in Fremont, CA at a fraction of its original cost. This was early 2010 when Tesla was still a private company and long before it unveiled the mass market Model 3 in 2016. Toyota was phasing out production at the NUMMI plant anyway, but the fact that Tesla had long made clear their plans to build a mass production car undoubtedly helped convince Toyota to consider Tesla’s offer.
4) Balancing First Steps vs. Long Term Vision
Another challenge is striking the balance of executing and focusing on the first steps in the master plan without losing sight of the long run goals. The best founders I’ve seen do this with a combination of great storytelling and ruthless focus.
We’re proud investors in Grove Collaborative, an exciting company in the online CPG space. We co-led Grove’s institutional seed round in early 2015 and at that point the business was called ePantry and had a very modest amount of revenue as an e-tailer of other companies’ household CPG products (primarily in the cleaning category). From the outside looking in, it was easy to dismiss the startup’s ambitions — it was surrounded on all sides by e-commerce giants (Amazon), offline retailers (Target, Walmart), and CPG brands themselves (Unilever, P&G, Clorox, SC Johnson, et al).
But in talking to Grove’s founder/CEO Stuart Landesberg in private, it was clear his master plan included not only creating delightful products under their own brand, but also category expansion to other areas of household CPG. Plus, it all would be delivered as part of a curated, repeat buying model that consumers loved. Stu talked about his inspiration for the company as part of this master plan, and a desire to reinvent simple CPG products like plastic cups or paper towels for the online commerce age.
Fast-forward to 2018, and not only has the business grown tremendously, but much of that master plan is also coming to fruition. Stu and his team kept a relentless focus internally on the short-term steps of building and expanding the business, but throughout, he also continued to evangelize the master plan in private with key stakeholders.
5) Finding True Believers vs. Convincing Skeptics
As I’m fond of saying, selling a company vision at an early stage is fundamentally about finding people (investors, co-founders, early employees, etc) who are true believers.
Most people will be skeptical of a company’s secret master plan — either on the founder’s prediction on how a market will evolve or the team’s execution of the master plan.
Articulating and selling your long run vision is important, but trying to convince those that are deeply skeptical about it is simply a mutual waste of time.
What’s your secret master plan? It takes time, but it’s well worth translating the vision in your head to a plan that will enable you to rally others to your cause.