FTTM is More than Being on Time

We work with two types of technology companies in Silicon Valley; 1) established companies with a portfolio of new products being released from an ongoing development pipeline, and 2) with new venture start-ups where the single project is in fact the company. Both need FTTM (fast-time-to-market) thinking in order to hit the optimal market window, yet both have very different drivers.

Established company cost of delay model drivers - fast revenue

This is the FTTM Model we use with clients that have a portfolio of products in development (above). The driver is to accelerate “Time-To-Break-Even.” The fastest teams we’ve worked with measure success by quantifying the complete life-cycle of development from team formation to break-even.

Slower, more siloed companies, hand off development such that the core engineering team rarely see when, or if a product actually achieved its expected return on investment or even broke-even in the market. Having this connection to financial performance is a key element of accelerating innovation cycle time.

One integrated team must own the steps from team formation through to break-even. Next, these fast teams quantify the cost of delay in terms of lost revenue, margin, share, and development expense if they are late (i.e. cost of delay each day they are late). They know that entering early affords the maximum ASP (average selling price) potential. This is true of advanced technology segments where the profit is in being first to market. Just look at Apple and Samsung as competing examples of the value of being first and establishing share.

Start-up cost of delay model drivers - fast valuation

The problem seems similar, yet there are major differences with our start-up clients and their venture fund investment partners (above). The FTTM challenge in this case is driven by the need to accelerate “Time to Cash-Positive.” In other words, to minimize the cash burn and get something into customers hands, and to get them sending you money for it! The more cash that is needed, then the more dilution of equity the early investors have to accept.

The win when you hit the optimal market window is one of increased business valuation. Valuation is the key to a successful start-up. The higher the valuation, the greater the ROI for the investment syndicate.

Further, start-ups must focus on revenue generation. Start-ups that are not generating revenue have a far lower market valuation. Generating revenue means getting the new product into the hands of customers as fast as possible. Often, start-ups miss the basic economics of the new venture business and become enamored in the technology they are advancing and lose sight of the point of the game — to maximize valuation.

This is not a totally money-centric idea in that customers will only pay for what they value (i.e., “great products”), and this is why revenue generation is such an important metric of new venture success. Unsold new ideas are just new ideas, which Silicon Valley is full of already.

Cost of delay is also important for start-ups; yet the components of this model are valuation and burn rate.
The common element and critical success factor in both models is “hitting the optimal market window.”