Tech Firms Need a Backup Plan

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Imagine you’re a tech startup with a great new Web service or product idea. You get enough funding to build out the staff and start developing the product in earnest. A year later, you realize the market’s changed; another company already offers 90 percent of the functionality of your SuperWebWonderWidget along with a bunch of features you don’t have.

It’s time to go to Plan B, but guess what? B doesn’t need to mean ‘Beaten’, rather it can be Beautiful. That’s according to Randy Komisar, co-author with John Mullins of the new book “Getting to Plan B: Breaking Through to a Better Business Model.”

Komisar spoke earlier this week at a Churchill Club event “in conversation” with New York Times reporter John Markoff. As a venture capitalist, virtual CEO and executive of a number of Silicon Valley tech companies (WebTV, TiVo, GlobalGiving, senior counsel at Apple), Komisar has seen his share of firms that had to change business plans quickly.

(Photo by David Needle)

For example, he recalls when he was a director at Tivo in the company’s early days when its focus was on home networking and licensing its technology to companies like Sony and Philips. “That was in the late 1990s when they hadn’t figured out entertainment was the opportunity,” he recalls.

A more recent example that Komisar is involved in is Cooliris, a Web service that’s been out a few years, but hasn’t found its footing despite changes to its original model. Cool Iris is designed to bring a more visual navigation to the Web, its latest iteration is a nifty “3D Wall” for speedier image searching of Google, YouTube, Flicker and other services.

Komisar says it brings an “Apple-like elegance” to surfing the Web. “My guess is there will be a Plan C, ” said Komisar.

Most Plan A’s fail

But he says it’s all part of a process. “Most plan A’s fail, you have to start with that premise. The problem many company’s have he says is “Plan A” thinking or sticking to the original goals and business plan regardless of changes in the marketplace, inventory backups and other signs that the plan isn’t working.

He admits moving to Plan B takes a well-reasoned “leap of faith” but it’s one companies have to risk to move forward.

Working with coauthor Mullins, their book explains how to develop a dashboard process for justifying a new business plan like determining whether the backend of the business will actually scale.

“If it comes out wrong, you course correct,” says Komisar. He also explains he’s not suggesting a company rush into a new direction, specifically he says its important to preserve capital for further changes that may be needed.

Flexibility and tenacity

When looking for startups and companies to invest in Komisar says the people behind it are key.

“Flexibility and tenacity are some of the most important things I look for in an entrepreneur,” he said.

On this point, I was struck how some of Komisar’s comments echoed what Opus Capital partner Bob Borchers told me in a recent interview.

“The last thing we want is someone who says something like ‘This is a software-as-a-service company’,” said Borchers. “We look for great teams and ideas. Over the course of 5-to-7 years a successful venture will probably have changed quite a bit from the original idea.”

Iterate with discipline

Komisar spent a lot of time talking about the need for companies to iterate and develop new ideas so after the event I asked him what he thought of Google’s 20 percent program that lets engineers and designers work on projects that interest them.

He said Google seems to have too many projects and “experiments” and that some should be killed off.

“The 20 percent idea sounds good, but it needs discipline, more rigor and accountability,” he said.

Article courtesy of InternetNews.com.