The Fabric multi-phase model of co-creating companies with entrepreneurs consists of five phases. In the last blog, we talked about phase 1 “Idea Validation”, how we ideate, the importance of a solid entrepreneurial team, having a great advisory board and the creation of the marketing requirements document (MRD). After a year of the idea validation, we shall address the next 2 phases: “Hardening the Idea, Business Model”, and “Technology Innovation”. I also discuss the attributes of the companies and teams which get them successfully to the next set of milestones.
MULTI-PHASE PROCESS OF CO-CREATING COMPANIES:
PHASE 2 – IDEA AND BUSINESS MODEL HARDENING
Once an MRD has been created, then the next step is to sign up a set of lighthouse customers and creation of a detailed product requirements document (PRD). It is also essential to create some click-through demo to illustrate the product concepts to customers so they can start to give more substantial feedback. Along the way, the company would need a reasonable amount of capital to deliver on the milestones of a PRD, click through demo and lighthouse customers.
It is also at this stage that we leverage the expertise of the deep bench of advisors that we have put together. Advisors such as Pankaj Patel, Former EVP at Cisco, Klaus Ostermann, Former SVP & GM at Citrix, Gary Gauba, former President at CenturyLink, and MR Rangaswami bring their years of experience to bear when they give their input on what we have come up with.
Very early, within the Phase 1/Phase 2 stages, the team has to come together to begin the execution phase. At the same time, the founding team has to identify lighthouse customers and raise the preliminary seed round. Typically, this seed round would be from friends and family. This effort takes a tremendous amount of time and takes away from focusing on the execution of a reasonable concept. Time and energy are dissipated on the fundraising effort allowing time for alternate solutions to come into play.
The Fabric was designed precisely to address this issue and provide the early funds to get the company going.
PHASE 3 – TECHNOLOGY INNOVATION AND LIGHTHOUSE CUSTOMERS
We now enter what I call the tweener stages. To attract additional capital, you need to prove the technology works, and you have some early customer successes. At the same time, you need capital precisely to achieve these milestones. This is where The Fabric steps up to provide the necessary critical support and financing for the entrepreneur. We provide up to $3M to achieve the necessary deliverables against the milestones which have outlined in the plan.
At this stage, the company has to figure out a way to get a minimal but useful product in the hands of the lighthouse customers identified in the earlier stages. This is another aspect of The Fabric model. With our innovation labs in Chennai and our hands-on guidance on both strategy and tactics, we work with the rest of the founding team to bring out the right minimal product. The Chennai team helps create demos, rapidly proto-type, attract talent, and create test environments to validate the product quickly.
Much of the software world has adopted the agile philosophy and a CI/CD approach. The Fabric portfolio companies take the same approach in the infrastructure space. It is important to have a version of the product into the hands of the customer rapidly so that the usability issues, feature sets, use scenarios, etc.. can be understood quickly from a real-world perspective. In addition, the product has to be easy to deploy and use by the customer, even in the very first version. There has been consumerization of how infrastructure is deployed and used.
The Fabric strongly believes that infrastructure software should be consumed as SaaS.
Elements of these are zero-touch provisioning, good visualization tools, and metrics which enable the ops people to provision and deploy.
In my next article, I’ll share more about the next phase of The Fabric co-creation approach of building companies with entrepreneurs – how to achieve critical mass.