"Pick the one thing that is of burning importance to the customer then delight them with a compelling solution."
"Customers will only buy a simple product with a singular value proposition."
What about iPhone, probably the most profitable product of the last 5 years? Is it really that focused?
I don't think that many people in 2006 would have said: my phone is not enough like a computer. I would have said that cell phone call quality and battery life sucks, so give me something that will hold charge for a week, has the quality of a land line, is ultra light, small, can be dropped, etc. That would have been focused.
Steve Jobs said it was 3 products I think... it's a phone, an ipod, and a computer in your pocket. It's this thing where you can play music, surf the web, call your friends, text them, take notes, download apps, and the interface is better than predecessors because you can use your finger.
Not to say their advice is wrong... it's just that thing kind of advice is applicable in limited ways. It sounds like conventional wisdom, and isn't one of their points to challenge conventional wisdom? :)
Apple's first product - the Apple I - was an assembled circuit board. Basically a motherboard. Very targeted audience, very narrow scope of value for the first release. They layered on functionality from there. The iPhone came almost 30 years later.
> give me something that will hold charge for a week, has the quality of a land line, is ultra light, small, can be dropped
I would pay dearly for such a phone. I don't need "apps" when I'm on the road; I need something small and durable that can survive anything (including being put in water).
I don't carry a purse and find it hard to make room for a smart phone, esp. newer ones which are only getting bigger and bigger.
I had hoped Nokia would make that phone, but they too seem to be only interested in the smart phone business. Too bad.
They were stretching to enter the "phone" category, and it turned out to be a huge bet that paid off incredibly well.
I think it's generally good advice, but if you have the wherewithal to execute a combination product to perfection, then you'll win. The point is that people who focus on any one aspect of your combination product usually will do better.
Think toaster/microwaves or scan/copy/fax machines.
No real surprise there.
This wasn't some "oh the business idea seemed good, but the team just couldn't get their act together", or, "turned out they attacked the market opportunity from the wrong angle and didn't pivot in time"...
No, this was:
"GEOLOCATION MOBILE SOCIAL INSTAGRAM PICTURES CONCERTS!"
Don't even try to worm out of this and pretend there was any reason to take Color seriously.
$40mm? My ass.
The right-hand side: Steve Blank aptly defines a startup as "an organization formed to search for a repeatable and scalable business model." So a business plan written by a startup is, by definition, all lies. They're a fine exercise as long as you're grounded by the fact that you'll end up with 20 slides of pure bullshit. (Read: Don't put real effort into writing business plans, build a company instead.)
For example, if you work out that your best theory for acquiring customers costs you $20, but their best-case total lifetime value is $15, you have a business model that you can throw out.
What proves a business works is traction and revenue. Walking into Sequoia with "I've thought really hard about my startup and I'm pretty sure it'll work," is far less compelling than "my business is currently working and I need your money to scale it."
A great example is Instagram: I wouldn't have bet on that product because it seemed destined to make no money, but since so many people liked it they somehow found an exit.
I wouldn't bet on anyone who couldn't answer those questions on the right. We are not talking some 100 page MBA bullshit, we are talking understanding what it is you are setting out to do. This is very, very basic stuff right here.
RICH CUSTOMERS Target customers who will move fast and pay a premium for a unique offering.
Sure, I too would love to invest only on huge markets composed only by the world's 1%.
So why does it require large vc firms?
Then it won't go to the page. I know I'm one of the few stuck with a browser version at work I have no control over, but come on.
Btw, Sequoia has one of the best "about us" page (http://www.sequoiacap.com/about). It's focused on their customers (showing entrepreneur's pictures in early days and how they serve entrepreneurs) rather than glorifying their ninja investing skills.
We could not find the page you requested.
Most of the ideas advice is obvious-but-good-to-be-reminded-of, apart from "Rich Customers". That is one legitimate approach (and fair enough if that's what Sequoia wants) - but it's not appropriate for all startups.
Another approach is to target (1) a niche market (2) with no money (3) to do something that doesn't matter. pg argues that's how Facebook, Microsoft and Apple began http://paulgraham.com/swan.html
It seems likely that most revolutionary startups began this way (especially when the customer doesn't feel pain); whereas incremental startups address rich people's problems.