The 3 Levels Of Venture Development

Now that Elizabeth Holmes’ trial is over, it would be helpful to understand why the “fake” Silicon Valley method didn’t work in this case.

One reason seems to be that Holmes misunderstood the phrase.

There are 3 main levels of Rhino project development:

· Level 1 – Basic Science Development. This level is the development of new knowledge and requires scientific skills and education. The main problem at this level is that science does not bend to your will (even in Silicon Valley). This is a big reason why scientists and labs from around the world spend billions developing new knowledge, and why some governments fall short of the process by stealing the efforts of others. In my study of 122 unicorn entrepreneurs, 1% succeeded based on a scientific discovery — after the science was discovered.

· Level 2 – Product development based on advanced science. This is often called a “first mover” strategy where enterprising entrepreneurs and developers learn the science and develop the product at the forefront of technology. This level assumes that the first mover is the winner. Unfortunately for all the first movers, product developers, and Shark Tank fans, first movers have dominated their industries only 11% of the time. There may be a defect in the first engine.

· Level 3 – Project development based on imitation and improvement of a developed product. One of the biggest deceptions perpetrated on the project’s audience is the media’s constant playing of “First Engine”. The truth is that many unicorn entrepreneurs have succeeded because of their unicorn strategy and their unicorn skills – and they imitated the product and improved the strategy.

It’s surprising to many unicorn entrepreneurs that they excel at level 3, not at level 1, which is science development. This is the level that Holmes claimed to have achieved without a relevant educational and scientific background.

Most unicorn entrepreneurs imitate the product, improve strategy, and excel at execution. Examples include:

Jobs, who imitated and improved the iPod, iPhone, and iPad

Zuckerberg who imitated and improved the development of Facebook

Page and Brin, who imitated and improved Internet search to develop Google

Gates, who acquired and improved the computer operating system to develop Microsoft

Chesky, who imitated and improved home rents to develop Airbnb

Walton, who imitated and developed supermarkets to develop Wal-Mart.

So why is the “fake it up” strategy still thriving in Silicon Valley? Because of the gap from idea to aha.

Aha when the potential of the project is visible based on demonstrable results and “skilled” investors, i.e. VCs (VCs), enter. Since the demand for venture capital has always been higher than the supply, the venture capital can bear to wait for Aha, i.e. proof of potential.

To bridge the gap from idea to product to Aha, you may need to attract customers, employees, and resources. It is difficult to attract these resources if they appear to be a loser. So, even if you’re internally depressed about your chances of success, don’t show it because your project will likely come to an end.

So “fake” it to make it. Except, of course, if your product science hasn’t been developed.

Here’s where counterfeiting might work:

If the science is developed, and you have the technical skills to develop a product, it may succeed

If your product is developed, works successfully, and you develop a minimum viable product

If your product is developed, working, and you have customers, but don’t know if you’ve found the right slide and may need to prove, center and focus on it, it may work.

But do not “fake” it so that you can achieve it if the basic sciences are not developed. It seems surprising that many seasoned investors have been duped. why?

My opinion: It looks as if Holmes got swept up in it and didn’t really understand that you weren’t “faking it” before science was developed and you might be gambling with human life.

Harvard Business ReviewDisadvantages of the first engine

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