When the founders quit their job, they leave the heady Ideation stage armed with their Demo and enter the Valley of Death. Or is it? Earlier this week I had the pleasure of interviewing John Paul DeJoria for the Bootstrap Bootcamp DVD. JP spoke to Bootstrap Austin in November, 2005. He cofounded Paul Mitchell, Patron Spirits and is involved in numerous other startup ventures including John Paul Pet and DeJoria Diamonds. While agreeing with the Bootstrap stages, actions and principles, he made one modification, renaming the "Valley of Death" the "Valley of Opportunity."
And indeed, that's exactly what it is, particularly for the Evangelist cofounder. The VOO is where the potentiality of Ideation comes to fruition through customers. The precariousness and possibility of "death" propels the bootstrapper toward the absolute necessity of discovering their customer. And as I wrote earlier, constraint creates innovation. This crucible is vital for the business to emerge and also why investor capital is the enemy of the venture at this stage. John Paul recounted how the planned $500K investment for Paul Mitchell fell through; the founders continued with a $700 combined investment. The scarcity of capital caused a number of innovations such as the use of a black/white color scheme for the bottles and outsourcing production. They were also able to get get distributors on board by first securing orders from salons before approaching them.
The pitch is the all-important tool of the Valley of Opportunity needed to make the sale. It articulates the value proposition in terms of the customer's needs. The pitch is perpetually presented, amended and reformulated before the right one emerges. Pitches are presented to various customers before the right ones emerge. It's a trial-and-error process with ongoing feedback, both from the customer and the Maven. Eventually, the finely-tuned pitch takes the venture out of the Valley of Opportunity into Growth. Meanwhile, the product evolves from a demo to a customer-driven version 1.0.