276 Case Studies
At the first signs of failure, Ovation had two viable options:
· Cease operations and return any remaining funds to the investors because the technology was inadequate to support the product. (However, I am unable to cite a precedent for this course of action.)
· Reduce the company to a minimal marketing effort until a product could be built, which might have enabled Ovation to achieve an improved balance between its technology (i.e., its ability to produce a product), its product definition, and its future funding scenario.
Thus, Ovation is simply another case of Ken Olsen's wallpaper remover (described in Chapter 5)-all concept and no product, which is too often a fatal flaw in start-ups.
ANALYTICA: FAILING WITH A GOOD PRODUCT
Analytica was formed by Eric Michelman and Adam Bosworth to build a decision-support software product for the PC with an easy-to-use graphical interface. Adam and Eric had already worked together in 1982, when they explored a project-scheduling program with Andrew Lehman, who ultimately built the program as Time Line. Since Eric had been interested in decision support from his student days at MIT, he and Adam (who had designed eighteen successful banking applications) decided to develop such a product.
CONCEPT AND SEED STAGES
In March 1983, the company was funded with $1.3 million based on a plan for a revenue growth of $60,000, $4 million, $15 million, and $34 million and an Apple II product demonstration that Adam had built. The business plan was based on the wildly successful Lotus model: take nine months to build and introduce a product; spend lots on marketing and sales; and charge a high price. Although everyone knew what spreadsheets were, no one knew what a decision-support program was, why one was needed, or how to build one. The product, ultimately called Reflex, was initially nicknamed "What If and Why."
Founding consisted of merging with a stalled company, Taurus, which was selling a user-friendly interface shell for CP/M and DOS. At its inception, the plan of the combined company (eventually named Analytica) was to milk the existing Taurus product and develop Reflex.
Taurus had a staff of about twenty, and its president became the CEO of the new firm. The merged board consisted of four venture capitalists and the president; the founders attended the board meetings. Some of the board members had operational