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    Traction Gap Reference Sheet

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    Dan Yos

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    © All Rights Reserved
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    Traction Gap Reference Sheet

    Uploaded by

    Dan Yos
    23 views2 pages

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    Traction-Gap-Reference-Sheet

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    23 views2 pages

    Traction Gap Reference Sheet

    Uploaded by

    Dan Yos

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    TR AVE RS I NG TH E TR AC T I O N GAP ® RE FE RE N CE SH E E T

    MVC IPR MVP MVR MVT


    Minimum Viable Category Initial Product Release Minimum Viable Product Minimum Viable Repeatability Minimum Viable Traction
    Defining a new or redefining First publicly developed Product has achieved Solution-grade product, MVR + multiple quarters
    an existing category product iteration minimal customer business model & repeatable of growth
    validation metrics sales/marketing

    METRICS & RATIOS (FOR EACH VALUE INFLECTION POINT)


    IDEA PRODUCT TRACTION SCALE

    IDEATION MVC IPR MVP MVR MVT


    THE
    TRACTION GAP REVENUE (ARR) $0 $0 $0 $0 $2M $6M
    GO-TO-PRODUCT > GO-TO-MARKET > GO-TO-SCALE >
    MAX MONTHLY
    NET CASH BURN
    $100K $100K $100K $250K $500K $750K
    MVC IPR MVP MVR MVT

    % R&D SPEND 80% 80% 80% 80% 70% 50%


    STARTUP CAPITAL NEEDS (FOR EACH VALUE INFLECTION POINT)
    % SALES &
    MARKETING SPEND
    0% 0% 0% 0% 10% 35%
    IDEATION MVC IPR MVP MVR MVT
    % SALES/
    MARKETING SPLIT
    0% 0% 0% 0% 70/30% 70/30%

    CAPITAL $
    RAISED
    $1M $1M $1M $5M $11M $20M
    % G&A SPEND 20% 20% 20% 20% 20% 15%

    PRE-MONEY CAC RATIO


    $5.3M $5.3M $5.3M $14.2M $40M $77M (MEDIAN)
    0 0 0 0 2 1.2
    VALUATION

    % GROSS MARGIN
    VALUATION (LICENSE)
    0% 0% 0% 0% 78% 78%
    STEPUP FROM N/A N/A N/A 3x 8x 15x
    IDEATION
    % CHURN RATE
    (MEDIAN)
    0% 0% 0% 0% 10% 10%
    DILUTION
    FROM PRIOR 16% 16% 16% 26% 22% 21%
    ROUND HEADCOUNT 4-6 4-6 4-6 10-12 15-25 35-50

    Source: Wildcat & Mattermark 2014 Startup Traction Report


    TR AVE RS I NG TH E TR AC T I O N GAP ® RE FE RE N CE SH E E T

    TRACTION GAP PRINCIPLES

    PRODUCT REVENUE TEAM SYSTEMS


    Focus on product-engineering tasks: Focus on market-engineering tasks:
    Implement basic systems for
    Perform statistically valid market Build draft business model and initial
    Invest solely in people who can engineering, collaboration,
    IDEATION research and prioritize initial product value propositions—estimate customer
    specify and build the product. and back-office functions.
    features based upon that market acquisition costs and marketing/sales
    research. funnel conversion rates.

    Define or redefine the category you


    Capture statistically valid market Do not hire anyone who cannot
    intend to build/compete in; lock in Establish your startup’s initial
    MVC feedback to produce a verified product
    your initial value propositions, pricing
    accelerate initial product
    governance and core values.
    and feature list. release.
    models, and positioning.

    Don’t build everything. Obsess about


    Hire only the best people,
    the things that users really rely on and Focus on a subset of a market, then Keep your systems incredibly
    IPR actually use. Develop a market-first expand outward from there.
    preferably those you’ve worked
    lightweight at this stage.
    with previously.
    mindset and process.

    Measure your customer engagement Select revenue metrics carefully and Keep your burn low—too
    Hire slow, fire fast—quickly
    MVP and usage rates, not just the number maintain a disciplined focus around
    remove toxic team members.
    much funding can cause bad
    of customers. them. behavior.

    Not everyone is good at every


    Measure your product’s success and Spend more time on finance
    Leverage reference selling to fuel a stage of the company. Remove
    MVR communicate those metrics with
    repeatable sales engine. anyone who isn’t consistently
    than you think you should;
    customers to influence retention. make sure the math works.
    producing.

    Refine pricing models, customer


    Prioritize removing technical debt over Deliberately construct a high- Implement advanced front
    MVT new features.
    acquisition strategies, hire sales
    quality board—and advisers. and back office systems.
    resources slightly ahead of demand.

    AVOI D THE MIS S T E P S T H AT


    C AUS E STA R T U P S T O FA IL
    Purchase your copy of Traversing the Traction Gap
    © 2019 Wildcat Venture Partners. All Rights Reserved.

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