Ability to learn from the past. My business development process is all about creating an environment where the sum of the parts are greater than the whole (with attribution to Aristotle). Our process of continuous incrementalized learning allows us to develop superior new Selling Propositions.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing Patrick J. Tighe, founder of Flagship New Product Group, which has a Best in Class track record in new business development.
Over the last 4+ decades Flagship has introduced 61 major new products, of which 54 (89%) have been successful (Fact Check — P&G’s success rate is about 50%).
These successes have generated well over $4Billion in new revenue.
The firm has participated in 5 startups as management and 4 were successful.https://content.thriveglobal.com/media/86b34e18a39b1bb61d5eb4f4f7d5b87d
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I entered Columbia’s School of Engineering because I wanted to build “things”. Little did I know at that time it was not buildings, but products. I found both the professors and the students at Columbia Engineering to be very boring, rigid and stifling. As a result, I transferred to Columbia School of General Studies and took up Marketing and PR.
While at General Studies, I got a job at Independent Media Services, the first independent Media Buying Service (my mother was a VP at a moderate sized advertising agency and had “connections”). Our clients were small creative boutique agencies (it was the 60s — the creative boutique agency period of Madison Avenue). A number of their clients were heavily involved in new products and these accounts fascinated me and I enjoyed the challenges of working on them.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
After Columbia, my first real job was as an Account Executive Trainee at the then very prestigious Madison Avenue advertising agency, Dancer Fitzgerald & Sample. My responsibilities included working as an information grunt on the New Business team and servicing the Corn Products/Best Foods account. At that time, Best Foods was heavily involved in new product development and launches….the hook was set.
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
There were actually two.
I was hired away by Ketchum in NYC. The reason I left DFS was because I was to work exclusively on new products for Johnson’s Baby Products and a small flour company, White Lily, that was turning itself around. Another reason for leaving was that I was to work with an account supervisor, Ben Britt, who had multiple P&G new product development experiences. In that 2 year period, Ketchum, as agency of record, launched Johnson’s No More Tangles Spray on Creme Rinse (notice the USP in the brand name), repositioned White Lily to be the number one flour in their sales region (South East) and launched 3 new pre-prepared muffin mixes.
However, the most seminal impact came when I was hired away by JBP to work on new products. I formed a kinship with the Director of Market & Consumer Research, Tom Gorman. We realized that neither Baby Products, nor Health Care, nor Personal products had a new product process. We adopted the four step Scientific Method, culminating in a new emerging research methodology at that time called Simulated Test Marketing. It is still used today by Major CPG companies, and it is the principal reason for Flagship’s success rate to date…..we don’t leave home without it!
What do you think makes your company stand out? Can you share a story?
The primary reason is that most of the group has worked for 2 or 3 decades together. We all have actual in company/in market new product development and commercialization experiences. We are not a bunch of consultants, who for the most part have no in-company operating experiences. We all have been on the front lines.
How have you used your success to bring goodness to the world?
For the15 years that I have lived in Denver, I have supported a charity, The Optimist Club: The Optimist Club is a WW organization, dedicated to giving disenfranchised children a better life.
I supported the club on both a monetary and a voluntary time basis, as I was a member of the Board of Directors of the Littleton Colorado chapter.
You are a successful business leader. Which four character traits do you think were most instrumental to your success? Can you please share a story or example for each?
Using Inc. Magazine’s Top 10 CEO traits as trot, and being a new product mavin and entrepreneur, and looking at it from that point of view exclusively, the bolded ones are my choices for the top 4
- Ability to learn from the past
Strong communication skills
2. Realistic optimism
3. Willingness to take calculated risks
Reading people’s management styles
4. Thinking outside the box
(what are your 4 top choices?)
5. Ability to learn from the past
My business development process is all about creating an environment where the sum of the parts are greater than the whole (with attribution to Aristotle). Our process of continuous incrementalized learning allows us to develop superior new Selling Propositions.
6 . Realistic optimism
If you don’t have this trait you can’t play in the new products game. For example, at Dole Foods in the 80s, I came up with the idea of fresh, prepared cut vegetables and salad makings. Women were joining the workforce and they needed convenient food items. There were loud cries from R&D of the difficulties of doing such, but we did and we created a unicorn for Dole. Maybe it was the fact that R&D reported to me, a marketing guy:)
In closing, and not looking at this from an entrepreneurs or startup perspective, but from my corporate experiences, I would choose the following top three corporate traits, while subtracting some of the attributes of the entrepreneurs. I would keep Ability to learn from the past. One cannot continue to make past mistakes, period. My second would be: Building relationships. Corporate is all about teamsmanship, and may I remind everyone, there is no “I” in team. The third would be a tie between Strong communication skills and Listening.
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed
Yes. The advice was to not to do this, i.e., not get into New Product Development and Commercialization. A mentor suggested I go see Jack Cantwell, a trusted advisor in the industry who could help direct my ambitions. His first response to my inquiry was, “What makes you think you can succeed? The failure rate for new products is well over 50%.” My response? “There has to be a better way.”
The moral of the story is, there is always a better way. That’s what makes entrepreneurship possible. See below for how this lesson turned out.
Can you tell us a story about the hard times that you faced when you first started your journey?
As I mentioned, when I started out in the new products game, a number of people, including my mother (25 years in advertising) and an ad agency owner and mentor, said I must be a masochist. They said there was nothing but failure down that career path. My blythe 20 year old reply was there’s gotta be a better way.
Well we followed that rut that became a path, that became a street and finally a highway to a stunning success on a playing field that knew nothing but failure.
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
First, personally things were never “so hard”. I had early success in the ad agency business; was hired away by a prestigious client and had success where there had been no successful new products in two decades for both Brown & Williams and Dole Foods.
As to strategies and tactics, I think the prime reasons for overcoming these daunting challenges in new business development was a series of mentors at each point in my early career. First there was Dick Gershon at Independent Media Services; we both went to Columbia. Then there was Ira Weinblatt, Media Director at DFS; we both liked the field of media analytics. Then there was Ben Britt, my Account Supervisor at Ketcham; we both liked the hooch. Then at JBP, there was Tom Gorman, Director of Market and Consumer Research. Plus, my Group Product Manager Bill Bortree and Jack Cantwell.
At Brown and Williams it was an outside factor. One of our agencies was chaired by Rosser Reeves, an icon in the agency business. His book Realities in Advertising is still a must read. He taught me about the problem/solution approach to positioning: “which hand has the M&Ms”…. Still use it today. The fact that Rosser was a member of the NYAC and loved to play pool, as I did, also helped.
The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?
As said earlier for the most part of my career I have enjoyed success, sometimes more than other times. I have benefited from friends and mentors that have helped along the way. These deep friendships have been a form of comfort during the lows, someone to lean on, and a source of joy to celebrate with when things go well.
A few of things that I have learned along the way and that are are kinda my guidelines/philosophies are:
- Never lie or distort the truth, as I have seen those that did be destroyed.
- No idea is a bad idea because someone else will see it in a different light and add to it, and then someone else will add to that, and voila, you have a good idea.
- Don’t put off what you can do today till tomorrow….get it done today.
- Our strategy of continuous learning, we call it incrementalization, proves out the theory of Aristotle that the sum of the parts is truly greater than the whole.
- When someone tells you NO on a project or an idea, don’t accept it. Because a no in this case is just a reason to go back to that person with a better rationalization of the idea.
- And most of all, don’t fraternize with co-workers. That will come back to haunt you….if you doubt this, just ask Bill Gates.
Let’s imagine that a young founder comes to you and asks for your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
During my career, Flagship has personally launched 5 startups, 4 of which were successful. 4 were bootstrapped and 1was funded by investment. We are currently in the midst of a 6th and because the problem is so huge it will require funding.
Did you know that in 2019 $215 Billion was spent by VCs supporting the launches of Startups?
Most likely you do know the common rule of thumb is 1in 10 will succeed.
But I bet you that you didn’t know that the success rate is much lower. According to Addressan Horowitz only 1–2% succeed.
There has to be a better way. And Flagship’s new Acquisition Express is a proven Paradigm Shift on how startups will GTM much more successfully.
Now as to bootstrapping vs funding, there are numerous articles detailing the pros and cons of these funding approaches. Suffice to say from my perspective, I would prefer funding because bootstrapping for the most is designed for smaller businesses and besides it takes longer. Whereas, with proper funding partners, the launch process is much faster and speed to market is a critical success factor for new products.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.
First, there are two categories of failure areas that must be overcome: those that come from within the startup, themselves and those that are outside the startup and that is how startups currently go to market.
WRT Inside the Startup
In November of 2019 a noted online database,CB INSIGHTS, wrote a seminal article on why startups fail. CB conducted a study base on 101 post mortems of failed startups This study defined the top 20 reasons why startups fail.. The top 4 reasons accounted for almost half, 47%, of all the failures and they were:
- No market need, or as I would say no real marketplace problem to solve
- Ran out cash
- Not the right team
- Got outcompeted
Now let’s look at these hurdles in more detail and how we solve them.
No real need/problem
Tackling problems that are interesting to solve rather than those that serve a market need was cited as the №1 reason for failure, noted in 42% of cases. Tackling problems that are interesting to solve rather than those that serve a market need was cited as the №1 reason for failure, noted in 42% of cases.
We did a study based on 50+ concept tests results decades ago. The objective of the study was to define which selling propositions attributes (feature/benefit statements) had the greatest impact on purchase interest. By far was the Problem Statement (remember Rosser Reeves penchant for the problem/solution approach) with 3 degrees of statistical difference over the next up selling proposition of Value, and 5 degrees above the third proposition of Believability.
Therefore, when we write a new product concept, the problem is stated up front because what occurs in the mind of the consumer/customer is a head nodding with them saying yes I have that problem (if you have got the problem right), and I need a solution. This construct has been confirmed by Physiological testing (Voice Pitch Analysis) and Neurological testing (BrainWave Scanning) methodologies.
Ran out of cash
Money and time are finite and need to be allocated judiciously. The question of how should you spend your money was a frequent conundrum and reason for failure cited by startups (29%). We have also found in this area that there is insufficient justification for additional funding (only 10% that have gotten Seed investments, go on to raise Angel money)
There are three key issues at play here: the rationale and support for additional monies, the amount of the monies asked for and the valuation of the startup. And the primary culprit is the lack of solid quantifiable information of Proof of Concept for the startups product or service. Notably, major CPG companies do not have those problems, and it’s not because they have deep pockets. It is because they have a much different process that allows for management to take the guesswork out of making such decisions. We use the same process as P&G (50% success rate) on new products, only we are a tade more successful at 89% 🙂
Looking at this from another POV, I stated that we have created over $4Billion in new revenue at the beginning of this document. What I didn’t say is that I had to spend over $4Billion to develop and launch those businesses. And you betcha, I had to have Proof of Concept in spades to get that kind of money.
Not the right Team
A diverse team with different skill sets was often cited (23%) as being critical to the success of a company. Failure post-mortems often lamented that “I wish we had a CMO from the start,” or wished that the startup had “a founder that loved the business aspect of things.”
From my personal experience from sitting on the Keiretsu Forums Screening, Investment and Due Diligence committees, I have seen over 100 startup presentations and only about 1/4 observed Best Practices in their pitch deck presentations. To me that says a lot about how thin and inexperienced their team is, particularly first timers. Oh, they have a set of advisors that they tout, but how involved are these advisors in the day to day operations, where the real decisions every day are being quickly made?
Another pet peeve of mine is the lack of seasoned new product marketers. They drive the bus in corporate CPG new products development and commercialization efforts, peroid, which are much more successful.
Our core team has easily over 100 years in business development and our active advisors match that.
PS if you want a copy of our best practices pitch deck outline, just email me at: [email protected]
Despite the platitudes that startups shouldn’t pay attention to the competition, the reality is that once an idea gets hot or gets market validation, there may be many entrants in a space. And while obsessing over the competition is not healthy, ignoring them was also a recipe for failure. 19% of the startup failures are because of being beaten to or in-market
Now imagine a process that is completely incognito and delivers a more precise forecast than in market testing and guarantees 80% ACV.
WRT Outside the Startup
4 GTM problems were detailed by CHRON and the following 2 are deemed worthy of discussion:
One major disadvantage of test marketing is the high cost. The normal in-market conditions include producing significant amounts of product, getting retail distribution, shipping products to distributors. advertising them for 6 months at least, as it takes time to build up consumer awareness, and then reading the results: retail sales reorder rates and Usage & Attitude studies. For startups, this places a significant burden on employees working full-time on test marketing, which also gets very expensive and on top of this, also handling their everyday chores.
Test marketing is also very time-consuming, because so much is at stake. First, they must produce a significant amount of product, while at the same time selling into the distributors and shipping to the retailers. They must run their tests for at least 6–9 months and they must analyze sales and profit patterns, looking for possible seasonal trends. Marketers must evaluate the effectiveness of their advertising. It also takes consumers time to learn about a new product’s availability, which is another contributing factor to the duration of a test market…usually about a 12 month cycle.
Now Imagine a process that requires significantly less time….3 ½ months till you know you have something, definitely, and another 2 months to have a bankable revenue forecast (+/- 10%) and at 20% of the cost of in-market testing. What’s more, there is more! There are three major Go/No Go decision points in our process, and as such our process is the ultimate Risk Mitigator.
The line forms to the right or just simply email Patrick
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
First, the vast majority of startup founders are not experienced new product marketers. A lot comes from the R&D side of the equation of new products development.
Second, there are not a lot of new product marketing people that can demonstrate a series of consistent successful startup launches — remember at least 9 of 10 fail.
Third, some just don’t listen
Fourth, Murphy’s law
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
Ah yes, the health vs wealth trade off!
I have pulmonary hypertension, a result from a childhood disease, rheumatic fever. When I relocated from NYC to Denver 3 years ago to be near our grandchildren, I embarked on a strenuous diet and exercise program of going to the gym daily. I dropped 40lbs. and set new records in 6 minute walk tests. However, with the launch of Flagship Acquisition Express (FAE) and the recipient time demands, I have not exercised in the last 4 months. But I was told by a friend, who is also playing in the startup game, of a shorter high intensity exercise regime. That program will begin when this document is submitted!
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Having gone through one startup failure was enough pain for me, my fellow firm members and my family. We believe our new platform, FAE, will significantly reduce such terrible experiences for most startups.
Not only will we reduce the failure rate dramatically and in so doing increase the success rate, but it also increases the value of the startup by the use of our incrementalization, quantitative based processes. In addition, there are more benefits to our process to be discussed later — you have just seen the tip of the iceberg. For example, we take at least 25% of our fees in stock. Now that’s real skin in the game…..we put our money where our mouth is!
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
Our target markets in order of priority are: CPG/Consumer Durables VCs, Series A startups, as they have the money for our intensely based research processes. Secondary targets are Private Equity Funds and Risk Mitigation firms.
How can our readers further follow your work online?
Currently our website is under construction to accommodate FAE, but there is a placeholder site of materials that convey what Flagship is all about. We will be also posting updates on my personal LinkedIn profile: www.linkedin.com/in/patrick-j-tighe-ii-24055711
And we will be instituting a LinkedIn marketing program that will also keep you abreast of our activities. Just send me an email at [email protected], and we will send you the latest news.
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!
In closing, we want to say thank you for perusing the above and we look forward to hearing from you and keeping in contact with you.
Patrick J. Tighe II, Founder