http://www.infoconomy.com/pages/strategy/group19967.adp
Winblad's idea of an 80/20 rule. This model is completely
ridiculous as these numbers change over time. R&D at 15%? That's
only 2-5% over what traditional companies are spending on R&D.
If you can't outpace a traditional company on R&D, that 2-5% isn't
going to be enough to gain a long term competitive edge
or circle a niche market.
She keeps calling them like that, she's going to run out of numbers.
I can see at the end of your first couple of VC rounds that's a good
rational target to aim for. I mean, if some angel gives you $2M,
are you going to spend 15% of it in the first 6-9 months on doing
R&D or are you going to spend 97% of it to do R&D? The answer is
97% as you company grows, the R&D budget stays the same, but the
percentages change. A $2M R&D costs out to a $13.3M outlay. If
your company makes it to a tens of million dollar valuation and
raises a first (VC) round or a second round in the teens, then
eventually you need to be spending at the same R&D level but
introducing the other costs as the company settles.
Greg
-- Gregory Alan Bolcer | gbolcer@endtech.com | work: 949.833.2800 Chief Technology Officer | http://www.endtech.com | cell: 714.928.5476 Endeavors Technology, Inc. | efax: 603.994.0516 | wap: 949.278.2805
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