New book offers insight for investors


April 29, 1991|By Jane Poss | Jane Poss,Boston Globe

Ovation Inc. was a small start-up launched in 1982 to build "the next generation" of integrated PC software. It started out strong, but filed for Chapter 11 two years later after spending $7 million and failing to deliver a product.

The company suffered from a fundamental imbalance: too much marketing and not enough technology.

C. Gordon Bell, an entrepreneur and former head of engineering at Digital Equipment Corp., thinks it is possible for start-ups and their investors to spot problems early through constant monitoring. He spells out what it takes to make it in today's high-technology world in his new book, "High-Tech Ventures."

Mr. Bell divides the life of a start-up into five stages: concept, seed, product development, market development and steady state. Within these stages, Mr. Bell identifies 12 aspects for evaluation, from the board of directors to the business plan. He considers four to be the most critical determinants of success: people, cash, manufacturing and marketing.

Of all the factors influencing a start-up, Mr. Bell considers the founding chief executive officer to be the most important. "Companies fold or perform poorly as a result of CEO failure more often than they do from any other single cause," he writes. Common failures include the inability to manage, to hire and fire, and to make good and timely judgments.

Managers from large organizations "are especially dangerous," Mr. Bell believes, "since they are often incapable of performing basic functions without the plethora of resources available in a big company."

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