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Thursday
Aug162012

Direct Selling Startups Need An Incubation Phase

When I speak to venture capitalist these days, they are all paying attention to the direct selling industry.  Venture capital wants to invest in the next direct selling superstar because in the last 10 years, more than 11 direct selling startups have gone from $0 to $100M in just a few years.  I have seen these profit rockets several times in my career.  But I've also seen some collapse under their own weight.  The reason for their fall is usually a faulty foundation.  They try to grow too fast.  They haven't been battle tested, and usually they are not prepared for the investment needed to fund such rapid growth.  

Every direct selling startup needs an incubation phase.   A company evolves with time.  But in the first few years, the company looks nothing like it did only six months ago!  The entrepreneur (and even the Board of Directors) will have made some mistakes, and learn from those failures.  

Nothing great has ever been created at supersonic speeds.  Let a good idea test, and discover its most powerful value proposition.

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