Category Archives: Venture Capital

The Question that CEOs Too Often Don’t Discuss with the Board

Startup boards are complex.  While all board members own stock in the company their interests are not necessarily aligned.

  • Founders may be motivated by a vision to change the world, to hit a certain net worth target, to see their name in an S-1, to make the Forbes 500, or — and I’ve seen crazier things — to make more than their Stanford roommate.  First-time founders with little net worth can be open to selling at relatively low prices.  Conversely, serial successful founders may need a large exit simply to move the needle on their net worth.  Founders can also be religious zealots and take positions like “I wouldn’t sell to Microsoft or Oracle at any price.”
  • Independent board members typically have significant net worth (i.e., they’ve been successful at something which is why want them on your board) and relatively small stakes which, by default, financially incents them to seek large exits.  While they notionally represent the common stock, they are often aligned with either the founders or one of the investors in the company — they got on the board for a reason, often existing relationships —  and thus their views may be shaped by the real or perceived interest of those parties.  Or, they can simply drive an agenda that they believe is best for the company — whatever they happen to think “best” means.
  • Venture capitalists (VCs) are motivated by generating returns for their funds.  Simple, right?  Not so fast.  VC is increasingly a “hits business” where a few large outcomes can mean the difference between at 10% and 35% IRR over a fund’s ten-year life.  Thus, VCs have a general tendency to seek huge exits (“better to sell too late than too early”), but they are also motivated by other factors such as the expectations they set when they raised their fund, the performance of other investments in the fund (e.g., do they need a big hit to bail out a few bad bets), and their relationships with members of other funds represented on the company’s board.

In this light, it’s clearly simplistic to say that everyone is aligned around a single goal:  to maximize the value of the stock.  Yes, surely that is true at one level.  But it gets a bit more complicated than that.

That’s why it’s so important that CEOs ask the board one question that, somewhat amazingly, they all too often don’t:  what does success look like?  And it doesn’t hurt to re-ask it every few years as any given board member’s position may change over time.

I’m always shocked how the simplest of questions can generate the most debate.

Aside:  back in the day at Business Objects (~1998), I suggested bringing in the Chasm Group to help us with a three-day, strategic planning offsite.  I figured we’d spend a morning reviewing the key concepts in Crossing the Chasm, at most one afternoon generating consensus on where we sat on their technology adoption lifecycle curve, and then two days working on strategic goals and operational plans after that.

Tech-Adoption-Lifecycle-01

With about 12 people who had worked together closely for years, after three full days we never agreed where we sat on the curve.  We spent literally the entire time arguing, often intensely, and never even got to the rest of the agenda.  Fortunately, that didn’t end up impeding our success, but it was a big lesson for me.  End aside.

So be ready for that simple question to generate a long answer.  Most probably, several long answers.  In fact, in order to get the best answer, I’d suggest asking board members about it first individually (to avoid any group decision-making biases) and then discuss it as a group.

But before examining the answers you can expect to this question, let’s take a minute to consider why this conversation doesn’t occur more often and more naturally.  I think there are three generic reasons:

  • Conflict aversion.  Perhaps sensing real misalignment, like in a bad marriage the CEO and board tacitly agree to not discuss the problem until they must.  You may hear or make excuses like “let’s cross that bridge when we come to it,”  “let’s execute this year’s plan and then discuss that,” or “if there’s no offer on the table then there’s nothing to discuss.”  Or, in a more Machiavellian situation, a board member may be thinking, “let’s ride Joe like a rented mule to $5M and then shoot him,” continuallying defer the conversation on that logic.  Pleasant or unpleasant, it’s usually better to address conflicts early rather than letting them fester.
  • Rationalization of unrealistic expectations.  If some board members constantly refrain “this can be a billion-dollar company,” perhaps the CEO rationalizes it, thinking “they don’t really believe that; they’re just saying it because they think they’re supposed to.”  But what if they do believe it?
  • The gauche factor.  Some people seem to think it’s a gauche topic of conversation.  “Hey, our company vision statement says we’re making the world a better place through elegant hierarchies for maximum code reuse and extensibility, we shouldn’t be focusing on something so crass as the exit, we should be talking about making the world better.”  VCs invest money for a reason, they measure results by the IRR, and they can typically cite their IRRs (and those of their partners) from memory.  It’s not gauche to discuss expectations and exits.

When you ask your board members what success looks like these are the kinds of things you might hear:

  • Disrupting the leader in a given market.
  • Building a $1B revenue company.
  • Becoming a unicorn ($1B valuation).
  • Changing the way people work.
  • Getting a 10x in 5-7 years for an early stage fund, or getting a 3x in 3-5 years for a later stage fund.
  • Showing my Mother my name in an S-1 (a sub-case of “going public”).
  • Getting our software into the hands of over 1M people.
  • Realizing the potential of the company.
  • Selling the company for more than I think it’s worth.
  • Getting acquired by Google or Cisco for a price above a given threshold.
  • Building a true market leader.
  • Creating a Silicon Valley icon, a household name.
  • Selling the company for {a base-hit, double, triple, home-run, or grand-slam} outcome.

Given the possibility of a list as heterogeneous as this, doesn’t it make sense to get this question on the table as opposed to in the closet?

I learned my favorite definition of strategy from a Stanford professor who defined strategy as “the plan to win.”  The beauty of this definition is that it instantly begs the question “what is winning?”  Just as that conversation can be long, contentious, and colorful, so is the answer to the other, even more critical question:  what does success look like?

Don’t Let Product Management Turn Into “The Roadmap Guys”

At many enterprise software companies product management (PM) ends up defaulting into a role that I can’t stand:  The Roadmap Guys*.

Like a restaurant with one item on the menu, the company defaults into ordering one thing from product management:  a roadmap pitch.

  • “The VP of PM is in Boston and Providence this week, can she visit some customers and do a few roadmap presentations?”
  • “Hey, there’s a local user group in NY this week; can PM do a roadmap pitch?”
  • “There’s a big customer in the executive briefing center today; can the PM do a roadmap?”
  • “As part of our sales cycle with prospect X, we’d love to get PM in to discuss the roadmap.”
  • “We’ve got a SAS day with Gartner next week, can PM come in a present the roadmap?”

You hear it all the time.  And I hate it.  Why?

From a sales perspective, roadmap presentations are the anti-sales pitch:  a well organized presentation of all the things your products don’t do.  Great, let’s spend lots of time talking about that.

From a competitive perspective, you’re broadcasting your plans.  If you’re presenting roadmap to every prospect who comes through the briefing center and at every local user group meeting, your competition is going to learn your roadmap, and fast.  Then they can copy it and/or blunt it.

But what irks me the most is what happens from a product management perspective:  you turn PM into “the talking guys” instead of “the listening guys.”  Given enough time, PM starts to view itself as the folks who show up and pitch roadmaps.

But that’s not their job.

PM should be the listening folks, not the talking folks.  Just like sales, PM should remember the adage:  we have two ears and one mouth; use them in proportion.

Wouldn’t the world be a better place if we changed the five previous bullets as follows?

  • “The VP of PM is in Boston and Providence this week, can she visit some customers and observe how people actually use the product?”
  • “Hey, there’s a local user group in NY this week; can PM break off a small focus group to ask customers about how they use the product?”
  • “There’s a big customer in the executive briefing center today; can PM come in and interview them about their impressions on evaluating the product?”
  • “As part of our sales cycle with prospect X, we’d love to get PM in to discuss what specifically they are trying to accomplish and how the product can do that?”
  • “We’ve got a SAS day with Gartner next week, can PM come in and hear from Gartner about what they’re seeing in the market and in their interactions with customers?”

So every time you hear the word “roadmap” in the same sentence as “product management,” stop, pause, and think of a better way to use the PM team.  Sure, there are certainly times when a roadmap presentation is in order.  But don’t default to it.  Keep your PM team listening instead of talking.

# # #

* I’m using “guys” here in a gender-neutral sense like “folks.”

Kellblog (Dave Kellogg) Featured on the Official SaaStr Podcast

Just a quick post to highlight the fact that last week I was the featured guest on Episode 142 of the Official SaaStr  podcast produced by the SaaStr organization run by Jason Lemkin and interviewed by a delightful young Englishman named Harry Stebbings (who also runs his own podcast entitled The Twenty Minute VC).

In the 31-minute episode — which Harry very nicely says was “probably one of his favorite interviews to record” — we cover a wide range of my favorite topics, including:

    • How I got introduced to SaaS, including my experience as an early customer of Salesforce in about 2003.
    • Challenges in scaling a software business, learned at BusinessObjects as we scaled from $30M to $1B in revenues, as well as at MarkLogic and Host Analytics.
    • My favorite SaaS metric.  If you had to pick one, I’d pick LTV/CAC.
    • Why simple churn is the best way to value the annuity of a SaaS business.
    • The loose coupling of customer satisfaction and renewal rates.
    • Why SaaS companies need to “chew gum and walk at the same time” when it comes to driving the mix of new and renewal business.
    • User-based vs. usage-based pricing in SaaS and how the latter can backfire in disincenting usage of the application.
    • My thoughts on bookings vs. ARR as a SaaS metric.  (Bookings is generally seen as a four-letter word!)
    • Why SaaS companies should make “the leaky bucket” the first four lines of their financial presentation.
    • Why I think it’s a win/win when a SaaS company gives a multi-year prepaid discount that’s less than its churn rate.
    • Why I view non-prepaid, multi-year deals as basically equivalent to renewals (just collected by finance/legal instead of customer success.)
    • Why it’s OK to “double compensate” sales and customer success on renewals and incidental upsells, and why it’s OK to pay sales on non-incidental upsells to existing customers (don’t put your farmer against someone else’s hunter).
    • Why you can’t analyze churn by analyzing churn and why you should have a rigorous taxonomy of churn.
    • My responses to Harry’s “quick fire” round questions.

You can listen to the podcast via iTunes, here.  Enjoy!

 

Simple Rules to Make It Easier To Build Your Startup’s Board Deck

As someone who has assembled many startup board decks over the years, I thought I’d offer some advice to executives who contribute slides to board decks that should make it easier for the point-person to assemble, improve the deck’s appearance, and avoid any painful and/or embarrassing mistakes in the process.  Marketing folks, who both build a lot of presentations and live in PowerPoint, tend to get these basics right.  Everybody else, in my experience, not so much.

  • You are your metrics.  Remember the old quote that’s often misattributed to Peter Drucker, “if you can’t measure it, you can’t manage it.”  I prefer its corollary, “if you’re not measuring it, you’re not managing it.”  And, in turn, its corollary, “if you’re not presenting it at a board meeting, then you don’t care about it.”  Remember, the metrics you choose to present — and perhaps more importantly those you choose not to present — say a lot about you and what you think is important.  Put real thought into selecting them.
  • Take the time to write a short letter.   Remember the again often-misattributed quote from Blaise Pascal:  “if I had more time, I would have written a shorter letter.”  It’s your board — take the time to include as few slides (and as few numbers per slide) as are needed to tell the story.  But no fewer.  Don’t make the classic mistake of just grabbing your ops review slides and pasting them into your board deck.  Don’t make the deck assembler have to decide which slides, from a pile you provided, should be in the deck.
  • Provide context for numbers.  Repeat after me:  the board is not afraid of numbers.  So don’t be afraid to present them.  Don’t drown them — be selective in which metrics you show.  But when you choose to show a metric, provide context so board members can analyze it.  That means providing trailing nine quarters of history, sequential and YoY growth rates, and % of plan attainment.  Thus, each metric translates to 12 numbers, so pick your metrics carefully.
  • Use the right design template.  Assembly is much easier if everyone is using the same corporate slide template, ideally a confidential version of it that includes good security footers (e.g., Company Confidential and Proprietary, Internal Use Only).
  • Learn how to use slide layouts.  Don’t be the guy putting text boxes onto blank slides when you should be using the Title+Content layout.  One great part about using layouts is re-applying them to make sure you, or a prior author, hasn’t changed anything.
  • Don’t hack the layout.  If your layout doesn’t include a subtitle, don’t use one.  It just makes it harder to reformat things downstream.  Plus, too many folks are lazy and make a sequence of slides with the same title, only varying the subtitle.  Bad habit.  Integrate the two and make varying titles.  Less is more.
  • Don’t put numbers into embedded tables.  The easiest way to get math errors in your board slides if to either cut/paste or re-type numbers into embedded Word tables.  Use embedded worksheets for numbers and ideally do live total calculations to ensure all the numbers are right.
  • Be careful as heck with embedded worksheets.  That said, note that Office has a terrible habit of taking the whole workbook along for the ride when you paste a table as an embedded object.  Don’t be the person who pastes in a table of payroll by department, accidentally including everyone’s salary on an adjacent tab, and then mailing that not only to the board, but also the whole executive team.
  • Paste charts as images.  The major upside here is you eliminate problems related to the prior point, the downside if you give zero power to the deck-assembler to fix things at 2 AM.  The best practice is to ship your slides with charts pasted as images and attach a separate Excel file as the source.  That way, you both reduce risk and give the assembler the power to change things if needed.
  • No more than one table of numbers per slide.  While board members love numbers, don’t mentally overload them with too many concepts on a single slide.
  • Use a standard capitalization convention.  I Recommend Title Case for Slide Titles.  I recommend sentence case for slide body copy.  It’s a pain in the neck to fix this if everyone is doing something different.
  • Use a standard convention for notes and sources.  I use * and ** and put the notes (which are often data sources) in 8-point type right above my confidentiality footer.  It doesn’t matter where you do it; what matters is that everyone puts them in the same place.
  • Don’t use slide notes.  In reality, you have two choices here — either always distribute your board slides in PDF or never use slide notes.  Any middle ground is very dangerous — imagine copying a slide from someone else’s deck that has embarrassing commentary in a slide note that you don’t notice, but a board member does.  Ouch.
  • Type text directly on objects.  Don’t create a separate text box and then put it atop on object; make the text and the object one.

If everyone on the e-staff follows these tips you’ll end up with a better board deck and it will take whoever assembles it — often the CEO at smaller companies — far less time to do so.

The SaaS Rule of 40

After the SaaSacre of early 2016, investors generally backed off a growth-at-all-costs mindset and started to value SaaS companies using an “appropriate” balance of growth and profitability.  The question then became, what’s appropriate?  The answer was:  the rule of 40 [1].

What’s the rule of 40?  Growth rate + profit should be greater than or equal to 40%.

There are a number of options for deciding what to use to represent growth (e.g., ARR) and profit (e.g., EBITDA, operating margin). For public companies it usually translates to revenue growth rate and free cash flow margin.

It’s important to understand that such “rules” are not black and white.  As we’ll see in a minute, lots of companies deviate from the rule of 40.  The right way to think about these rules of thumb is as predictors.  Back in the day, what best predicted the value of a SaaS company?  Revenue growth — without regard for margin.  (In fact, often inversely correlated to margin.)  When that started to break down, people started looking for a better independent variable.  The answer to that search was the rule of 40 score.

Let’s examine a few charts courtesy of the folks at Pacific Crest and as presented at the recent, stellar Zuora CFO Forum, a CFO gathering run alongside their Subscribed conference.

rule-of-40

This scatter chart plots the two drivers of the rule of 40 score against each other, colors each dot with the company’s rule of 40 score, and adds a line that indicates the rule of 40 boundary.  42% of public SaaS companies, and 77% of public SaaS market cap, is above the rule of 40 line.

As a quick demonstration of the exception-to-every-rule principle, Tintri recently went public off 45% growth with -81% operating margins, [2] reflecting a rule of 40 score of -36%, and a placement that would be off the chart (in the underneath sense) even if corrected for non-cash expenses.

For those interested in company valuations, the more interesting chart is this one.

rule of 40 valuation.PNG

This chart plots rule of 40 score on the X axis, valuation multiple on the Y axis, and produces a pretty good regression line the shows the relationship between the two.  In short, the rule of 40 alone explains nearly 50% of SaaS company valuation.  I believe that outliers fall into one of two categories:

  • Companies in a strategic situation that explains the premium or discount relative to the model — e.g., the premium for Cloudera’s strong market position in the Hadoop space.
  • Companies whose valuations go non-linear at the high end due to scarcity — e.g., Veeva.

Executives and employees at startups should understand [3] the rule of 40 as it explains the general tendency of SaaS companies to focus on a balance of growth and profitability as opposed to a growth at all costs strategy that was more popular several years back.  Ignore the rule of 40 at your peril.

Notes

[1] While the Rule of 40 concept preceded the SaaSacre, I do believe that the SaaSacre was the wake-up call that made more investors and companies pay attention to.

[2] Using operating margin here somewhat lazily as I don’t want to go find unlevered free cash flow margin, but I don’t think it materially changes the point.

[3] Other good rule of 40 posts are available from:  Tomasz Tungaz, Sundeep Peechu, and Jeff Epstein and Josh Harder.

A Look at the Tintri S-1

Every now and then I take a dive into an S-1 to see what clears the current, ever-changing bar for going public.  After a somewhat rocky IPO process, Tintri went public June 30 after cutting the IPO offering price and has traded flat thus far since then.

Let’s read an excerpt from this Business Insider story before taking a look at the numbers.

Before going public, Tintri had raised $260 million from venture investors and was valued at $800 million.

With the performance of this IPO, the company is now valued at about about $231 million, based on $7.50 a share and its roughly 31 million outstanding shares, (if the IPO’s bankers don’t buy their optional, additional roughly 1.3 million shares.)

In other words, this IPO killed a good $570 million of the company’s value.

In other words, Tintri looks like a “down-round IPO” (or an “IPO of last resort“) — something that frankly almost never happened before the recent mid/late stage private valuation bubble of the past 4 years.

Let’s look at some numbers.

tintri p+l

Of note:

  • $125M in FY2017 revenue.  (They have scale, but this is not a SaaS company so the revenue is mostly non-recurring, making it easier to get to grow quickly and making the revenue is worth less because only the support/maintenance component of it renews each year.)
  • 45% YoY total revenue growth.  (On the low side, especially given that they have a traditional license/maintenance model and recognize revenue on shipment.)
  • 65% gross margins  (Low, but they do seem to sell flash memory hardware as part of their storage solutions.)
  • 87% of revenue spent on S&M (High, again particularly for a non-SaaS company.)
  • 43% of revenue spent on R&D  (High, but usually seen as a good thing if you view the R&D money as well spent.)
  • -81% operating margins (Low, particularly for a non-SaaS company.)
  • -$70.4M in cashflow from operating activities in 2017 ($17M average quarterly cash burn from operations)
  • Incremental S&M / incremental product revenue = 73%, so they’re buying $1 worth of incremental (YoY) revenue for an incremental 73 cents in S&M.  Expensive but better than some.

Overall, my impression is of an on-premises (and to a lesser extent, hardware) company in SaaS clothing — i.e., Tintri’s metrics look like a SaaS company, but they aren’t so they should look better.  SaaS company metrics typically look worse than traditional software companies for two reasons:  (1) revenue growth is depressed by the need to amortize revenue over the course of the subscription and (2) subscriptions companies are willing to spend more on S&M to acquire a customer because of the recurring nature of a subscription.

Concretely, if you compare two 100-unit customers, the SaaS customer is worth twice the license/maintenance customer over 5 years.

saas compare

Moreover, even if Tintri were a SaaS company, it is quite out of compliance with the Rule of 40, that says growth rate + operating margin >= 40%.  In Tintri’s case, we get -35%, 45% growth plus -81% operating margin, so they’re 75 points off the rule.

Other Notes

  • 1250+ customers
  • 21 of the Fortune 100
  • 527 employees as of 1/31/17
  • CEO 2017 cash compensation $525K
  • CFO 2017 cash compensation $330K
  • Issued special retention stock grants in May 2017 that vest in the two years following an IPO
  • Did option repricing in May 2017 to $2.28/share down from weighted average exercise price of $4.05.
  • $260M in capital raised prior to IPO
  • Loans to CFO and CEO to exercise stock options at 1.6% to 1.9% interest in 2013
  • NEA 22.7% ownership prior to opening
  • Lightspeed 14.5% ownership
  • Insight Venture Partners 20.2% ownership
  • Silver Lake 20.4% ownership
  • CEO 3.8% ownership
  • CFO 0.7% ownership
  • $48.9M in long-term debt
  • $13.8M in 2017 stock-based compensation expense

Overall, and see my disclaimers, but this is one that I’ll be passing on.

 

The Strategy Compiler: How To Avoid the “Great” Strategy You Couldn’t Execute

Few phrases bother me more than this one:

“I know it didn’t work, but it was a great strategy.  We just didn’t have the resources to execute it.”

Huh.  Wait minute.  If you didn’t have the resources to execute it, then it wasn’t a great strategy.  Maybe it was a great strategy for some other company that could have applied the appropriate resources.  But it wasn’t a great strategy for you.  Ergo, it wasn’t a great strategy.  QED.

I learned my favorite definition of strategy at a Stanford executive program I attended a few years back.  Per Professor Robert Burgelman, author of Strategy is Destiny, strategy is simply “the plan to win.”  Which begets an important conversation about the definition of winning.  In my experience, defining winning is more important than making the plan, because if everyone is focused on taking different hills, any resultant strategy will be a mishmash of plans to support different objectives.

But, regardless of your company’s definition of winning, I can say that any strategy you can’t execute definitionally won’t succeed and is ergo a bad strategy.

It sounds obvious, but nevertheless a lot of companies fall into this trap.  Why?

  • A lack of focus.
  • A failure to “compile” strategy before executing it.

Focus:  Think Small to Grow Big

Big companies that compete in lots of broad markets almost invariably didn’t start out that way.

BusinessObjects started out focused on the Oracle financials installed base.  Facebook started out on Harvard students, then Ivy league students.  Amazon, it’s almost hard to remember at this point, started out in books.  Salesforce started out in SMB salesforce automation.  ServiceNow on IT ticket management.  This list goes on and on.

Despite the evidence and despite the fame Geoffrey Moore earned with Crossing the Chasm, focus just doesn’t come naturally to people.  The “if I could get 1% share of a $10B market, I’d be a $100M company” thought pattern is just far too common. (And investors often accidentally reinforce this.)

The fact is you will be more dominant, harder to dislodge, and probably more profitable if, as a $100M company, you control 30% of a $300M target as opposed to 1% of a $10B target.

So the first reason startups make strategies they can’t execute is because they forget to focus.  They aim too broadly. They sign up for too much.  The forget that strategy should be sequence of actions over time.  Let’s start with Harvard. Then go Ivy League.  Then go Universities in general.  Then go everyone.

Former big company executives often compound the problem.  They’re not used to working with scarce resources and are more accustomed to making “laundry list” strategies that check all the boxes than making focused strategies that achieve victory step by step.

A Failure to Compile Strategy Before Execution

The second reason companies make strategies they can’t execute is that they forget a critical step in the planning process that I call the strategy compiler.  Here’s what I think a good strategic planning process looks like.

  • Strategy offsite. The executive team spends a week offsite focused on situation assessment and strategy.  The output of this meeting should be (1) a list of strategic goals for the company for the following year and (2) a high-level financial model that concretizes what the team is trying to accomplish over the next three years.  (With an eye, at a startup, towards cash.)

 

  • First round budgeting. Finance issues top-down financial targets.  Executives who own the various objectives make strategic plans for how to attain them.  The output of this phase is (1) first-draft consolidated financials, (2) a set of written strategies along with proposed organizational structures and budgets for attaining each of the company’s ten strategic objectives.

 

  • Strategy compilation, resources. The team meets for a day to review the consolidated plans and financials. Invariably there are too many objectives, too much operating expense, and too many new hires. The right answer here is to start cutting strategic goals.  The wrong answer is to keep the original set of goals and slash the budget 20% across the board.  It’s better to do 100% of 8 strategic initiatives than do 80% of 10.

 

  • Strategy compilation, skills. The more subtle assessment that must happen is a sanity check on skills and talent.  Do your organization have the competencies and do your people have the skills to execute the strategic plans?  If a new engineering project requires the skills of 5 founder-level, Stanford computer science PHDs who each would want 5% of a company, you are simply not going to be able to hire that kind of talent as regular employees. (This is one reason companies do “acquihires”).  The output of this phase is a presumably-reduced set of strategic goals.

 

  • Second round budgeting. Executives to build new or revised plans to support the now-reduced set of strategic goals.

 

  • Strategy compilation. You run the strategy compiler again on the revised plan — and iterate until the strategic goals match the resources and the skills of the proposed organization.

 

  • Board socialization. As you start converging via the strategy compiler you need to start working with the board to socialize and eventually sell the proposed operating plan.  (This process could easily be the subject of another post.)

 

If you view strategy as the plan to win, then successful strategies include only those strategies that your organization can realistically execute from both a resources and skills perspective.  Instead of doing a single-pass process that moves from strategic objectives to budgets, use an iterative approach with a strategy compiler to ensure your strategic code compiles before you try to execute it.

If you do this, you’ll increase your odds of success and decrease the odds ending up in the crowded section of the corporate graveyard where the epitaphs all read:

Here Lies a Company that Had a “Great” Strategy  It Had No Chance of Executing