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Saturday, April 9, 2011



EBIT = Earnings before interest and taxes. It is a financial ratio. EBIT is a measure of a firm's profitability that deliberately excludes interest and income tax expenses. The difference between EBIT and operating income is that EBIT includes non-operating income.

Due diligence

Due diligence

Due diligence is a research process that aims to provide accurate and complete information regarding the physical, financial, legal and technical attributes of an investment target.

Crossing the Chasm

Crossing the Chasm
Marketing and Selling High Tech Products to Mainstream Customers

by Geoffrey A. Moore

Crossing the Chasm is a book by Geoffrey A. Moore that deals with the challenge that many start-up companies face of overcoming the marketing gap between early adopters of a certain technology and mainstream users. Consequently, Moore offers specifics for solving this problem.

The philosophy behind Crossing the Chasm is based on the so called "Diffusion of Innovations" theory by Everett Rogers. This theory argues that there is a chasm between the early adopters of a product (the technology enthusiasts and visionaries) and the early majority of users (who are pragmatists). Moore explains that visionaries and pragmatists have very different expectations from a product. While early adopters buy things because they are cool, later groups value the functionality of the product.

This creates a "chasm". Moore attempts to explore the differences between the groups and suggest techniques to successfully cross the chasm to reach mass market. He suggests solutions such as: choosing a target market, understanding the whole product concept, positioning the product, building a marketing strategy, choosing the most appropriate distribution channel and pricing. For a product to become attractive to mainstream users, it should be easy to adopt and fulfill a desperate need. One of his creative suggestions is to focus on one group of customers at a time and using each group as a base for marketing for the next group.

The distinctions Moore draws between the different target groups are largely based on the classic technology adoption lifecycle where five main users segments are recognized: innovators, early adopters, early majority, late majority and laggards. The underlying thesis is that technology is absorbed into any given community in stages corresponding to the psychological and social profiles of various segments within that market.

The Four Steps to the Epiphany

The Four Steps to the Epiphany

by Steven Gary Blank

This book is an essential read for every 21st Century entrepreneur who wants to bring a product to market or write a business plan in preparation to do so. In his book Four Steps to Epiphany Steven Blank presents a step-by-step strategy for successfully organizing sales, marketing and business development for a new product or company. The book offers great insight into the factors that make some startups successful while others go bust. It is packed with concrete examples, which make it easy for entrepreneurs to enlarge their skill sets and shape up sales, marketing and business for eventual success.

The main takeaway of Four Steps to Epiphany is that it emphasizes rapid iteration, customer feedback and testing of the assumptions that underly a newly proposed business model. Although the book lacks a linear structure, the author basically presents five key factors that he thinks are decisive for the success of a startup business.

1. Get out of the building. This is classic advice but still very true. Few startups fail for lack of technology, they almost always fail for lack of customers.

2. Each market has its own characteristics. Never take assumptions about a market for granted.

3. The product as well as the company grow and mutate over time. The book takes its name from Blank's theory about the four stages of growth that any startup goes through.

Blank has called these steps:
- Customer Discovery (when you're trying to figure out if there are any customers who might want your product)
- Customer Validation (when you make your first revenue by selling your early product)
- Customer Creation (akin to a traditional startup launch, only with strategy involved)
- Company Building (where you gear up to Cross the Chasm to find a mass market). For more about Crossing the Chasm, see the book with the same name by Geoffrey Moore.