By Rob Adams

Want to win at MOOT CORP, the premier intercollegiate business plan competition in the world? Or at any of the dozens of new venture contests for student entrepreneurs that have sprouted in its wake? Want to increase your chances of venture financing? Here's the simple secret to securing victory at both of these highly competitive pursuits: forget about your business plan. And, while you're at it, forget about your technology. In today's rough-and-tumble, highly efficient markets, 90% of a company's risk is in the market -- not the business plan and not the technology. The simple math translates to spending 90% of your efforts validating your market.

Taking a shot at the American Dream, either as a competitor at MOOT CORP, which has been hosted by The University of Texas at Austin's McCombs School of Business since 1984, or as a corporate refugee, has resulted in an unnatural fixation on the business plan. This scenario plays out all the time:

Lock yourself in a room and produce the perfect business plan. Run multiple scenarios and document every subtle nuance of response. Call out every risk factor, and make it innocuous with elegant prose. Plot your patent strategy to make the world safe for (your) free enterprise. Three months and multiple trips to Kinko's later, out rolls your tome: perfectly bound, four color graphics, with beautifully footing financial statements. Express mailed to venture capitalists across the country, or sent after much last minute consternation over page counts and font sizes to your professor.

LISTEN UP, CLASS!  I'm here to tell you you're wrong.

I've been a MOOT CORP finalist judge for the past five years, a venture capitalist for even longer, and founder of a former venture-backed business modeling company (Business Matters). I've reviewed thousands of business plans, and, frankly for the majority, never read past the executive summary (which, for the record, is seldom the half page it should be).

If the plan catches my eye, or is part of the MOOT CORP competition, the next step is the management team presentation. The team presents, and the aspiring entrepreneurs postulate and wax eloquently about their markets. This is where my instincts kick in. After years of doing this, it's easy to pick up the body language and word nuance of someone who is not solidly confident about his or her markets. My strategy? I ask some deceptively simple, basic questions:

What is your target market?
How big is it?
Who buys your product?
Why do they need it?
Who pays for it?
Who uses it?
How do the users fix the business problem you're addressing today?
How much are they willing to pay?
Why would they buy from you?
What business problems are more important to them than this one?


The almost universal reaction to this line of questioning is arm-crossing. This is quickly followed by aggressive objection-handling (even though these were questions, not objections), followed by the final move, real-time speculation of market needs. Once this speculation takes place, I aggressively listen and propose a straightforward exercise for the team. Let's call the target market you identified and ask them the questions above. If the 100 calls match the responses the team gave me, it's as sure a bet for investment or a MOOT CORP win as anything in the world of business.

DEFENSIVE ENLIGHTENMENT.  The defensive responses I so often get to this straightforward logic are startlingly revealing:

First response: Where do we find these people? You sure better have the answer to this one because, between the two of us, you know far better than I will. If you're going to raise money from someone, or compete with a business plan in a global competition, you should have used your entrepreneurial talent to get a list of your target accounts.

The second response goes something like this: How many people do we have to call to connect with 100 customers? Another great question, and a sure sign you locked yourself in a room, cutting yourself off from the realities of business and the market while putting together that beautiful tome of a business plan you're so proud of. The reality is you better know your sales and marketing model before you present. The best way is to know how many people you have to call to get 100 to respond. This is your first real-world indicator of how efficiently your market buys and how much time, money, and effort you'll have to put into sales and marketing.

Third response: we don't have that kind of time to make those calls. You don't? Let's see now, you've taken the time to write a business plan, raise money, or compete in a venture competition, and you want to use someone else's money to develop a product that could take months or years to complete, but you don't have time to call your target market? Instead, you want to raise all the money needed to build your product, then call? I think you see my logic here.

A final suggestion: While you're making these validation calls, get everyone in the company to participate, from the receptionist, to the CEO, to the engineers. Nothing impresses judges or investors more than an engineer who can add color commentary to product requirements, based on customer needs from direct interaction.

Let me give you a real world example.

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