One of the primary challenges organizations face when adopting new technology is securing funding. In this special two-part episode, Julie engages in a conversation with Victoria Yampolsky, the founder of The Startup Station, discussing the intricacies of budget planning for both optimal and worst-case scenarios.
Julie: Greetings, everyone. I’m Julie Smithson, your XR for Learning podcast host. Today, I’m joined by Victoria Yampolsky, founder and president of The Startup Station. Victoria’s company is dedicated to aiding founders in achieving success and securing funding promptly. Her focus lies in crafting credible financials and valuations for early-stage ventures. Welcome, Victoria.
Victoria: Thank you, Julie. Delighted to be here.
Julie: Today, our discussion diverges into budgeting, finance, and the startup landscape, emphasizing the importance of budgeting for innovation amidst technological advancements. Victoria, could you shed light on your company’s approach and the demand for your services?
Victoria: Certainly. I established The Startup Station in 2013 after experiencing entrepreneurship firsthand. Recognizing a prevalent need for business and financial expertise in the startup realm, I observed a commonality: passionate entrepreneurs often neglected monetization and market strategies. This pattern persisted beyond media and entertainment startups, extending to various industries. The Startup Station emerged to guide entrepreneurs in developing financially feasible plans, interpreting market feedback, conserving capital, and achieving success.
Julie: Fascinating. Have you worked with startups venturing into XR technologies like virtual reality, augmented reality, or artificial intelligence?
Victoria: While I haven’t directly engaged with XR technology startups among my clients, I’ve interacted with over a thousand founders through teaching and advising. A subset of my students has delved into XR companies.
Julie: Considering the introduction of disruptive technologies, what is your initial advice to companies, especially those embracing XR technologies, which often necessitate swift adaptations to hardware or software updates?
Victoria: For successful technology integration, assembling a team with profound technical understanding is paramount. They need to anticipate and strategize for potential changes associated with the technology they adopt. Similar to financial modeling’s low, medium, and high-case scenarios, technical teams should envision potential scenarios, considering the impact on the organization. This preparatory work equips companies to be agile in the face of unforeseen changes.
Julie: Indeed, having the right team and forecasting for potential changes are crucial. Moving on to strategy, how do you advise companies to prepare for the adoption of new technologies, especially in terms of financial forecasting and the statement of work?
Victoria: Assessing new technologies involves creating a think tank within the company to monitor emerging trends. Define the minimum commercial viability of the technology for your organization and establish a flexible timeline. Question whether the technology solves a specific problem for your company and weigh the potential costs. Companies have four options: develop in-house, start an accelerator, license the technology, or acquire a company. The decision hinges on the size of the opportunity, the competitive advantage gained, and the associated costs. Contingency planning is vital, typically constituting 10-20% of the budget. A contingency exceeding 30% indicates a lack of understanding of the cost structure.
Julie: Contingency planning is an essential aspect. Transitioning to the current pandemic, the coronavirus has introduced unprecedented challenges. What advice do you have for startups facing the uncertainties brought about by the current global situation?
Victoria: Technology startups, particularly in XR, benefit from the ability to work remotely. This period offers an opportunity for reflection and reassessment of financial planning. Prudent financial discipline positions companies better during economic downturns. For technology companies with high fixed costs, it’s advisable to plan for various scenarios, potentially shifting focus to converting customers and slowing down product development timelines to conserve costs. The key is to use this time wisely for strategic planning.
Julie: Thank you, Victoria, for sharing your insights. Join us in part 2, where we delve into forecasting for innovation and the execution roadmap.