Ep. 8 - The Hierarchy of Powers as an Investment Model with Geoffrey Moore Traction and Trapped Value

In early stage venture, determining those important signals that indicate investment potential and traction are critical. 
One way to do so is through this concept of power as Geoffrey Moore, Author of Crossing the Chasm, Speaker, Advisor and Venture Partner at Wildcat shares... 
“Power is an attempt to say, what are the leading indicators of success in business just as performance it’s a trailing indicator of success. And what you find in investing is, an investor buys a share of your future earnings, not your past earnings.
And so therefore how can they expect you to perform in the future? So you're always looking to say, how powerful could this company become? Cause that's, what's going to increase its market valuation. Now that's true in public investing, but it's even more true in venture investing because the power is so nascent.”
Power is actually a hierarchy and the prioritization of this structure is based on the impact each step has on a company’s future performance. In fact, this ordering comes from public markets and is adjusted to venture dynamics.
As such, this hierarchy can be leveraged as an investment framework to determine where the trapped value lies and how to identify the traction behind it. 
 
Power Concepts - A Five-Step Hierarchy
 
There are five steps to this power hierarchy: Company power, Category power, market power, offer power, execution power. 
Category Power - Growth born from category expansion.  How much money is coming into your category? What’s the size of the opportunity?  Company Power - Growth born from category share Within a given category who’s the leading company that provides that product or service?  Market Power - Growth born from customer relevance Market share of a company within a target market segment defined in terms of an industry and a use case. Offer power - Growth born from unmatchable offers How well do your offers directly stack up against competitors? Execution power - Growth born from managing a portfolio of commitments How well can your team actually deliver such that you are meeting and beating plan? Category power is at the top of this hierarchy because venture investing is focused on nascent categories that are expected to blossom. In fact, the category may not exist quite yet but the technology does. So when doing an investment, you inevitably start with the question “what categories are we in and are these categories getting traction?” 
Market power is different from company power in that markets are defined by a set of customers and categories are defined by a set of competitors. 
An early stage company delivers market power by winning devoted customers who advocate on its behalf, thereby speeding up sales cycles and creating a local market that can attract a local ecosystem.  It’s growth from customer relevance because the offers address segment-specific concerns with domain expertise. And the end result is company power in a niche that is both persistent in its own right and a potential stepping stone to greater things to come.
Offer power is defined as the feature/function/performance status in comparison to competitors. In established markets Geoff tells us that product managers are always looking to have the best set of these points of differentiation in their competitive positioning charts.  But in venture, it’s more asymmetrical.  
Early stage companies need need to find at least one dimension where there is a 10X advantage, something that will warrant customers and ecosystems going through the pain and strife of disruption to adopt the offering. 
The last step in this 5 step hierarchy is execution power.  It’s about getting to the next milestone in a timely fashion because growth ultimately stems from managing those portfolio of commitments. 
To create that necessary performance traction, the team must redirect its execution power from building and serving everyone in the ea