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Avoid Stagnation: Acceleration Trumps Incubation Bill Aulet, Managing Director, Martin Trust Center for MIT Entrepreneurship March 8, 2014 entrepreneurship.mit.edu @BillAulet

SXSW 2014 Accelerator vs Incubator Presentation

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Page 1: SXSW 2014 Accelerator vs Incubator Presentation

Avoid Stagnation: Acceleration Trumps Incubation

Bill Aulet, Managing Director, Martin Trust Center for MIT Entrepreneurship

March 8, 2014

entrepreneurship.mit.edu @BillAulet

Page 2: SXSW 2014 Accelerator vs Incubator Presentation

Summer 2012• Summer 2010 – Startup Central

• Summer 2011 – Wicked Awesome Summer StartUp Program (a/k/a WASSUP)

• Summer 2012 – FSA

• Summer 2013 – GFSA

Page 3: SXSW 2014 Accelerator vs Incubator Presentation

Time

Succ

ess

Page 4: SXSW 2014 Accelerator vs Incubator Presentation

• Complete the Ramp

• Entrepreneurs Not Companies:Teaching our students how to fish rather than catching a fish

• Fulfill MIT’s Mission

Goals of FSA

Page 5: SXSW 2014 Accelerator vs Incubator Presentation

Validation

MIT Entrepreneurship Ramp

Inspiration, Idea,

Technology

Classroom Extra-Curricular

The Grand Plan: “The Ramp”

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We neededsomething to

support students!

Validation

MIT Entrepreneurship Ramp

Inspiration, Idea,

Technology

Classroom Extra-Curricular

Most Often Unable to Achieve Escape

Velocity

Plan vs. Reality: Before FSA

Page 7: SXSW 2014 Accelerator vs Incubator Presentation

Validation

Completing the Ramp with FSAMIT Entrepreneurship Ramp

Inspiration, Idea,

Technology

Classroom Extra-Curricular Accelerator

Page 8: SXSW 2014 Accelerator vs Incubator Presentation

• Peter Thiel • Fellows Program

• $100k to dropout

Challenge

RESULTING CONCLUSION

Photo of Peter Thiel by David Orban via wikipedia.org

Stay in

school

Be a Serious

EntrepreneurORX

Page 9: SXSW 2014 Accelerator vs Incubator Presentation

Changing Face of Entrepreneurship

Herbert B. Jones Foundation’s Milestone Achievement AwardsUniversity of Washington

Page 10: SXSW 2014 Accelerator vs Incubator Presentation

• Educational

• Honest broker

• Existing extensive entrepreneurship eco-chamber & value chain

• Tremendous opportunity for a complementary program

MIT’s Unique Role

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• Space

• Stipend

• Structure

• Status

How GFSA Works

˅Global

Page 12: SXSW 2014 Accelerator vs Incubator Presentation

Community•Support - emotional, pride, culture

•Learning

•Peer motivation

Space

Page 13: SXSW 2014 Accelerator vs Incubator Presentation

1. Baseline: $1k/month per person

– Creates full focus

2. Milestone Awards

Stipend

Area Mtg #1 Mtg #2 Mtg #3 Mtg #4 Total

Customer $5K

Product $5K

Team $5K

Financial $5K

Cumulative $20K

3. Discretionary budget available

Page 14: SXSW 2014 Accelerator vs Incubator Presentation

1. April 6 – 1st round of applications due2. April – interviews3. May 1 – decisions4. 3.5 month program5. Demo Day at t=0 Festival (mid-September)6. Goal: student capabilities reach escape velocity

Structure

Student

Team

Mentor Network

• EiRs

• VMS

• Catalyst

Prototyping

• Labs

• IDC

Committee

• Holds team accountable

• Customized for team

• Members have BoD

experience

• 3 monthly meeting and 1

final meeting

Tues & Thurs

Luncheon Series

• JIT Education &

connections

• Internal & external

Informal Support

• Staff

Page 15: SXSW 2014 Accelerator vs Incubator Presentation

General Rhythm

Validate & invalidate

idea based on Primary

Market Research (PMR) &

refine team

1st 30 Days

Continue to refine team & focus on product

definition & dev

2nd 30 Days

Financials, product

deviterations& polish

for graduation

3rd 30 Days

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1. Acceptance with Social Norms

2. Good Housekeeping Seal of Approval/Status

Status

Page 17: SXSW 2014 Accelerator vs Incubator Presentation

Reaction of Students & Application Process

ALL APPLICATIONS129 Teams, 376 Participants, 241 MIT Students (All Schools)

FIRST SCREENING26 Teams, 88 Participants, 61 MIT Students

GFSA FINAL SELECTION10 Teams, 35 Participants, 25 MIT Students

Other Summer Accelerators: 40 Teams – MIT Beehive Coop30 Teams – MassChallengeRockHealth, HealthBox, YC, etc.

Page 18: SXSW 2014 Accelerator vs Incubator Presentation

GFSA Educational Component

TEAM• Founders Agreements & Equity

Splits

• Hiring and Firing Employees

• Developing Company Culture

CUSTOMER• Primary Market Research/

User Innovation

• Developing a Persona

• Securing your First Customer

• Decision Making Unit/Decision Making Process

FINANCE• Legal Issues and Startups• Building Financial Statements• Entrepreneurship MicroEconomics:

CoCA & LTV• Alternative Ways to Raise Capital

PRODUCT• 24 Steps to Successful Product Launch• Protecting and Growing your Core • Iterating, Refining & Evolving Your

Product• Building a Pricing Model

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GFSA Clinic Leaders

MIT Management and Engineering Faculty

Eric von Hippel Matt Marx Catherine Tucker Fiona Murray Sanjay Sarma

Page 20: SXSW 2014 Accelerator vs Incubator Presentation

GFSA Clinic Leaders

Internal Trust Center Resources

Bill AuletManaging Director

Christina ChaseEntrepreneur in Residence & Student Evangelist

Kyle JudahGFSA Program Director

Elaine ChenRethink Robotics

Jim DoughertyGreat Hill Partners

Charlie Tillett50-50-50 Consulting

Brian HalliganHubSpot

Entrepreneurs in Residence (EiRs)

Page 21: SXSW 2014 Accelerator vs Incubator Presentation

GFSA Clinic Leaders

External Resources

Başak ÖzerNokia

Jack VanWoerkomHome DepotStaples

Christopher O'Donnell HubSpot

Kevin RustagiFounder, Ministry of Supply

Kit HickeyFounder, Ministry of Supply

Paul EnglishFounder, Kayak.com

Prahar ShahFounder, Mobee

Aaron WhiteFounder, Boundless Learning

Joe Greenstein Founder, Flixster

Dharmesh ShahHubSpot

Jim BaumCEO, Netezza

Chuck KaneFounderOne Laptop Per Child

Page 22: SXSW 2014 Accelerator vs Incubator Presentation

• Extremely Important “Forcing Function” & Closure Event

• Three Goals for Three Audiences

– Students

– GFSA/Beehive

– Integration of External Players

• Positive effects already seen

– 3x increase in student participation in t=0 events from last year

– Fills pipeline to make next year’s GFSA much stronger

– Dozens of teams proactively asking to move into the Beehive

• Videos of Demo Day presentations can be seen at:

http://entrepreneurship.mit.edu

Demo Day “Graduation Event”

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0

1

2

3

4

Customer Product Team Financials/Other Overall

Participant Data Validates Assumptions

Ability to Articulate Theory

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0

1

2

3

4

Customer Product Team Financials/Other Overall

Participant Data Validates AssumptionsAbility to Execute

Page 25: SXSW 2014 Accelerator vs Incubator Presentation

Participant Data Validates AssumptionsNet Promoter Score of +73

“This was one of the most valuable experiences I’ve had while at MIT.”

“We learn a lot of theory in class, but now we know how to execute.”

“The program fills the chasm that often limits ideas/projects from becoming real businesses.”

“This experience helped us to quickly develop the product that addressed real market needs, and with a high market potential.”

“This real world experience really helps clear up a lot of misconceptions about the struggle as well as the pay

off in the end.”

“I have already advised professors at other universities

about the program and suggested that this is the real way to honor your students.”

Page 26: SXSW 2014 Accelerator vs Incubator Presentation

OVERALL•Huge success in allowing teams to make progress beyond best case scenario

•Three months is about the right time – less time would not be enough maybe a month longer would be even better

•There were conflicts with academic work at times but was manageable (WiCare & SmartScheduling)

•10 was a good size for year 1 & could grow next year but need to be careful on scaling too fast

Lessons Learned

Page 27: SXSW 2014 Accelerator vs Incubator Presentation

Lessons Learned

SELECTION•Team should be the #1 criteria far & away - the best teams far outperformed the teams with more compelling projects at the beginning

•Developing culture in the GFSA cohort is a tricky but very important thing. Keeping a collaborative and positive spirit in the program is important to optimizing its success.

•Have mixed skilled teams makes a difference – this is a very good criteria

•Once teams get funding, they should probably not be in GFSA

Page 28: SXSW 2014 Accelerator vs Incubator Presentation

Lessons Learned

IMPLEMENTATION•Key element was giving the teams the chance to revisit strategy/direction without a loss of urgency (there was only three months)

•Teams still reconfigured – founders issues took a lot of time; Forcing a founders agreement milestones halfway through was very productive

•Board meetings and milestone payments were extremely implortant in complementing the mentoring Demo Day as a forcing function worked extremely well and was a huge amount of work to pull off

•There is a limit to the value of mentorship and at some points it can get to be too much. Teams have to do things and get answers themselves rather than continually listening to more people.

Page 29: SXSW 2014 Accelerator vs Incubator Presentation

• Acceleration works

• General Incubation does not work as well

• Avoid Stagnation: Acceleration Trumps Incubation

Conclusion

Page 30: SXSW 2014 Accelerator vs Incubator Presentation

More info

• The book• www.disciplinedentrepreneurship.com

• Progress Dashboardwww.detoolbox.com

29

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Coming March 18: New Online course

• Google “edX Entrepreneurship 101”

• https://www.edx.org/course/mitx/mitx-15-390x-entrepreneurship-101-who-1312

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Top 10 Teams All 129 teams that applied

Number Percentage Number Percentage

MIT Undergrads 1 4.0% 45 19.7%

MIT Master's 18 72.0% 113 49.5%

MIT Doctorate 5 20.0% 62 27.3%

MIT Postdoc 1 4.0% 8 3.5%

All MIT Students (Including 2012 graduates) 25 100% 228 100%

0 0

MIT Students (from above) 25 71.4% 228 66.7%

MIT Alumni 4 11.4% 27 7.9%

Harvard Students 2 5.7% 18.5 5.4%

Harvard Alumni 0 0.0% 7.5 2.2%

Other 4 11.4% 61 17.8%

All participants 35 100% 342 100%

0 0

SAP (4, 11, MAS) 4 16.0% 25 11.0%

Eng (1, 2, 3, 6, 10, 16, 20, 22, ESD) 10.5 42.0% 98.5 43.2%

HASS (14, 17, 21, 24, CMS, STS) 0 0.0% 2.5 1.1%

Sloan (15 including certain joint programs with ESD) 8.5 34.0% 74.5 32.7%

Sci (5, 7, 8, 9, 12, 18) 0 0.0% 13 5.7%

Whitaker (HST) 0 0.0% 4.5 2.0%

Other (postdoc; Operations Research Center) 2 8.0% 10 4.4%

All MIT Students 25 100% 228 100%

Preliminary Results I: Input

Page 34: SXSW 2014 Accelerator vs Incubator Presentation

Pre FSA

Topic Knowledge

(articulate) Capability (apply)

Scale 1 - 4 Scale 1 - 4 CUSTOMER average (across the group) 2.4 2.1

PRODUCT average (across the group) 2.5 2.2

TEAM average (across the group) 2.4 2.0

FINANCIALS/OTHER average (across the group) 2.6 2.1

Post FSA

Topic Knowledge

(articulate) Capability (apply)

Scale 1 - 4 Scale 1 - 4 CUSTOMER average (across the group) 3.5 3.3

PRODUCT average (across the group) 3.5 3.3

TEAM average (across the group) 3.5 3.3

FINANCIALS/OTHER average (across the group) 3.7 3.4

Preliminary Results: Skill Building

Page 35: SXSW 2014 Accelerator vs Incubator Presentation

Thank you!

Any questions?