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January 2005
Why Entrepreneurship?
Douglas Abrams
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Douglas Abrams
Why entrepreneurship?
Why entrepreneurship?
Let’s fail!
So how?
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What is an entrepreneur?
A person who organizes, operates, and assumes the risk for a business venture.
From Old French, from entreprendre, to undertake.
Enterprise: An undertaking, especially one of some scope, complication, and risk.
Enterprising: Willingness to undertake new ventures; initiative: "Through want of enterprise and faith men are where they are, buying and selling, and spending their lives like serfs" (Henry David Thoreau).
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What are the qualities that make a successful entrepreneur?
Intelligent
Creative problem-solving skills
Self-starting
Committed
Motivated
Risk taking
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What about luck?
Luck by definition is random
In the long run, luck evens out for everyone
Luck plays some role in success but much less than you imagine
Don’t wait to get lucky; make your own luck
Chance favors the prepared mind
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Why is entrepreneurship important to Singapore?
The development of a thriving entrepreneurial sector in Singapore is not just an economic "nice-to-have."
In the knowledge- and innovation-driven globalized economy of the 21st century it is a competitive necessity.
In 2000, venture backed companies generated $736 billion in revenues and have created 4.3 million new jobs, so the small number of venture backed companies account for 3.3% of total jobs in the US and 7.4% of GDP.
Singapore itself is the product of entrepreneurship
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Why is entrepreneurship important to you?
What type of life do you want to have?– An average life or an extraordinary life?
What do you want to do with your life?– Create something of value from nothing or just make money?
Do you want to:– Make a difference?– Change the world in some way?– Leave something of value after you are gone?
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As an entrepreneur, you can:
Have an extraordinary life
Create something of value from nothing
Become rich
Make a difference
Change the world in a positive way
Leave something of value behind after you are gone
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Obstacles to entrepreneurship in Singapore
Lack of entrepreneurial skills
Attitudes toward risk
Cultural attitudes toward failure
Entrepreneurial success is difficult
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Entrepreneurship can be taught
Skills and talent are distinct
Talent is innate; everyone can improve their skills
Skills can be developed and improved through learning, training and practice
No matter what your innate level of talent, you can improve your performance by enhancing your skills
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How can entrepreneurship be taught?
Simulation - learning through doing
Like learning to play a musical instrument
How would you like to learn to swim by reading up on swimming theory and then being thrown in the pool?
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TR teams swept 2004 business plan competitions
Competition Number ResultStart-up@Singapore 1 1st Prize Winner
2 Finalist11 Semi-Finalist1 2nd Runner Up1 Youth Category 1st prize1 Youth Category Merit Award1 Best Executive Summary
Lee Kwan Yew BPC 1 1st Prize Winner1 2nd Prize Winner1 Finalist
Wharton BPC 2 Semi-FinalistNUS-Motorola BPC 1 1st Prize Winner
1 2nd Prize Winner1 Semi-Finalist2 Finalist - Gold Award2 Semi-Finalist - Bronze Award
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Winning teams came from all coursesTeam Competition Result Course
World Indigo Start-up@Singapore 1st Prize Winner TBV3012DermaTech Start-up@Singapore Youth Category Merit Award TBV3012
Semi-FinalistLee Kwan Yew BPC 1st Prize WinnerWharton BPC Semi-Finalist
Help-to-Screen Start-up@Singapore 2nd Runner Up TBV3012Youth Category 1st prize
Lee Kwan Yew BPC FinalistWharton BPC Semi-Finalist
Seed fundingFrensville/MobileTown NUS-Motorola BPC Semi-Finalist - Bronze Award TR3002
Seed fundingTMD Lee Kwan Yew BPC 2nd Prize Winner TR3102Liaser Start-up@Singapore Finalist TR5105
NUS-Motorola BPC 1st Prize WinnerAlphaFlux Start-up@Singapore Semi-Finalist TR3002Flaunt Cosmetics Start-up@Singapore Semi-Finalist TR3002Thinking Pictures Asia Start-up@Singapore Semi-Finalist TR3002TeXellence Start-up@Singapore Semi-Finalist TR5105XtenSAN Start-up@Singapore Semi-Finalist TR5105
NUS-Motorola BPC 2nd Prize WinnerNauticus NUS-Motorola BPC Semi-Finalist - Bronze Award TR5105HABYX Inc. Start-up@Singapore Semi-Finalist TR5105
Best Executive SummaryHepatech Start-up@Singapore Semi-Finalist TR3102
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TR teams received more than S$200,000 in 2004
Total prize money and seed funding of S$215,357
Team Amount
Help-to-Screen $ 63,568
Frensville/MobileTown $ 40,300
DermaTech $ 36,986
World Indigo $ 30,000
TMD $ 25,704
Liaser $ 12,000
XtenSAN $ 5,000
HABYX Inc. $ 500
Nauticus $ 300
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This could be you - DermaTech
First Prize Winner – Lee Kuan Yew Global Business Plan Competition 2004
Semi-Finalist – Wharton Business Plan Competition 2004
Semi-Finalist and Youth Category Merit Award - Start-up@Singapore 2004 – Total funding S$37,000
Featured on CNA and in Straits Times DermaTech - TBV3102
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This could be you – World Indigo
First Prize Winner – Start-up@Singapore Business Plan Competition 2004 – S$30,000
Representing NUS in the 2nd Global Start-up@Singapore Business Plan Competition in October 2004
World Indigo - TBV3102
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This could be you – TMD and Help-to-Screen
TMD- 2nd Prize in Lee Kuan Yew Global Business Plan Competition 2004 – US$15,000
Help-to-Screen – Finalist in LKY 2004, 2nd Runner Up and winner of 1st Youth Category Prize in Start-up@Singapore 2004, Semi-Finalist Wharton BPC – S$23,000
Help-to-Screen has received a term sheet for up to S$40,000 in seed funding
Help-to-Screen - TBV3102
TMD - TBV3102
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This could be you: Fresnville, Liaser, XtenSan
Frensville – Semi-Finalist, NUS-Motorola BPC, seed funding of S$40,000
Liaser – 1st Place Winner, NUS-Motorola BPC, Finalist, Start-up@Singapore – S$12,000
XtenSan – 2nd Place Winner, NUS Motorola BPC, Semi-finalist, Start-up@Singapore, 2nd Place Winner – IIT Megabucks BPC – S$6,000
Frensville – TR3002
Liaser – TR5105
XtenSan – TR5105
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This could be you – Geo-X and Apex Solutions
Both TR3002 teams – advanced to the final round in Start-Up@Singapore Competition 2002/3
Only eight out of 230 entrants went so far
Apex won a total of $2500 in prizes in the competition
Geo-X won $10,000 runner-up prize; also a finalist in the Mega-Bucks business plan competition held in India
Geo-X – TR3002
Apex Solutions – TR3002
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This could be you - QuantaGen
Won top prize of $30,000 in Start-Up@Singapore Competition 2002/3
Runner-up in the first Global Start-up@Singapore Business Plan Competition, beating out competitors from the top business schools in the world, including Harvard, Wharton and Stanford
Team members include Heng Eu Jin an NUS Overseas College student in Silicon Valley
QuantaGen – TR3103
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This could be you: Google
1995: Sergey Brin and Larry Page, two Stanford University graduate students develop the technology that will become the Google search engine.
1998: Sergey and Larry raise $1 million in funding from family, friends, and angel investors to start Google in a friend's Menlo Park, Calif. garage with four employees.
1999: Google raises $25MM from VCs and angel investors
2004: Google planning IPO at valuation of US$15-25 billion. Will sell 10-15% to public for $2 billion
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Founded by undergrads: Dell and Microsoft
Michael Dell, who founded Dell in 1984 with $1,000 when he was 19 years old. The company now employs approximately 41,800 people worldwide and reported revenues of $38.2 billion for the past four quarters.
Bill Gates, who founded Microsoft in 1975 while still an undergraduate at Harvard. Microsoft had revenues of US$32.19 billion for the fiscal year ending June 2003, and employs more than 54,000 people in 85 countries and regions.
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Why entrepreneurship?
Why entrepreneurship?
Let’s fail!
So how?
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Let’s fail: the importance of failure for innovation
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What is the relationship between risk and return?
Risk and return are highly correlated
You cannot increase return without taking more risk
How much risk do you want to take?
What type of life do you want to have?
How much return do you require?
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Evolving cultural attitudes toward failure
Failure is bad; avoid at all costs
Traditional
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Evolving cultural attitudes toward failure
Failure is bad; avoid at all costs
Failure is acceptable; leads to learning
Traditional Current
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Evolving cultural attitudes toward failure
Failure is bad; avoid at all costs
Failure is acceptable; leads to learning
Failure is desirable; necessary for innovation
Traditional Current Future
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The rate of technological change is increasing exponentially
1 10 100 1,000 10,000 100,000 1,000,000 10,000,000100,000,00
0
First Humanoids
Language
Agriculture
Abacus
Calculating machine
Telegraph
Stock Ticker
Light Bulb
Recording sound
Television
General purpose computer
Stored program computer
Integrated circuit
Mini computer
Microprocessor
Personal computer
IBM PC
Pentium
World Wide Web
Deep Blue defeats Kasparov
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The rate of innovation is increasing
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Ever-shortening product cycles require more innovation
Phonograph - invented in 1877 by Thomas Edison
33 rpm/45 rpm discs - 1948 (75 years)
Cassette tapes - 1970s (25 years)
Compact disc - 1990s (20 years)
MP3 files - 2000 (10 years)
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Innovation requires failure
“Failing is one of the greatest arts in the world. One fails toward success” - Charles Kettering - founder of Delco and inventor with 200 patents
“An inventor fails 999 times, and if he succeeds once, he’s in. He treats his failures simply as practice shots.” - Charles Kettering
Failure is “the opportunity to begin again, more intelligently” - Henry Ford, who started Ford Motors after failing at 2 previous ventures
“The fastest way to succeed is to double your failure rate” - Thomas Watson, founder of IBM
“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” - Bill Gates, founder of Microsoft.
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Sometimes failure itself is innovation
Post-It notes - failed glue
Scotchgard - spilled on shoes
Combat - failed additive for cattle feed
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The essence of risk is failure
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Failure is necessary to achieve success
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Why are people afraid to risk failure?
Fear of the unknown - “Why take a chance?”
Fear of looking stupid - “What will they think?”
Judging too quickly - “That will never work”
Attachment to the old - “We have always done it this way”
Attachment to past successes - “This approach got us here”
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Do not let fear stop you
Why are you afraid to try?
The outcome must be important to you; otherwise no fear
This makes you afraid to fail
If you do not try, then you have already failed
“You miss 100% of the shots you do not take” - Wayne Gretzky
Fear causes you to fail at the things that are most important to you
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Conquering your fear
Everyone is afraid
It is OK to be afraid
Don’t try to eliminate your fear
Work through your fear
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If you don’t fail, you are not trying hard enough
Most learning and progress are achieved through failure
The top scientists in the world fail more than average scientists
Everyone who is now highly successful took significant risk to get there
We don't regret the things that we do and fail at; we regret the things that we fail to do.
A life lived in fear is a life half lived
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Success from failure: Albert Einstein
1895: Fails entrance exam to the Swiss Polytechnic, a top technical university
1902: Unable to find work at a university, takes a job as a clerk at the Swiss Patent Office
Failure
1905: Submits paper on Special Theory of Relativity to a leading German physics journal. At age 26, formulates the equation e=mc2.
Now recognized as one of the leading thinkers of the 20th Century
Success
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What makes Silicon Valley different?
A different attitude toward failure
Many Silicon Valley VCs will only invest in entrepreneurs who have already failed
“I got my education on the mean streets of Silicon Valley, where I got to see how huge mistakes are made. Knowing what doesn’t work is perhaps more valuable than knowing what should work. Failure is just tuition. If you are in a failing start-up, take notes.” - successful start-up founder
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Only do things that are difficult to do
Everything that is worth doing is difficult
If it is easy, it is probably not worth doing
You should never hesitate to do something difficult
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Why entrepreneurship?
Why entrepreneurship?
Let’s fail!
So how?
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From idea to business model
How do we create value?
Who do we create value for?
What is our source of competence/advantage?
How do we differentiate ourselves?
How do we make money?
What are our time, scope and size ambitions?
Business model developed by Michael H. Morris, Ph.D
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Key steps to success
Develop an innovative product - Innovation
Choose the right market - Customers
Create sustainable competitive advantage - Competitors
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Product or service?
Odds of starting a company that made the Inc 500 list of fastest growing young private companies from 1982 to 2000
Biotech – 265 times higher than restaurant
Software – 823 times higher than hotel
Choosing the right opportunity is the most important determinant of success
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High risk, low return?
Product-based start-ups – High risk of failure– High return if successful
Service-based start-ups – Higher risk of failure– Lower return if successful
Choose an industry favorable to start-ups
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Evaluating new ideas
Original?
Feasible?
Marketable?
Profitable?
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What problem are you solving for customers?
You need to have a value proposition for customers
Start a business with a product that meet a real customer need
Develop a solution to the customers’ problem
Meet customer needs better than competitors
Evaluate customer preferences – traditional market research ineffective – listen to customers
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Identify, analyze and strategize your market
Identify market opportunity
The niche that will make you rich
Assess and analyze market– Competitors - don’t say you don’t have any– Customers
Develop marketing strategy– Differentiation that offers superior customer value– Cost leadership
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Create sustainable competitive advantage
Competing with established companies
Protect your intellectual property
Create barriers to entry
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Writing a model business plan
Concept
Market opportunity & strategy
Value proposition and sustainable competitive advantage
Products and services
Team
Financials, including pro-forma projections and valuation, total funding, funding required, equity offered and exit strategy
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Begin with an executive summary
The executive summary contains the key points of your business plan
This is all that most investors will read
Approximately 2-5 pages long
Define your business
Why and how it is going to be a success
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A value proposition
For (target customers)
Who are dissatisfied with (the current market alternative)
Our product is a (new product category)
That provides (key problem-solving capability)
Unlike (the product alternative)
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Amazon.com’s value proposition (circa 1995)
For people who buy books
Who are dissatisfied with shopping in bookstores
Our product is an on-line bookstore with millions of titles
That uses the Internet to transform book buying into the fastest, easiest, and most enjoyable shopping experience possible.
Unlike Barnes & Noble, Waldenbooks and other brick-and-mortar bookstores
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Product, team and financials
Describe the products and services in only enough detail for investors to understand why they should be interested
The team is the most important thing
Go beyond the management team
Financials– Business model– Projections and valuation– Funding required and equity offered– Exit Strategy and ROI
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Contact us
Douglas Abrams
65-9780-5381 (hp)
