Entrepreneurship class

BUSINESS

ENTREPRENEURSHIP

CLASS

LECTURE SLIDES

SPRING 2013

ERDEM OVACIK

Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 2

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THE THREE PATHS


THE DIP THEORY


EVEN WHEN YOU SUCCEED, IT’S TOUGH ON THE WAY

• Advancing career

• Regular income• Good workplace• Regional clients

& opportunities• Great colleagues

Time and/or Energy

Reward

• Uncertain income• No unemployment benefits• Cut back on life’s luxuries• Crappy economy• Work insanely hard• Do everything self• Often, lonely• Can’t bitch about it• Don’t know where it’s going

• Industry recognition• Live fully• Wake up and be excited

about the day• Do stuff you’re really

passionate about• Spend time with family• Travel the world• Afternoon naps

• Exciting start• Able to dream

everything• Comfort of being

new – anything can happen


AND IT MAY GO NOWHERE…

• Advancing career

• Regular income• Good workplace• Regional clients

& opportunities• Great colleagues

Time and/or Energy

Reward

• Uncertain income• No unemployment benefits• Cut back on life’s luxuries• Crappy economy• Work insanely hard• Do everything self• Often, lonely• Can’t bitch about it• Don’t know where it’s going

• Exciting start• Able to dream

everything• Comfort of being

new – anything can happen


PEOPLE HAVE DIFFERENT MOTIVATORS

MYERS BRIGGS

Intravert

Extravert

Sensation

Intuition

Thinker

Feeler

Judgment

Perception

Knowing who you are helps you find out where and how you should work

vs vs vs vs

4 main personality types

SPwants action

SJwants order

NTwants creation

NFwants purpose

Erdem Ovacik – Business Entrepreneurship Project – Spring 2013

GUESS WHO IS WHO

4 main personality types

SPwants action

SJwants order

NTwants creation

NFwants purpose

Journalist

Quantum physicist

Investment banker

Human resources Teacher

Process engineer

Sales advocate

Business developer

Top-notch developer

Accountant

LawyerEntrepreneur

Priest

Lobbyist

Design freak


YOU SHOULD HAVE A SPECIAL CONNECTION TO WHAT YOU DO

If your business idea is any good,

there will be competition.

there are 7 billion people on earth who want to make money and something meaningful. there’s always someone ahead.

therefore


ENTREPRENEUR CAN MEAN SELF-EMPLOYMENT

One-person show.

Not scalable:

more hours => more income

Own boss. BUTOwn employee, also.

No value generation without you.


BUT THERE IS MORE THAN THAT

Create a system, so work doesn’t depend on you

Disproportional value creation

Own boss.

You can take a holiday. You will still be paid. Can also hire a CEO.


ENTREPRENEURSHIP = BUILDING INSTITUTION


THE JOB OF THE ENTREPRENEUR

(Inspire People.)


WHY DO YOU NEED TO INSPIRE?

Attract best people to go on a journey with you.

Convince people to invest their money on you.

Get people try your sub-optimal product.

Make media write about your project.

BEFORE YOU HAVE MUCH TO SHOW… IT’S ALL YOU.


THINGS YOU NEED / SKILLS YOU NEED EVERY DAY

Write blog post

Tell your story to random people

Motivate people

Accounting

Sell

Sell

Sell

Do your website

Wake up your employee

Book meetings

Design your logo

Get the beers for Friday bar

Wait on the phone to speak to tax authority

Negotiate with partners

Prepare power points

Edit email list


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


STARTUP ENVIRONMENT


BUSINESS MODEL GENERATION – THE CANVAS


WHO ARE OUR MOST IMPORTANT CUSTOMERS?

Two sided:2 or more interdependent customersEx: Credit Card holders & merchants

Diversified:Unrelated groupsEx: Amazon

Niche:Specific specialized segmentsEx: car part manufacturers

Segmented:Slightly different problemsEx: Credit Suisse Retail Banking

Mass:One broad groupEx: Milk


WHAT VALUE DO WE PROPOSE?

New Service Cell phones, ethical investment funds.

Performance PC market, light bulbs, energy efficient equipment

Customization Threadless, car market, MYC4

Payment per use RollsRoyce engines, subscription software

Design Swatch, Mini

Brand / Status Rolex, Bentley, Louis Vuitton

Price Ryanair, free email

Cost reduction Salesforce software on the cloud

Risk reduction IT service level guarantees, car 1-yr service guarantee

Accessibility 7Eleven in Denmark, NetJets

Convenience / Usability iPod, Google Search & Mail


WHICH CHANNELS BEST SUITED TO REACH CUSTOMERS?

Own Channel

Partner Channel

Direct Indirect

Sales force

Web sales

Own stores

Partner stores

Wholesaler


Awareness

Evaluation Purchase Delivery After

sales

CHANNEL DEVELOPMENT STAGES

Developing channels takes time!


WHAT KIND OF RELATIONSHIPS WITH CUSTOMER ARE MOST VIABLE?

Personal assistance(dedicated vs not-)

Self- service

Automated services (stimulates personal care)

Communities / co-creation(peer reviews, peer-recommendation)


HOW MUCH AND HOW ARE YOUR CUSTOMERS GOING TO PAY?

Asset sale Subscription

Pay for use

Licensing Advertising

Rent / lease / lend Brokerage


PRICING STRATEGIES

Fixed Menu Pricing

(prices pre-defined based on certain

variables)

Dynamic Pricing(price based on market

conditions)

• List price

• Product/feature dependent (upgrade for new features)

• Customer segment dependent (price discrimination)

• Volume dependent (get 3 for 2)

• Negotiation

• Yield management (plane seats, hotel booking)

• Real time market (Commodity markets)

• Auctions (Google and Facebook Ads)


5 SLIDES UNTIL THURSDAY

1. Project name, your name and your mantra.

2. What is the customer pain today

3. How will your product / service solve it

4. How will you make money: business model

5. Your go-to-market strategy (how will you establish clientele)?

6. Expected revenue (per annum, next 5 years)

Samples:

http://www.slideshare.net/dmc500hats/zapmealscom-closing-the-gap-between-your-mouse-your-tummy-for-supernova-2007

http://austin.startupweekend.org/2010/09/11/presentation-template/

http://www.examiner.com/article/ten-slides-make-a-killer-investor-presentation











KEY RESOURCES

Physical Assets

Intellectual asset, copyright, code, knowledge

Relationships, Trust, Brand recognition

The team with their skills and motivations

Petty cash


KEY ACTIVITIES

Production.

Value: quality, flexibility, lean (not wasteful), just in time

Problem solving.

Value: knowledge management, continuous training

Platform.

Value: Match demand & supply, security, performance


KEY PARTNERSHIPS

Strategic Alliance non-competitors

Coopetition alliance betw. competitors

Joint ventures develop new biz

Buyer / supplier reliable sales / supplies

TYPES

WHY Acquisition of particular resources or activities (ie, google motorola)

Optimization and economies of scale (Starbucks buys coffee)

Reduction of risk and uncertainty (Touch screen manufacturer)


COST STRUCTURE

Cost-driven versus Value-driven business: different sensitivity around cost

vs

Fixed costs Variable costsEconomies of scale

Economies of scope

Office, factory Labor, energy Bulk purchase is cheaper

Important concepts:

Synergies between business lines


THE LEAN STARTUP

1. Entrepreneurship IS Management (under conditions of extreme uncertainty)

2. Startups exist to create Validated Learning – its biggest asset, which helps undergo uncertainty

3. Build – Measure – Learn cycle as the regular activity of startup life


WHY THE HYPE?

1. Most startups fail.

2. Western economies under pressure to innovate.

3. Demonstrated reduction in waste and increased success rate in companies.


TWO RECENT APPROACHES TO STARTUPS

Defined everything, execute the “plan” Just Do It

vs

Business plan Real life extreme uncertainty


LEARN TO LEARN – TO UNDERGO EXTREME UNCERTAINTY


THE MAGIC VALIDATED LEARNING LOOP


GOING WILD MAKES SENSE IF YOU ARE LEARNING

What are your assumptions?The loop gives => validated learning

What will people sign up to?

How are you accumulating your knowledge?

Website, video, minimum viable product, features, additional services, channels, pricing, etc

Call, talk, interview, survey, watch, A/B test, Google-analyse

Drive conclusions on your initial assumptions.


START WITH CLARIFYING YOUR ASSUMPTIONS

When we have an idea, we make (conscious or unconscious) assumptions.

Know your assumptions.

To get some answers, ask:

- Do consumers recognize that they have the pain you are trying to solve?

- If there was a solution, would they buy it? - Would they buy it from us? - Can we build a solution for that problem?


THINK HARD – WHAT ARE YOUR TOP 3 KEY ASSUMPTIONS?

Student idea

An App to report Autoparking availability from car-parks.

- Autoparks would SMS info every half hour to receive 5% more traffic

- Customers would pay 1$ per request

- There are regularly parks with idle capacity


BUILD SURVEY, SCREENSHOTS, ETC TO MEASURE

Students put together an interface and went to speak to autoparks.

They also received signups to the service and launched a survey to find out how willing people were to pay.

They did not start coding a product. Initial product was the product interface and a website.


REMEMBER TO GET YOUR BUTT OUT THERE.

Answers are out there. Use your network, creativity, etc to get to them


FIND OUT WHICH WAY TO CONTINUE

Students found out that autoparks did have the space and they would SMS every half-hour to report on the availability.

But, users would not pay $1 to find out about the availability!

They quit the project. For now.


A FINE BALANCE OF SPEED, LEARNING AND FOCUS


VIRTUE OF LEAN: STOP WASTE

Don’t waste your time, others time.

Don’t waste money.

We live once, so make sure you do stuff that succeed.

So, smell it as early as possible when you are wasting time.

Control Damage by thinking Lean.

KNOW WHEN TO STOP.


ADJUSTING/OPTIMIZING VERSUS PIVOTING

Are your assumptions giving you validation of improved success?

New featuresNew features


THE LEAN CANVAS: ANOTHER TAKE ON BIZ MODEL GEN


YOUR NEXT STEP: BUILD MODEL WITH ASSUMPTIONS

Build a simple spreadsheet with:

• Number of units sold

• Price point

• Costs

Revenue

Profitability

Total investment to break-even`

Clarify assumptions versus calculated figures.

If you like, use this simple template: goo.gl/cd6PU

Take a look at this blog post: goo.gl/hlK4b

http://goo.gl/cd6PU


EXAMPLE OF BUSINESS MODEL AND ASSUMPTIONS


USE TEMPLATE TO BUILD YOUR BUSINESS PROJECTIONS

goo.gl/X13Kx

https://drive.google.com/a/wedecide.net/previewtemplate?id=0AieE1sc7NlmJdHBQM3dqM2JhaUNkREFuWVNTSHNxQWc&mode=public

https://drive.google.com/a/wedecide.net/previewtemplate?id=0AhCf9DYUG_mAdFMxUkhOUW9WSHZlZzQ2ZTM0MjZvUXc&mode=public

https://drive.google.com/a/wedecide.net/previewtemplate?id=0AtLgJd8SING0dHNJRHQ3MURNNC1LeGZVcUhRdlFuWGc&mode=public

https://drive.google.com/a/wedecide.net/previewtemplate?id=0Am9tWKNHeZGwdHJwcl84N3Q2dWh2QWtQekFtbzlHVUE&mode=public

https://drive.google.com/a/wedecide.net/previewtemplate?id=0AnsQwXgRrzkUdGpZelJ2bmZ2Y3pDaERhVVdodEppRUE&mode=public

Use this: goo.gl/cd6PU

Others for inspiration:














http://goo.gl/cd6PU

http://goo.gl/cd6PU

http://goo.gl/cd6PU


TIME TO GET OUR HANDS DIRTY

Start communicating your idea.

Find out about your assumptions


THE STEP TO START IS HALF OF THE WAY (TURKISH SAYING)

Declare to world what you’re up to.

Public recognition.Inbound contacts.


REMEMBER TO KEEP MEASURING WHAT YOU’RE DOING AND WHY (LEAN)

Once you’re in, it’s natural to keep going.

Remember to check your speed and direction.

Measure progress. Remember Lean.


ESTABLISHING YOURSELF. COMMUNICATE.

Define your identity. Name, Mantra, URL, logo, Biz cards,

Start your website. Design, content, action step

Start a blog. Genuine content, links

Engage professionals Join groups, company profile, LinkIn!

Engage friends Your page, visuals/videos, discussions

Engage thought-leaders Relevant, connect

What How












TESTING YOUR ASSUMPTIONS

Qualitative / Quantitative Survey Don’t lead, keep short, be concise

Interviews Don’t lead

Website visitor analysis See demographics, set goals/conversion

Newsletters Measure opening rate, links clicked

Usertests Watch the user, don’t lead

Ad Response Targeting, A/B test message and design

Cohort Analysis & A/B Test Analyse behavior on actual platform

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Education

Entrepreneurship class