introduction to entrepreneurial management - entrepreneurship 101 (2013/2014)

Entrepreneurial Management!5 Dimensions of Success!

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Nathan Monk!Sr. Strategist,!

Info. Technology (ICE) Practice, MaRS!!

@Cowboytweets!!!!!

A set of principles and frameworks that helps startups identify a sustainable

business model with the least amount of waste possible.

- Jon Worren, MaRS Entrepreneurship Programs

‘A legendary hero is usually the founder of something – the founder of a new age, the founder of a new religion, the founder of a new city, the founder of a new way of life. In

order to found something new, one has to leave the old and go on a quest of the seed idea, germinal idea that will have the potential of bringing forth that new thing.’ !

– Joseph Campbell, The Hero with a Thousand Faces!

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You do not need to just solve a ‘pain’ or ‘problem’ to be an entrepreneur. !

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Why?!

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What can I do well that I would love to do for an extended period of time?!

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Ask yourself.

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1.  Knowledge: what was the focus of your education or career?!

2.  Capability: what you most proficient at?!

3.  Connections: who do you know that has expertise in different industries? !

4.  Financial assets: do you have access to significant financial capital, or will you be relying on a meager savings account to start out!

5.  Name recognition: what are you or your partners well-known for?!

6.  In previous jobs you’ve held, what inefficiencies or pain points existed?!

7.  Passion for a particular market…!

8.  Commitment: do you have the time and effort to devote? ! !! ! ! !!

Read: Crush It! By Gary Vay-ner-chuck

Where to start ‘digging’.

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‘Often you will find an idea or technology that improves something for you personally, then realize that idea or technology has the potential to help many others.’ ! - Bill Aulet, Sr. Lecturer, MIT Entrepreneurship - Sloan School of Management !

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Your choice of co-founders is extremely important. The research at MIT suggest that businesses with multiple founders are more successful than

those founded by an individual. !

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Read: ‘ The Founder’s Dilemmas’ – Noam Wasserman!

It’s not a solo sport.

What is ‘Entrepreneurial Management’?!

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Ready to jump?!

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‘75% of all venture-backed start-ups fail.’ !– Shikhar Gosh, Harvard Business School!

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Why?!

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1.  Startups with helpful mentors, track performance metrics effectively & learn from thought leaders raise 7x more money & have 3.5x better user growth.!

2.  Pivoting startups raise 2.5x more money, 3.6x better user growth, & are 52% less likely to scale prematurely. Startups that haven’t raised money overestimate their market size by 100%. !

3.  Premature scaling is common reason startups perform worse: scale team, customer acquisition strategies, or over build the product.!

4.  Solo founders take 3.6x longer to reach scale stage.!

5.  Business-heavy founding teams are 3.3x more likely to successfully scale with sales-driven startups!

6.  Tech-heavy founding teams are 3.3x more likely to scale with a product-centric startup!

7.  Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams!

8.  Founders that don’t work full-time have 4x less user growth and end up raising 24x less money from investors!

9.  Most successful founders are driven by impact rather than experience or money.!

10.  Startups need 2-3 times longer to validate their market than most founders expect. The underestimation creates the pressure to scale prematurely. B2B and B2C isn’t a meaningful segmentation because of the way the internet has changed customer dynamics. !

Here’s what we know. !

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Source: Startup Genome Report: 3200+ high growth startups, co-authored by researchers at UC Berkeley & Stanford, supported by Steve Blank, the Sandbox Network & 10 global accelerators.

The art of ‘high-growth’ entrepreneurship is to master the chaos of getting each of these 5 dimensions to move in time and

concert with one another. !!! ! ! !!- Startup Genome Report!

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Customer Product Team

No segmenta+on Acquisi+on b4 PMF Missing PMF Vanity metrics trap Influencer focus Wrong archetype

Invalidated PSF Inves+ng scale before PMF 3.4x more lines of code Execute on irrelevant Poor MVP / conversion Outsourced dev.

Hiring too much too early Adop+ng mul+-‐levels Not hiring doers No accountability Lack of Customer Dvp. Focus on features No ‘search & learn’

5-Dimensions Failure Causation!

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Business Model Financials

Profit max. too early Over planning Not adap+ng to market Costs > revenue Pivot with no valida+on No learning capture

Undisciplined Raising too much No innova+on accoun+ng Picking wrong investors Deploying capital wrong No KPI or understanding

Misnomer Attributes

•  Emphasis on market size •  Product release cycles •  Education levels •  Gender •  Cofounder history •  Entrepreneurial experience •  Age •  Number of products •  Type of tools to track metrics

Source: Startup Genome Report: 3200+ high growth startups, co-authored by researchers at UC Berkeley & Stanford, supported by Steve Blank, the Sandbox Network & 10 global accelerators.

What can we do about this?!

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CUSTOMER PRODUCT TEAM BUSINESS MODEL

FINANCIALS

6- Stage Life Cycle of a Startup!

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ESTG PMF LSTG BMC

Search 4 repeatable & scalable business model Extreme uncertainty

STAGE ‘Marmer’

STARTUP

BEHAVIOURAL &

ACTUAL DIMENSIONS

• Learning • Valley of death

DISCOVERY • PMF • PSF

VALIDATION EFFICIENCY SCALE SUSTAIN CONSERVATION

i: $100k / month threshold / scaling, BMC ops. 60% Search for problem space & fit (PSF-PMF)

MaRS ICE Practice Startup Methodologies (‘insurance policy)’

High-risk of pre-mature scaling along all dimensions

Valley of Death

PSF

Validation

Startup Phase

Entrepreneurial Management

Tradi+onal

Management

Growth Phase

Search

Business Model?

Execu+on

1,000 Foot View

‘Scaling successfully is what separates eventual industry leaders from long-forgotten startups in the deadpool.’

– Michael A. Jackson!

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Whose theories do we follow? !Blank! Ries!

Ellis!

Osterwalder! Mauyra ! Aulet!

Christensen! Moore!

Ellis!

Social Compe++on

Technological

Poli+cal Economic

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•  A tactic for cutting back on wasted engineering hours!•  A strategy to get the product into early evangelists hands as

soon as possible!•  A tool for generating maximum customer learning in the

shortest possible time.!•  Answers the question: “What is the smallest or least !

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What is an MVP? (Minimum Viable Product)

Part 1: BUSINESS MODEL GENERATION! ! ! ! ! !!

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Environmental Factors !!! ! ! !!!

Part 2: CUSTOMER DEVELOPMENT !

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What we used to think…

Big idea…!We no longer compete on a product or service, but rather, a competitive, repeatable and scalable business

model. !!! ! ! !!!

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Listening to customers.!

1. •  Translate business

model hypotheses to test with customers

•  Develop an MVP of the solution to test with customers

2. •  Continuous testing

of hypothesis. •  Careful analysis of

customer interactions

•  Pivot or proceed

3. •  Product is refined

enough to sell. •  Build demand

through marketing & sales.

4. •  Business

transitions for startup mode to departments operating in functions

THERE ARE NO FACTS INSIDE THE BUILDING, SO GET THE HECK OUTSIDE.

Part 3: LEAN!

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!‘Lean’ methodology favours

experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional up-front development. !

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This is lean. !! ! ! !! !!

Why is this important?!!! ! ! !!!

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CUSTOMER SEGMENTATION !

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The single necessary and sufficient condition for a business is a paying

customer.!

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A target customer is a group of potential customers who share many

characteristics and who would all have similar reasons to buy a particular

product.!

!‘By choosing a single market to excel

in, your startup can more easily establish a strong market position,

and hopefully a state of positive cash flow, before it runs our of resources.’ !

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Milkshake

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But wait….don’t start building, scaling, hiring etc…!

7 key questions I’ll leave you with.!!! ! ! !!!

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7 key questions!!! ! ! !!!

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Summary

•  Be driven by impact

•  It’s not a solo sport

•  Understand failure

•  Search and learn

•  Lean dev is key

•  Build a business model

•  Get out of the building

•  Segment your customers

•  Test, test, test

•  Listen to customers

•  Remember the 7 key questions

•  Have fun

Summary

•  Entrepreneurial Management offers a set of tools and processes that makes the process of starting up more manageable:

•  The philosophy brings clarity to the skillset required to succeed: –  Less persistence – more perception –  Stack the odds in your favour – rather than trying to win against all odds –  Commit to the process – not the idea

It’s not the beginning of the end, but it is perhaps the end of the beginning. !

! ! !! ! !- Steve Blank, Startup Owner’s Manual!

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Thank you. !

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Nathan [email protected]!

@Cowboytweets!

Appendix!!! ! ! !!!

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Lean Traditional!