introduction to entrepreneurial management
DESCRIPTION
Research from Harvard Business School’s Shikhar Ghosh shows that 75% of all startup enterprises fail. What causes these failures and what can entrepreneurs do to mitigate the risk? Enter “Entrepreneurial Management.” In Session 4 of Entrepreneurship 101, we discuss the research from Startup Genome’s report, define the 5-Dimensions of success and introduce entrepreneurial management practices that startups can use to reduce the risk of failure. Startups are not just small versions of big companies – they need special tools and methodology to manage uncertainty and find their place in the market. We aim to equip attendees with the tools to mitigate risk and enjoy the journey of building a great company.TRANSCRIPT
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Visit us at marsdd.com 16 October 2014
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Visit us at marsdd.com
ENTREPRENEURIAL MANAGEMENT N A T H A N M O N K , @ C O W B O Y T W E E T S I C T V E N T U R E S E R V I C E S
1 5 O C T 2 0 1 4
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“ “ 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 potenYal of bringing forth that new thing.
Joseph Campbell, The Hero with a Thousand Faces
15 October 2014 Entrepreneurial Management
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ENTREPRENEURIAL MANAGEMENT
You do not need to just solve a ‘pain’ or ‘problem’ to be an entrepreneur.
-‐
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ENTREPRENEURIAL MANAGEMENT
15 October 2014
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ENTREPRENEURIAL MANAGEMENT
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Ask yourself: What can I do well that I would love to do for
an extended period of Yme?
-‐
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ENTREPRENEURIAL MANAGEMENT
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1. Knowledge: what was the focus of your educaYon or career? 2. Capability: what are you most proficient at / strengths?
3. ConnecYons: who do you know and in what industries? 4. Financial: do you have significant financial capital, or meager
savings account to start? What is your ‘Ramon Noodle’ diet?
5. Name recogniYon: 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 parYcular market?
8. Commitment: do you have the Yme and effort to devote? -‐
Where do I start ‘digging’?
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ENTREPRENEURIAL MANAGEMENT
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“Olen you will find an idea or technology that improves something for you personally, then realize that idea or technology has the potenYal to help many others.’” -‐ Bill Aulet, Sr. Lecturer, MIT Entrepreneurship, Sloan School of Management
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Our Future MaFers 15 October 2014 ENTREPRENEURIAL MANAGEMENT
E N T R E P R E N E U R I A L M A N A G E M E N T
DEFINING
ENTREPRENEURIAL
MANAGEMENT
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ENTREPRENEURIAL MANAGEMENT
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A set of principles and frameworks that are aligned with your passion and help you idenYfy a sustainable and repeatable
business model, while managing the chaos of scaling through 5 phases of business
growth.
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The Emergence of New PracYces
1911 Scien6fic Mgmt
1948 Toyota
Produc6on System
2001 Agile
Develop-‐ment
2003 Lean
Thinking
2005 Customer
Development
2009 Lean
Startup Mvmt
15 October 2014
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ENTREPRENEURIAL MANAGEMENT
Are you ready to jump?
Really?
Are you sure?
Seriously?
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“ “ 30-‐40% of all U.S. startups fail (liquidaYng all assets) and 95% fail to deliver projected return on investment or breakeven by a defined Yme period.
Shikhar Ghosh, Sr. Lecturer, Harvard Business School
Entrepreneurial Management 15 October
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ENTREPRENEURIAL MANAGEMENT
Are you sure you want to jump?
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Why do startups fail? ENTREPRENEURIAL MANAGEMENT
Customer Product Team
No segmenta6on Acquisi6on b4 PMF Vanity metrics trap Wrong target Wrong archetype
Invalidated PSF Inves6ng scale before PMF 3.4x more lines of code Execute on irrelevant Poor MVP / conversion Outsourced development
Hiring too much too early Adop6ng mul6-‐levels Not hiring doers No accountability Lack of Customer Dvp. Focus on features No ‘search & learn’
Business Model Financials
Profit max. too early Over planning Not adap6ng to market Costs > revenue Pivot with no valida6on No learning capture
Undisciplined Raising too much No innova6on accoun6ng 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
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ENTREPRENEURIAL MANAGEMENT
If your answer is sYll
YES.
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ENTREPRENEURIAL MANAGEMENT
16 October 2014
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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. (SGR)
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ENTREPRENEURIAL MANAGEMENT
1. Startups with helpful mentors, track performance metrics effecYvely & learn from thought leaders raise 7x more money & have 3.5x beFer user growth.
2. PivoYng startups raise 2.5x more money, 3.6x beFer user growth, & are 52% less likely to scale prematurely. Startups that haven’t raised money overesYmate their market size by 100%.
3. Premature scaling is common reason startups perform worse: scale team, customer acquisiYon 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-‐Yme 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 Ymes longer to validate their market than most founders expect. The underesYmaYon creates the pressure to scale prematurely. B2B and B2C isn’t a meaningful segmentaYon because of the way the internet has changed customer dynamics.
We now know.
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6-‐ Stage Life Cycle of a Startup
15 October 2014 Entrepreneurial Management
ESTG PMF LSTG BMC
Search 4 repetable & scalable business model Extreme uncertainty
• 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)
Valley of Death
PSF
“Scaling successfully is what separates eventual industry leaders from long-‐forgoden startups in the deadpool.” – Michael A. Jackson
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“ “ Success is going from failure to failure without loss of enthusiasm.
Winston Churchill
Entrepreneurial Management 15 October
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The Entrepreneurial API
Entrepreneurial Management
Business Model
Stages
Lean Itera6on
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E N T R E P R E N E U R I A L M A N A G E M E N T
FRAMEWORKS AND METHODOLOGIES
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Who do we follow? The Founders of lean, disrupYon, crossing the chasm, business model innovaYon, startup markeYng and the discipline of entrepreneurship: Blank, Aulet, Christensen, Ellis, Mauyra, Ries, Moore Osterwalder, Chen 15 October
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1. Business Model GeneraYon
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Business Model
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4. Customer SegmentaYon
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4. Customer SegmentaYon
PresentaYon Title Goes Here 15 October
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Big idea…
We no longer compete on a product or service, but rather, a compeYYve,
repeatable and scalable business model.
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7 key quesYons
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Source: Osterwalder Masterclass, 2012
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Source: Osterwalder Masterclass, 2012
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Source: Osterwalder Masterclass, 2012
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Source: Osterwalder Masterclass, 2012
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Source: Osterwalder Masterclass, 2012
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Source: Osterwalder Masterclass, 2012
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Source: Osterwalder Masterclass, 2012
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Environment
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2. Customer Development (new IP)
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What we used to think…
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What happens today…
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• Translate business
model hypotheses to test with customers
• Develop an MVP of the solution to test with customers
• Continuous testing
of hypothesis. • Careful analysis of
customer interactions
• Pivot or proceed
• Product is refined
enough to sell • Build demand
through marketing & sales
• Business
transitions for startup mode to departments operating in functions
Customer Development Cycle
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3. Lean
15 October 2014
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‘Lean’ methodology favours experimentaYon over elaborate planning, customer feedback over intuiYon, and iteraYve design over tradiYonal up-‐front development.
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3. Lean
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Process
Assump6ons
Test problem Assump6ons
Measure
Evaluate
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Lean vs. TradiYonal
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Why is this important?
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4. Customer SegmentaYon
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A target customer is a group of potenYal customers who share many characterisYcs
and who would all have similar reasons to buy a parYcular product.
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Milkshake
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By choosing a single market to excel in, your startup can more easily establish a strong market posiYon, and hopefully a state of posiYve cash flow, before it runs out of
resources.
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5. Growth Hacking
15 October 2014 Entrepreneurial Management
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Growth Hacking Funnel
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Growth Hacking Funnel
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Growth Hacking Funnel
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E N T R E P R E N E U R I A L M A N A G E M E N T
CONCLUSION
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Summary • ‘Dig for your idea’ and be ready for Everest • Understand why we fail so you can succeed • Hypothesize, test & validate your assumpYons
• Search, don’t execute for your business model • Talk to customers (get out of the building) • Minimize waste, deploy resources efficiently
• Build a diversified dream team • Growth Hack when ready and opYmize funnel • Have fun, it’s an amazing journey
• Put MaRS to work. We are here to support you. 15 October
2014
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What do I do next?
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Thank you. "Visit my post-mortem blog on marsdd.com"
""""
Nathan Monk"[email protected]"
@Cowboytweets"
15 October 2014