nciia conference email: [email protected] twitter: @taylorpamm startup incinerator

NCIIA Conferenceemail: [email protected] twitter: @taylorpamm

Startup Incinerator

NCIIA Conference

Startup Incinerator

email: [email protected] twitter: @taylorpamm

• Who am I?• R.F. Culbertson • Entrepreneur / Prof. of Entrepreneurship @ CMU• Email = [email protected]• Twitter = @taylorpamm • Cell = 412.855.8767 (d)• Started “The Apprentice” in 1998 – 1999

• NBC – the rest was history…

mailto:[email protected]

• Who am I?• R.F. Culbertson = [email protected]• @taylorpamm / 412.855.8767 (d) / ‘The Apprentice’

• What do you do again?• In-Class Competitions for specific learning outcomes!• Goal is NOT to start a business … but rather• Teach you how to THINK like an Entrepreneur…



• It’s my view that entrepreneurship requires...



• It’s my view that entrepreneurship requires...“A very particular set of skills.”



• A ‘set of skills’ that – overtime:

“Will allow you to be compensated for your

VALUE rather than your TIME.”



• Why take ‘Startup Incinerator’?“Eventually you will want to be compensated for your

VALUE rather than your TIME.”


Everyone wants more entrepreneurs

do the math

I mean Everyone…

I mean More (20X)…

But as I would Teach: Market and Margin Related Issues:

Criterion High Potential Low PotentialProblem Identified UnfocusedCustomers Reachable Unreachable Payback < 1 year > 3 yearsValue Added IRR > 40% IRR < 20%Market Size $50 -100MM <$10MM or > $100BMarket Growth > 20% / annum < 20% & contractingGross Margin > 40% & maintain < 20% & fragile

E-ship’s 4 Pillars

And as I would Teach: Competitive Advantage:

Criterion High Potential Low PotentialFix / Vari Costs Lowest HighestDegree of Control Stronger Weaker Barriers to Entry None Strong

Proprietary AdvantageLead-Time Advantage

Service ChainContractual AdvantagesNetwork Advantages


As I would Teach: Value Creation:

Criterion High Potential Low PotentialProfit after Tax 10-15% < 5% and fragileBreakeven < 2 years > 3 yearsPositive Cash Flow < 2 years > 3 yearsROI Potential 40-70% < 20% and fragileValue High strategic Low strategic Capitalization Req. Low-Moderate High/difficult to fundExit Mechanism IPO, acquisition Undefined / illiquid

invest.


As I would Teach: Value Creation:

Criterion High Potential Low PotentialProfit after Tax 10-15% < 5% and fragileBreakeven < 2 years > 3 yearsPositive Cash Flow < 2 years > 3 yearsROI Potential 40-70% < 20% and fragileValue High strategic Low strategic Capitalization Req. Low-Moderate High/difficult to fundExit Mechanism IPO, acquisition Undefined / Non-Liquid

invest.


As I would Teach: Management Team Issues:

Criterion High Potential Low PotentialE-Team All-stars, Solo entrepreneur

free agents

Industry / Tech Superior records New guys on the block Experience

Intellectual Know what they Do NOT know, what Honesty do not know they do not know


But: What about Teaching Entrepreneurship Experientially?

It’s like ‘falling in love’

LOVE takes A LOT of work = Perfection!

(Nobody WANTS the Runner-Up)

Tell Me – I will forget,

Show Me – I will remember,

Involve Me – I will understand.

—Ancient Chinese

proverb

We need to become X-perienced ‘Want-Tra-Preneurs’:

• Teach the 4 Pillars of Entrepreneurship

• Using an X-periential methodology

• With Specific Learning Outcomes

• Crowning a (1) Winner and (Many) Losers each time!

In Classroom, Outcomes Based Competitions

The Goals:- Augment an Entrepreneurship Offering- Learn the 4 Pillars:

- Dynamic Decision-Making,- How to Sell,- Multi-Disciplinary Team Formation,- and Granular Cash Flow Analysis

- Use In-Classroom Competitions to Improve Business Survival Rates

‘The Apprentice’ morphed into ‘Startup Incinerator’- Students = No Ideas & very Diverse Bkgds.- No Business Plans- No Investor Pitches- Emphasis on Profitability &

Sustainability

In Classroom, Outcomes Based Competitions

Is an “Intro” Level Course- 2.5 week projects with SME’s- For REVENUE projects – the Team that turns in

the Most $’s WINS ALL the $$’s

Startup Incinerator:

4 Specific Goals:- Improve Dynamic Decision-Making1


4 Specific Goals:- Learn How to Sell2


4 Specific Goals:- Encourage Multi-Disciplinary Teams3


4 Specific Goals:- Business Modeling via Granular Cash Flow4


0 + 1000

But I also wanted to teach:Entrepreneurial Thinking

Add these numbers out loud with me:

+ 1000

+ 10 = ?

So - Who’s My Customer?

Any ‘Student’ @ CMU?- Any major – Normally WITHOUT an ‘Idea’

What’s the Syllabus? (Pt. 1)

Create, Compete & Destroy Teams Every 2 Weeks- Solve, real-world SME problems – 2 Weeks- SME’s contribute prizes- SME’s Problems Focus on :

- Teams working together- Sales - Decision-Making- & Cash Flow


Create, Compete & Destroy Teams Every 2 Weeks- Solve, real-world SME’s problems – 2 Weeks- Failures are analyzed and ENCOURAGED


Create, Compete & Destroy Teams Every 2 Weeks- Solve, real-world SME’s problems – 2 Weeks- Failures are analyzed and ENCOURAGED- We Compete (to WIN) Every 2 Weeks


Create, Compete & Destroy Teams Every 2 Weeks- Solve, real-world SME’s problems – 2 Weeks- Failures are analyzed and ENCOURAGED- We Compete (to WIN) Every 2 Weeks

- 3 Presentations of 2.5, 1.5, and 1 minute

What is the Structure? (Pt. 1)- Teach A Different Aspect of Entrepreneurship /

Every 2 weeks.- The Lectures Match the Project’s focus- For example:

- Granular Cash Flow:- #1 producing Team – Wins ALL the $$’s- Teaching: Accounting, Finance, YOM (Your

Own Money) vs OPM, The Incubator Model (pros and cons)

What is the Structure? (Pt. 2)- How we Build Teams:

- Fantasy Football – Auction method for teams- Captains have $100 (fake) and bid for players

(no more money = no more players)- Produces uneven numbered teams- Teaching: Hiring and Firing, Leadership,

Motivation, Teams captains label the Best and Worst team members

What is the the Competition? (Pt. 1)

Pre-Incinerator:- Teams hand in docs, ppt’s, xls’s for Seating- TA’s ‘seat’ the teams = Bracketology- In some projects – M&A is encouraged- Presentations are:

- 1st Round = 2.5 min - Semi-Finals = 1.5 min (smack-talk)- Finals = 1 min (smack-talk & rebuttal)


Let the Games Begin:- There is NO Quit!


Let the Games Begin:- There is NO Quit!- Dynamic Decision-Making (3 Presentations / Comp.)- After 1st Presentation = ‘smack talk’ & ‘rebuttal’- Judges = Experts / Social Media / Peers / TA’s / $$’s

- Voting Points can vary with level of expertise! - Voting via Mobile Device (in classroom)


Judging:- Rubric for Evaluation (written)- Quantitative (Varies with Topic)- Given to the teams Post-Incinerator- Teams choose ‘Best and Worst’ (defense)- Where Hunger Games meet American Idol

How do you Make Money?

International University Partnerships:

T-Shirts:- Direct Sponsors - Compensation based upon frequency- Sponsor Freebees based upon ‘wearing’- $10,000 - $15,000 / semester (small school)- Example on your chair(s)

- Entrepretainment - Education and Fun (real life successes and failures)

- Improved Sustainability – as Teams and Ideas are ‘battle tested’ and ‘combat ready’

- Sense of Community – the SME’s that we help are forever grateful for the visibility, awareness and the opportunity

WIIFM (the Student)?

WIIFM (the Team)?- Experience Quotient Increases by a factor of 20

- 1st Time Entrepreneurs – Success Rate = 1:1,000- 2nd Time Entrepreneurs – Success Rate = 1:50

- Talent Evaluation- Appreciate Granular Cash-Flow- Lean how to Sell

- Exposure to Judges, Mentors, Investors and Social Media

WIIFM (the University)?- International Exposure – expand your global

footprint by partnering w/ Universities in other countries

- Gain an Additional E-Framework to teach, monitor, and reward

- Gain Additional Funding Sources (Corp. / Angel)- Increase our Cash Flow and valuable Relationships

- Last Cash Prize = $27,000

WIIFM (the Results)?

- Startups:- Students come in w/ and w/out ideas- Last 5 Years - Class has spun-out 30+ businesses- 26 still alive / Largest > $140M+

- Always Over-Subscribed- “Best Value for Money Course on Campus”

… Dr. Jerod Cohen – (President of CMU)

- Spun Out 2 Other Courses- “Business for Engineers” & “Topics in E-ship”

WIIFM (the Results)?

History will Repeat Itself:

Turning Startup Incinerator into a Reality - TV Show:-VC’s & Networks have approached:-Please Write to:

- Continue the Dialogue- Obtain the Free Course Materials- To be Included in the Startup Incinerator

- Schools- VC’s- Sponsors

Questions:

- Create a Multi-Campus, Franchisable Food Truck:- Bring in Franchisees, & Franchisors from our area- Winning group received franchise focused prizes- Judges:

- Local Franchisees- Local Franchisors- Bankers- Students- Social Media

1

Cash Flow Example: Franchising Food Trucks

Cash Flow Example: Franchising Food Trucks - Concept (10% of the time)

- # of Trucks on Campus?- Menu Diversity?- Price Range?- Speed of Service?- Your Offering is…

2

Cash Flow Example: Franchising Food Trucks - Financing (90% of the time)

- Best Value for $’s?- Highest Turn?- Lowest Cost?- Deal to Franchisee?- Cash Flow from Bank

- To Franchisee - To Royalty Stream

- Measure Impact of FundingOn Decision-Making

3

Cash Flow Example: Teaching (for these 2 weeks)

- Accounting & Finance- Helps to bring an otherwise ‘dull’ topic – TO LIFE!- 3-Year Cash Flow Analysis

- With Timings, Taxes, Sector Comp’s, Financial %’s - Emphasize the feedback loop between Finance, the

Business Model, and the Health of the StartUp.

4

Sell Synth – a CMU (soon to be released) Absinthe- 111 Proof, Sweet, Glows in the Dark, $24.99- 20% commissions paid on each sales- Who’s their Customer?

- Local Groups- Liquor Stores- Bars- Restaurants- Individuals

Sales Example: Synth (a soon to be released Liquor)

Should AXS.TV – Go Mobile?- Examine Past – Present - Future:

- Stakeholders, Partners, End-Users, and AXS-Team- Can the AXS Team withstand the Culture Shock… - Content Required- Viewership- Cannibalization - Support

- Advertising- Partners

Decision-Making: AXS.TV (a Mark Cuban Company)

In Class / On & Off Campus – “We Preach & Practice”

We ‘preach’ Thinking

We ‘practice’ Doing

In Class:

We ‘preach’ Delegation

On & Off Campus:We ‘practice’ Leadership

& Accountability

In Class:

We ‘preach’ Communication

On & Off Campus:We ‘practice’ Consistency

(No Surprises)

In Class:

We ‘preach’ Urgency

On & Off Campus:We ‘practice’

Evaluation

In Class:

We ‘preach’ the Connection

We ‘practice’ beingIn Synch

In Class:

We ‘preach’ FiscalResponsibility

On & Off Campus: We ‘practice’ Granular

Cash Flow

In Class:

We ‘preach’ M&A

On & Off Campus:We ‘practice’ Increased

Decision-Making

In Class:

We ‘preach’ DynamicThinking

On & Off Campus:We ‘practice’ Staying

Alive

In Class:

We ‘allow’ Hiring &Firing

On & Off Campus:We ‘practice’

Darwinism

We Learn by Doing what NOT to DO…(FAILURE)and we DON’T sugar-coat the endings!Difference = You’re there to CATCH THEM!

In Conclusion:

An intended learning outcome should describe what students should know or be able to do [ Sales, Dynamic Decision-Making, Team Building, Granular Cash Flow ] at the end of the course that they couldn’t do before.

Intended learning outcomes should be about student performance. [ the bi-weekly competition]

Good intended learning outcomes shouldn’t be too abstract (“the students will understand what good literature is”); too narrow (“the students will know what a ground is”); or be restricted to lower-level cognitive skills (“the students will be able to name the countries in Africa.”).

Each individual intended learning outcome should support the overarching goal of the course,[ know how to start a sustainable business ] that is, the thread that unites all the topics that will be covered and all the skills students should have mastered by the end of the semester. Best practice dictates that intended learning outcomes be kept to no more than half a dozen. [ four ]

-from

nciia conference email: [email protected] twitter: @taylorpamm startup incinerator

Documents

taylorpamm slide

entrepreneur slide

history slide

x slide

taylorpamm cell

culbertson entrepreneur

competitive advantage

market size