Entrepreneurship Class, UNR MBA Program

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    Entrepreneurship Class, UNR MBA Program - Presentation Transcript

    1. Or the art and science of taking a malleable universe and adapting it to your creative vision and will … E n t r e p r e n e u r s h i p Robb Smith Managing Director
    2. Section I
      • What is entrepreneurship?
    3. What is Entrepreneurship?
      • Not a job
      • Not a career
      • Not a class
      • Not a title
      • Not risk-taking
      • Definitely not working for yourself
    4. My definition
      • Entrepreneurship is an orientation towards life
      • Recognizes limitations of human endeavor in society, economy, academy
      • Knows how malleable the world actually is
      • Commits to changing it
      • Wherever the world is imperfect, there find you an entrepreneur
      • Entrepreneurship is artistry
    5. Should You Care?
      • Wherever you work – nursing, education, business, research, government, non-profits – you will have opportunities to exercise your entrepreneurial mentality
      • If you do, you will earn more, achieve more, and stand out as a leader
    6. Life of an Entrepreneur
      • Cultivate your passion
      • Look for luck and take advantage of it
      • Learn to make mistakes
      • Learn to enjoy solitude
      • Have a great support system
      • Never give up
    7. Exercise: Highlight the Pain (How to Think Like One)
      • Brainstorm: Identify Problems
      • Who is in pain?
      • Quantify Cost
      • What solutions exist?
      • Is the solution feasible?
      • Do they increase revenue or decrease cost? Key to adoption in capitalism.
      • Who has authority to fix it?
      • Read the newspaper!
      • Watch people – when are they frustrated?
    8. Section II
      • Some Dos and Don’ts
    9. The Best Kept Secret in Business: Choose a Great Business
      • What are the elements of a great business/profit model?
      • 1. Demand exists or can be created that consistently exceeds supply.
      • 2. Customers love the product and advocate it to their friends and associates.
      • 3. They have a high degree of recurring, repeat or sequential revenue.
      • 4. They create a sustainable advantage that is difficult to duplicate and deepens over time.
      • 5. They possess a very high gross margin, net margin, and return on invested capital.
    10. Common Mistakes – Don’t Make Them
      • 50/50 or 3 person partnership – no leader/ no CEO
      • Customer concentration
      • Mousetrap team, not management team
      • Low gross margins
      • Undercapitalized
      • Assume fast time to market or large penetration
      • Lack of focus
      • No accountability
      • Proper market segmentation (e.g., high-end tents)
      • ROI indeterminable
      • Managers don’t act like owners
    11. Management: The Key to Success
      • Competent management who have an in-depth knowledge of the industry
      • Flexible to the company’s needs, will not hold a company back
      • Ability to execute a wide variety of tasks including complex business matters
      • Ability to train, hire, and recruit the best staff
      • Only undertakes activities which are value added for the company, i.e. not wasting time and money
      • Emotionally intelligent, stable, mature
    12. Board of Directors
      • Is a great board more important than great management?
      • Things to look for:
        • Deep board experience
        • Functional diversity
        • Diversity of styles
        • Experience managing people
        • Discipline, work ethic, integrity, serious record of achievement, candor
        • Smart, opinioned people who are professional, courteous, and who don’t kowtow to CEO
        • Emotionally stable, not greedy, manageable ego
        • Are informed and involved
        • Can prioritize and quantify materiality
    13. Dangers of Explosive Growth
      • Undercapitalization/mis-capitalization
      • Customer service mistakes
      • Management inflexibility
      • Capacity
      • Inexperience
      • Margin creep
    14. The Crucial Years – Summary
      • It’s the people, stupid!
        • Hire the best you can afford (and quality over quantity)
        • As hire As, Bs hire Cs
        • 2 biggest threats to success: greed & ego – are you the problem?
      • Capital may obscure market signals
      • Verify market: Spend 90% of time on top line and gross margin
      • Instill disciplined business practices on management: planning, accountability, control
      • Over-communicate w/ BOD, mgmt
    15. Section III
      • Venture Capital
    16. Sources of Financing for Newco, Inc.
      • Personal savings
      • Friends and family
      • Angels
      • Venture capitalists
      • Banks
      • Investment banks
      • Public markets
      Small company, Equity Larger company, Debt & equity Increasing Sophistication
    17. Best-performing asset class over long-term *Ibbotson & Associates **Venture Economics We hope …
    18. VCs: Most Important Thing We Do, 3 Ways
      • Mitigate Risk!
        • Instill world-class business practices
        • Hire/fire CEO, and quickly!
        • Ensure accountability
    19. How We Work With Management
      • Confessors, advisors, sounding-boards, devil’s advocates, and assistants, providing:
        • Moral support
        • Market Strategy
        • Recruiting
        • Credibility for financing, hiring
        • Business development
        • Key trends
        • And of course: more money!
    20. Turnoffs Include…
      • Inexperienced, inflexible management team
      • Principals don’t have zen
      • First time CEOs
      • No clear core competency
      • Customer base too broad due to undefined target market
      • Low ROI for customers
      • Low gross margin
      • Product is not a strategic purchase
      • Small target market size
      • Customers are not hungry for the solution
      • Product is not developed
    21. Section IV
      • War Stories
      • (Notice that “war” rhymes with “horror”.)
    22. Datacom Hardware
      • Great market, technology, team (we thought)
      • Well-funded, brand name syndicate
      • Lessons:
      • Executives do what they know (CEO was sales and marketing executive)
        • $1mm/mo marketing burn pre-product
      • Market analysts are usually wrong about timing of market opening
      • VCs as investment managers – must understand finance (tempers greed) and historical valuation precedent
        • Know when an acquirer is making a great offer
    23. Fiber optics
      • Revolutionary optical technology
      • Idiosyncratic team
      • Lessons:
      • Never rely entirely on someone else’s due diligence
      • Get to know the team very well
      • Never get caught up in hype
      • Watch for warning signs in entrepreneur’s motivations
    24. Satellite training
      • Very strong team (again, it appeared)
      • Well-funded
      • Guaranteed contract w/ IBM
      • Lessons:
      • Executives do what they know (CEO came from large company)
      • Bear as little fixed cost risk as possible (zero)
      • Hobby v. business
    25. Healthcare services
      • Reputable VCs
      • Compelling value proposition
      • Large market pain
      • Lessons:
      • Change management quickly on sign of systemic trouble
      • Always have growth financing in place alongside equity
      • Good boards can save a company on the slide
      • Bad boards will ruin a company on the rise
    26. Exercise: Startup, Inc.
      • Problem:
      • Solution:
      • Customers:
      • Market Size:
      • Decision Maker:
      • Product ROI:
      • Feature or Stand Alone:
      • Startup “Dream” Team (Pick 2):
      • Gross Margin:
      • Competition:
      • Unfair Advantage:

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