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Dimensions of Innovation in Entrepreneurship
 

Dimensions of Innovation in Entrepreneurship

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General advice for entrepreneurs starting up their company based on the 5P's principle (preparation, patience, persistence, persuasion, productivity).

General advice for entrepreneurs starting up their company based on the 5P's principle (preparation, patience, persistence, persuasion, productivity).

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    Dimensions of Innovation in Entrepreneurship Dimensions of Innovation in Entrepreneurship Presentation Transcript

    • The Dimensions of Innovation in Entrepreneurship Chris Evdemon (易可睿) Managing Partner Eastern Bell Venture Capital
    • Today let’s talk about … • Innovation: Product vs. Process vs. Business Model • The 5P’s in Starting a New Business • Venture Capital Trends in China in 2009 2 © 2009 - Chris Evdemon
    • Forms Of Innovation • Product – e.g. iPhone (Apple), Internet Search (Google), etc. – innovation through research and development • Process – e.g. Toyota, Dell, Zara (Inditex), etc. – innovation in supply chain management and logistics • Business Model – e.g. iTunes (Apple), AdWords / AdSense (Google), etc. – innovation in customer acquisition, new revenue streams, pricing policy, add-on services, etc. READ THIShttp://www.gizmag.com/go/7494/ 3 © 2009 - Chris Evdemon
    • Forms Of Innovation • Zara’s Process Innovation – Key is the ability to adapt the Sourcing & product offer to match Design Manufacturing consumer desire. – For Zara, time is the most important factor above and beyond production costs. – Shortened turnaround times, Distribution & achieved greater flexibility, Retail Sales Logistics reduced stock to minimum and hence diminished fashion risk as much as possible. READ THIShttp://www.slideshare.net/naveedtaji/inditex-group-presentation-893804 4 © 2009 - Chris Evdemon
    • Innovative Start-Ups Some personal examples: • Product Innovation ECitySky (www.ecitysky.com) • Process Innovation ECDL Hellas (www.ecdl.gr) • Business Model Innovation Ethos Technologies (www.ethos.com.cn) 5 © 2009 - Chris Evdemon
    • ECitySky • Founded in mid 2007 in Beijing with $115,000 USD start-up capital from the three founders as well as family and friends. • The company is developing China’s first truly 3D, fully web-based, immersive SNS / virtual world technology platform. • In May 2008 the company raised $400,000 USD from angel investors. • Currently in private beta-version. VIEW THIShttp://www.tudou.com/programs/view/gcU2Rl1XDH0 6 © 2009 - Chris Evdemon
    • The Founders Nov.’07 VIEW THIShttp://www.tudou.com/programs/view/gcU2Rl1XDH0 7 © 2009 - Chris Evdemon
    • ECitySky HIGH TECH BARRIER – CORE COMPETENCY 8 © 2009 - Chris Evdemon
    • ECitySky 9 © 2009 - Chris Evdemon
    • ECitySky • Current technology platform is truly innovative, by global standards. • “Great! We now have a cool technology, how about getting a business model?” Another Virtual World 10 © 2009 - Chris Evdemon
    • ECDL Hellas • Founded in March 2000 in Athens, Greece with €70,000 Euro start-up capital from two founders and one angel investor. • License to operate in Greece the ECDL digital literacy certification program. • Greece has a 10 million people population and in 2000 GDP per capital was about $14,000 USD. 11 © 2009 - Chris Evdemon
    • ECDL Hellas 12 © 2009 - Chris Evdemon
    • ECDL Hellas • When we started in March 2000, we had the following: – signed license agreement for ECDL in Greece; – ECDL syllabus; – four (4) ECDL tests for manual marking; – a brief and generic “Standards & Guidelines” booklet. 13 © 2009 - Chris Evdemon
    • ECDL Hellas • By the end of its 3rd fiscal year (2003), company had achieved in Greece: – establishing ECDL as the synonym of “digital literacy”; – €10 million Euro in revenue; – €2 million Euro in net profit; – 1,000+ Authorized Test Centers; – 200,000 ECDL candidates. – Additionally, ECDL Hellas acquired the ECDL license for and started operations in Turkey. 14 © 2009 - Chris Evdemon
    • ECDL Hellas • In March 2000, the ECDL program: – was already successful in the U.K., Ireland, Germany and the Scandinavian countries … – … but it was struggling in France, Spain and Italy. – The examination process was largely as follows: • a candidate registered and took test(s) at an ECDL Authorised Test Centre (ATC) whenever he/she wanted; • tests were supervised by ATC personnel; • tests were marked by ATC personnel; • results were communicated by fax or email to ECDL HQ in that country. 15 © 2009 - Chris Evdemon
    • ECDL Hellas • By the end of 2000, we had created new tools and processes, customized for the Greek market realities: – a proprietary simulation-based Automated Test Evaluation System (ATES); – a fully web-based intranet / extranet for all stakeholders in the ECDL operations (i.e. ATCs, candidated, ECDL Hellas, etc.); – a detailed ECDL ATC Operations Manual (~70 pages) explaining every part of the ECDL program and relevant processes; – full (compulsory) training program and materials for all ATC staff; – an initial set of customisable ECDL marketing materials in Greek which ATCs could use in their local market; – a daily, 9am – 9pm call centre for ATCs; – and much more … 16 © 2009 - Chris Evdemon
    • ECDL Hellas • The examination process was re-designed as follows: – ATC determined which days / hours ECDL examinations were to take place at its premises. – ATC registered candidate(s) online at the intranet and candidate(s) took test using the ATES; – tests were supervised by official ECDL Supervisors, members of the Greek Computer Society; – Supervisors were assigned to specific ATCs by the intranet; – tests were automatically marked by the ATES, results were instantly communicated to (a) the candidate and (b) ECDL Hellas’ central database through the intranet. 17 © 2009 - Chris Evdemon
    • ECDL Hellas • From a process point-of-view, ECDL Hellas was successful largely because: – it took a generic, internationally licensed business and customisedit for the local market; – it took a licensed product and made a first-class service out of it; – it realised that its clients were the ATCs (not the candidates) and focused on building and servicing a network of “partners”; – it protected the credibility of its product and service; – it automated all unnecessarily manual processes thus increasing efficiency, quality of service and reducing cost. 18 © 2009 - Chris Evdemon
    • Ethos Technologies • Founded in the beginning of 2005 in Beijing with $20,000 USD start-up capital from three founders. • The company is a software development outsourcing provider with its main (back-) office in Beijing and front-offices in Oslo, Stockholm and Helsinki. • For 2008, revenues where 40 million RMB and net profit was 1.5 million RMB. 19 © 2009 - Chris Evdemon
    • Ethos Technologies The Founders … … and their “family”! 20 © 2009 - Chris Evdemon
    • Ethos Technologies • Key question for founders was “how to provide customer value?” • Their answer is to be “Global, Local and Agile”. – Quality Solutions: • focus on solving the real problem, not only executing according to a specification; • the Ethos team must understand and take ownership of the solution; • achieved by having a front office in eachoftheir target markets for both pre- and after- sales support Ethoseliminatesusual offshore distance / language / culturebarriers. – Time To Market: • traditional “Waterfall” methodology separates project into serial phases whereas agile allows parallel tracks, i.e. development and planning goes hand in hand; • truly global development center can provide the required capacity for rapid development. – Reduced Risk / Cost: • iterationsevery 2-4 weekswithtangibledeliveriesprovideearly feedback on risk factors, reducingsignificantly overall project risk and cost. 21 © 2009 - Chris Evdemon
    • Ethos Technologies 22 © 2009 - Chris Evdemon
    • Ethos Technologies Agile Development Global Delivery Model • New trend in software • The world is flat – development. potential to source services globally. • Dynamic and flexible – but requires close • Leverage capacity and cost communication and levels in remote locations. collaboration. • China is emerging as an + • Frequent iterations allows alternative to India, large for learning in the project talent pool and better execution. infrastructure. • Increases quality and • Need to bridge culture and throughput time – reduces communication issues. risk. Ethos’ Agile Global Delivery Model (AGDM) is “the best of both worlds”. 23 © 2009 - Chris Evdemon
    • Ethos Technologies Ethos is moving ahead of Flexible competition by combining Agile and Global Onshore Delivery Model suppliers Onshore competition has evolved through Rigid process Offshore suppliers innovation in have captured the Agile share of the methodologies market that can Traditional over the last easily be supplied Offshoring years by traditional Global Delivery Model. Onshore Offshore
    • Today let’s talk about … • Innovation: Product vs. Process vs. Business Model • The 5P’s in Starting a New Business • Venture Capital Trends in China in 2009 25 © 2009 - Chris Evdemon
    • Preparation • Study and learn from best practices in foreign markets. • Understand your own local market. • Add your own “secret sauce”. • Initial strategic decisions are a crucial component for a start-up company’s success or failure. 26 © 2009 - Chris Evdemon
    • Preparation • Remember that: – at the beginning, a Founder of a start-up company has a “clean sheet”, i.e. a unique opportunity to determine everything about the company; – as the company is growing, it is all about management of growth and change. • In the course of the life of the company, be prepared to allow and encourage other people to: – grow with the company; – contribute to the company; and also – decide about the future of the company. • Be prepared to manage the transition. 27 © 2009 - Chris Evdemon
    • Preparation • People – human resources are by far the most critical success factor. • Business Model – careful planning is important, flexibility for and responsiveness to potential changes is even more important. • Execution – the best plan, the most innovative product, the brightest team can fail if execution fails. Ability to execute is the most sought after quality that investors look for in entrepreneurs. 28 © 2009 - Chris Evdemon
    • Preparation • Founders’ necessary ingredients: – excellent working relationship; – common or complementary goals; – discuss and agree on: • roles / responsibilities; • the plans for the business and potential exit; • all (majority / minority) shareholder issues. • Think of all potential scenarios and discuss, because: – tough times bring the best and the worst out of people; – success also brings the best and the worst out of people. • Know yourself, know your partners, know your contribution to and your position in the company. 29 © 2009 - Chris Evdemon
    • Preparation • People Management: – prepare early to make your company the most attractive, exciting and promising career prospect for any talented young person out there; – respect the employment laws; – be fair in salaries, reward based on performance; – invest in training and career development; – set up recruitment and assessment processes from the beginning; – make assessment a peer process; – ensure people understand their roles in the company and get them involved. 30 © 2009 - Chris Evdemon
    • Preparation • Business Model: – keep it simple; – do not forget to complement even the most innovative and exciting new product with excellent service; – distribute your income wisely, allow your partners to make money out of the business that you create for them; – readily adapt to changing market needs. 31 © 2009 - Chris Evdemon
    • Preparation for Fundraising • Carefully prepare all your materials: – 1’ elevator pitch – executive Summary – introductory slides deck (~15 slides) – full slides deck – full business plan • Practice your pitch and prepare to answer difficult questions. • Explain in detail what you are going to do with the money. • Be humble while confident and dynamic, and always honest. 32 © 2009 - Chris Evdemon
    • Preparation for Fundraising • Fundraising timeline is totally dependent on all other aspects of the business. • Think of different potential growth scenarios, demonstrate that you are prepared and understand the implications. • Put the forecast of all critical factors of your business evolution on the same timeline chart, e.g. product development, customer acquisition, staff, revenues, cost, profitability and fundraising rounds. 33 © 2009 - Chris Evdemon
    • Preparation for Fundraising 34 © 2009 - Chris Evdemon
    • Patience & Persistence • Timing – “being at the right time at the right place”: – even the best ideas backed by the most capable teams can fail if timing is not right; – rarely can you force your idea to the market so … – … if the market does not respond the way you want, adjust your business model and … – … survive so that you can be there when the right time comes. It will come! • The element of luck. 35 © 2009 - Chris Evdemon
    • Patience & Persistence • Building a business is a continuous process – “it is a marathon, not a 100m race”. • Do not get carried away by the frenetic pace, make it a point every-now-and-then to stop, take a breath and evaluate. Set Targets Evaluate Communicate Progress Assess Assess Your Yourself Team 36 © 2009 - Chris Evdemon
    • Patience & Persistence • Corporate Culture is critical in building patience and persistence, as well as retaining top talent: – Create a great work environment. – Start-ups are intense environment that test relationships. Diffuse tensions. – Find your internal “champion(s)”. – “Work hard, play hard.” VIEW THIShttp://www.ethos.com.cn/company/ethos-story 37 © 2009 - Chris Evdemon
    • Patience & Persistence in Fundraising • Boot-strapping: use your own resources to the maximum possible effect, until the “tipping point”. • Understand how investors think and decide. • Have realistic fundraising timetables. • Continuously communicate with potential and actual investors. • Do not be afraid to communicate bad news. 38 © 2009 - Chris Evdemon
    • Persuasion • Corporate Governance: – Start sooner rather than later – lay the foundations early on. – Carefully select the external members of your Board of Directors: • industry expert(s); • Government or other key influential person(s); • previous entrepreneur(s); • investor(s). – The Board has several very important functions. – Select a real (!) Board of Advisors and use it. • Senior Management’s role. • Everyone is following your leadership. 39 © 2009 - Chris Evdemon
    • Persuasion Co-Founders Senior Investors Management COMMUNICATION Public Staff Clients 40 © 2009 - Chris Evdemon
    • Persuasion in Fundraising • Angel Investors (“Smart Money”) – choose individuals whose contribution in the company will be just as beneficial as the capital they will put in; – ensure their time commitment. • Venture Capital: – research their previous investments and track record; – research the General Partners’ profiles; – select General Partner as much as selecting a fund; – give the General Partner that is championing your deal all the information that he / she needs. • Excited and satisfied investors will bring more investors. 41 © 2009 - Chris Evdemon
    • Persuasion in Fundraising • What is an early stage VC looking for? Management •An exceptional CEO. •Core team in place. Product •Core product ready. •Concrete future product development plan. Market •In-depth competition analysis and tracking. •Well planned and cost effective marketing plan. Revenues •Existing revenue stream(s). •Clearly identified new revenue stream(s). Cash •Reserve cash for at least twelve (12) months. •Clear and realistic cash flow positive projection. 42 © 2009 - Chris Evdemon
    • Productivity • “I do it all” vs. specific role: – at the beginning you will be involved in everything; – you will gain invaluable experiences that later on assist management decisions but … – … it will become counter-productive if prolonged beyond a certain stage, when rapid growth begins. – One of the biggest challenges is to learn how to delegate authority, let the people around you “grow” with the company. – Founders need to evolve together with the company. – A true measure of success is to bring in people that do things better than you. – Role transition: sometimes founders need to give way to more experienced managers. 43 © 2009 - Chris Evdemon
    • Productivity • Perfectionism vs. growth: – It is OK to make mistakes; they are part of the learning and improvement process. – Do not become the “bottleneck”! • Quick decisions vs. “the paralysis of the analysis”. • In-sourcing vs. out-sourcing; different stages of growth require different solutions. 44 © 2009 - Chris Evdemon
    • Today let’s talk about … • Innovation: Product vs. Process vs. Business Model • The 5P’s in Starting a New Business • Venture Capital Trends in China in 2009 45 © 2009 - Chris Evdemon
    • Venture Capital in China in 2008 • China’s venture capital market is already the second largest in the world, behind the U.S. • 2008 was a record year, despite the global financial crisis worldwide, in terms of: • capital raised - $7.3 billion USD • number of new funds - 116 • total investment amount - $4.2 billion USD • number of new deals – 607 READ THIShttp://www.zero2ipo.com.cn/en/research/2009224133246.shtml 46 © 2009 - Chris Evdemon
    • Venture Capital in China in 2008 47 © 2009 - Chris Evdemon
    • Venture Capital in China in 2008 48 © 2009 - Chris Evdemon
    • Venture Capital in China in 2008 • But Q3/Q4 numbers show a rapid decline. • IPO exits also significantly down year- on-year. • Traditional industries still a very large part of the dealflow. READ THIShttp://venturebeat.com/2009/01/19/venture-fundraising-going-going-gone/ 49 © 2009 - Chris Evdemon
    • Venture Capital in China in 2008 • Some additional observations: – still little attention to early stage; – Beijing and Shanghai represent the vast majority of deals; – foreign investment is still more than double of the domestic investment. READ THIShttp://www.zero2ipo.com.cn/en/n/2009-3-18/2009318150945.shtml 50 © 2009 - Chris Evdemon
    • Investment Trends for 2009 Sectors attracting most attention from VCs in China will be: – Technology: • Enterprise software • Logistics technology / infrastructure – Cleantech – Education – Consumer Services: • e-Commerce • Internet communities • Mobile applications • Gaming – Healthcare Services – Medical Devices 51 © 2009 - Chris Evdemon
    • Online Trends for 2009 and Beyond 1. Social networksare a business but cannot survive on ad revenues alone. Mobile social networks are the future. 2. Online communitiesare not just a teen phenomenon. Focused, target group communities are being formed and have economic effects. 3. E-commerceis here and will be the main growth segment for the next few years. Mobile commerce is still at a nascent stage in China but will also grow rapidly in the next few years. 4. The amount of information available online is overwhelming. Privacy is becoming a luxury. 5. Online gaming is already the most popular “21st century” form of entertainment and it is just getting started! Mobile MMORPGs are also around the corner. 6. 3D environments will start integrating with 2D - is this the definition of Web 3.0? Several new worlds for kids, for teens, for the fashion- conscious, for socializing, for brands, for education, etc. will start and/or grow this year. 52 © 2009 - Chris Evdemon
    • Online Trends for 2009 and Beyond 7. The new mass media. Last year, Korea was reportedly the first country to have its population spend more time online than watching TV. Who’s next? 8. Online startups will face a strong dose of realism. You will have to show not only usage but also revenues. Copycats will no longer get automatically financed unless they have proven business cases – it is time to innovate. 9. It is finally here - the impending launch of the wireless 3G mobile networks in China. China Mobile is set to launch their 3G TD-SCDMA network in Q2. Unfortunately, the TD-SCDMA is a China-only standard;3G handsets from other countries will not work on the China Mobile network. China Unicom however does use W-CDMA which is a global standard and compatible with the Apple iPhone 3G. 10. Welcome to the “Age of Convergence”! E-commerce, SNS, virtual worlds and online games are coming together, blurring the frontiers between categories, web and mobile, online and offline. Lifestyle is going digital. 53 © 2009 - Chris Evdemon
    • Consumer Trends for 2009 • Consumers in China do not have many role models, therefore currently open to try new products and accept new brands. • Still predominantly price sensitive but more and more people are beginning to have brand awareness. • Chinese consumer market is very fragmented in most product lines. This is unlikely to change in the near future. • Several opportunities to capture market share will be in 2nd and 3rd tier cities. • Emerging middle class has already started paying attention to diet, fitness, healthy lifestyle, environmentally-friendly products and services, etc. 54 © 2009 - Chris Evdemon
    • Thank you! 谢谢你们! 55 © 2009 - Chris Evdemon