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Entrepreneurship 101
 

Entrepreneurship 101

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This is an introduction to the basics of entrepreneurship, lean startup methodology, and effectuation principles. It is preparatory viewing for the first session of a course on entrepreneurship taught ...

This is an introduction to the basics of entrepreneurship, lean startup methodology, and effectuation principles. It is preparatory viewing for the first session of a course on entrepreneurship taught by global cleantech entrepreneur and Entrepreneur In Residence at Rice University, Bryan Guido Hassin. The full video is available at http://youtu.be/JYUJP3hxBn4

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    Entrepreneurship 101 Entrepreneurship 101 Presentation Transcript

    • Entrepreneurship 1012013-05-27Bryan Guido HassinEntrepreneur In Residence
    • This is how people believeentrepreneurship happens2Wunderkindhas divineinspiration• Or MBA hasgenius insightRaise hugeVC $$$• With detailedbusiness planIPO, retire• Preceded byhockey stickgrowth
    • But this is not howentrepreneurship usually happens3Wunderkindhas divineinspiration• Or MBA hasgenius insightRaise hugeVC $$$• With detailedbusiness planIPO, retire• Preceded byhockey stickgrowth• First timefoundersaverage 40years old• Venturesrapidly evolvefrom originalvision• < 2% ofventures everraise VC $$$• < 27% of Inc.500 ever hada biz plan• < 1% ofventures IPO
    • I am a global cleantech entrepreneur /professor of entrepreneurship at Rice4• Founded/led four startups– Plug-and-play office energy savings– Web environmental compliance– Digital social business card– Mobile/wireless disaster response• Educated at Rice (computer science) and IMD(business)
    • Entrepreneurship Roadmap5The BasicsLean StartupEffectuation
    • Entrepreneurship 101: who/whatare entrepreneurs?6
    • Is this an entrepreneur?Mike YangOwner, Fast Food Franchise7
    • Is this an entrepreneur?Eric FavreInventor,Nespresso 1976Jean-Paul GaillardCommercializer,Nespresso 19888
    • Is this an entrepreneur?Jesper HornbergFounder, GIVEWATTS9
    • Is this an entrepreneur?Dan EcklundPerpetrator, Stem Cell Fraud10
    • Entrepreneurship 101: What areentrepreneurs like (and why)?11
    • Average first time entrepreneur:Source: http://www.entrepreneur.com1240 yearsoldMarriedHaschildrenMiddleclassBachelor’sdegree
    • Mythbusters: entrepreneurs don’twork for themselves13Investors Clients RegulatorsEmployees
    • Mythbusters: entrepreneurs earnless than corporate peers14
    • Mythbusters: entrepreneurs aremore risk averse than average15
    • Entrepreneurship is…• A mindset– Seeking solutions to problems– Aligning resources to sustain solutions– Creating value16
    • There are 5 canonical venturetypes• Small business (feed the family)• Large business sustaining innovation• Large business disruptive innovation• Social enterprise• Scalable startupSource: Four Steps to the EpiphanyOur Focus17
    • A startup is…―a temporary organization used to search for arepeatable and scalable business model” – SteveBlankLarge CompaniesExecute KnownBusiness ModelsVentures Search forUnknown BusinessModels18
    • Startups are not small versions oflarge businessesLarge CompaniesExecute KnownBusiness ModelsVentures Search forUnknown BusinessModels19
    • Entrepreneurship Roadmap20The BasicsLean StartupEffectuation
    • What does this entrepreneurialsearch process look like?
    • A business model starts withhypothesesGuess GuessGuessGuessGuessGuessGuessGuessGuess
    • Hypotheses become facts through rapiditerations of customer developmentCompanyBuildingCustomerDiscoveryCustomerValidationCustomerCreationPivotSource: Four Steps to the Epiphany23
    • Get out of the building and testhypotheses with real clients• Stop selling, start listening• Test your hypotheses• Continuous Discovery• Done by foundersCustomerDiscoveryCustomerValidationCompanyBuildingCustomerCreationSource: Four Steps to the Epiphany24
    • When hypotheses are not verifiedby customers, pivot• The heart of Customer Development• Iteration without crisis• Fast, agile and opportunisticSource: Four Steps to the Epiphany25
    • Goal to exit Customer Validation:the MVP•MVP: The Minimum Viable Product•Smallest feature set that gets you the most …orders, learning, feedback, failure…Source: Four Steps to the Epiphany26
    • Sounds easy – yet so manyentrepreneurs still failNew research on consistently successful entrepreneurs
    • Entrepreneurship Roadmap28The BasicsLean StartupEffectuation
    • Expert entrepreneurs start withmeans and create opportunitiesFixedEndMeans1Means2Means3StartingMeansNewEnd1NewEnd3NewEnd2Source: Effectual Entrepreneurship29
    • Expert entrepreneurs expand theirmeans with partnershipsSource: Effectual Entrepreneurship30YourMeansOriginalEnd4OriginalEnd6OriginalEnd5MyMeansOriginalEnd1OriginalEnd3OriginalEnd2NewEnd3
    • Expert entrepreneurs embracefailure and leverage surpriseSource: Effectual Entrepreneurship31
    • Expert entrepreneurs setaffordable loss and control returnsSource: Effectual Entrepreneurship32EntrepreneursFor a given level of risk, entrepreneurs feeltheycan expand the problem space andincrease returnsFor a given level of return, bankers feelthey canreduce the problem space and decreaserisk.Step 2Push creativelyto increase returnStep 2Try to reduce riskthrough insurance, etc.Step 1Pick a comfortablelevel of riskStep 1Pick a target returnRiskReturnHigh HighLowLowLow Low HighHighBankersRiskReturn
    • Expert entrepreneurs control theunpredictable futureSource: Effectual Entrepreneurship33Biz PlanEntrepreneurship
    • Effectual principles can beillustrated with jars of marbles?1: Predictable 2: Risky 3: UnknowableYou win the game by selecting a red marbleEntrepreneurship is like Jar 3
    • Expert entrepreneurs add asmany red marbles as they can3: UnknowableAnd they make friends who have more red marbles to addYou win the game by selecting a red marble
    • Or else they create a new gamewhere blue marbles win3: UnknowableYou win the game by selecting a blue marbleIf they and their friends only have blue marbles
    • Innovation happens throughoutthe business system6. Product systemextended system that surrounds an offeringProductperformanceOfferingProductsystemService7. Servicehow you service your customers5. Product performancebasic features, performance and functionalityCoreprocessProcess.Enablingprocess3. Enabling processEnabling new connections,interactions, and transactions4. Core processproprietary processes that add valueSource: Doblin GroupBusinessmodelFinanceNetworking2. Networkingenterprise’s structure/value chain1. Business modelhow the enterprise makes moneyChannelDeliveryBrand Customerexperience10. Customer experienceThe overall experience forcustomers8. Channelhow you connect your offeringsto your customers9. Brandhow you express your offering’sbenefit to customers37
    • Source: Doblin GroupHiLoVolume of innovation effortsLast 10 yearsCoreprocessProcess.EnablingprocessBusinessmodelFinanceNetworking ProductperformanceOfferingProductsystemService ChannelDeliveryBrand CustomerexperienceStartups tend to focus on productopportunities38
    • But the best opportunities areoften elsewhereSource: Doblin GroupHiLoCumulative value creation—Last 10 yearsCoreprocessProcess.EnablingprocessBusinessmodelFinanceNetworking ProductperformanceOfferingProductsystemService ChannelDeliveryBrand Customerexperience39
    • The innovation ―piano:‖ the bestopportunities are ―chords‖Source: Doblin GroupChannelDeliveryBrand Customerexperience10. Customer experienceThe overall experience forcustomers8. Channelhow you connect your offeringsto your customers9. Brandhow you express your offering’sbenefit to customers6. Product systemextended system that surrounds an offeringProductperformanceOfferingProductsystemService7. Servicehow you service your customers5. Product performancebasic features, performance and functionalityCoreprocessProcess.Enablingprocess3. Enabling processEnabling new connections,interactions, and transactions4. Core processproprietary processes that add valueBusinessmodelFinanceNetworking2. Networkingenterprise’s structure/value chain1. Business modelhow the enterprise makes money40
    • Example: Apple’s iPod/iTunes ―chords‖have captured huge opportunityChannelDeliveryBrand CustomerexperienceProductperformanceOfferingProductsystemServiceCoreprocessProcess.EnablingprocessBusinessmodelFinanceNetworking41
    • Breakout• What are your means?• What is your affordable loss?• What can you do to control the futureinstead of predict it?• Which areas of non-product innovationcan you explore?
    • Entrepreneurship 1012013-05-27Bryan Guido HassinEntrepreneur In Residence