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Why Are Some Entrepreneurs Doomed to Failure? 
Elton B. Sherwin 
University of San Francisco 
2014
Do’s and Don'ts 
•Getting Started 
•Superbasics 
•Your Career and Leadership Skills 
•Tips 
•Two Common Fundraising Mistak...
Starting a New Business
Steps #1 and #2 
•Recruit Board of Advisors 
–3 to 8 people, informal 
–1 x-Founder, 1 technology, 1 marketing, 1 industry...
Avoid Kamikaze Co-founders 
Some people enjoy 
•Making life hard 
•Cheating 
•Lying 
•Breaking the law 
•Gossiping 
•Withh...
Don’t Start a Business with People You Don’t Like
Work with People You Like 
•You will be spending a lot of time with them 
•Successful founding teams like each other 80% o...
Think Baseball, Not Tennis 
Entrepreneurship is Not a Solo Sport 
Takes a team to refine the product 
–The idea is importa...
Your Roster 
Season One 
If no one joins your team: 
think about 
joining someone else's team 
Advisors (minimum: 3) 
___ ...
Tips for Finding Your Dream Team
Back to Starting Your Own Team 
Season One 
Advisors (minimum: 3) 
___ Industry expert 
___ Technology expert 
___ Finance...
Your Roster 
Season One 
Season Two 
Advisors (minimum: 3) 
___ Industry expert 
___ Technology expert 
___ Finance/legal ...
Work on Things You Are Interested In 
•It is not all about profit. 
God gave you interests and passions for a reason
Research the Competition 
I see entrepreneurs who have not Googled their business ideas or don’t know who their competitor...
It Is Shocking! 
I see entrepreneurs who have not Googled their business ideas 
•Sometimes invent a wheal 20 years after s...
Research the Competition 
•Investor presentations 
•Customer presentations 
•Videos 
•Marketing materials 
•Open jobs 
•Te...
Summary of Getting Started 
•Work with people you like to work with and who aren’t pathological 
•Work on stuff you are in...
SuperBasics of Business 
Sometimes even experienced people forget
Need Customers 
Before you build your business ask prospective customers: 
•If we build this product/service would you buy...
Early Customers 
Early customers: 
•Difference between success and failure 
•Clarify goals 
•Credibility with investors 
•...
Make Money 
•Positive gross margin (usually above 40%)
SuperBasic Summary 
Find Customers 
Make Money
Your Career and Leadership Skills 
•Work in a restaurant before you start one 
–Run a restaurant before you buy one 
–Join...
Two Common Fundraising Mistakes
“Uncompelling” 
PowerPoint Presentations 
No compelling reason to invest
Look at the Outline in The Silicon Valley Way 
The complete business plan presentation is attached in the appendix and 
al...
No Elevator Pitch 
•Start with an elevator pitch 
–VCs make up their minds in the first 30 seconds 
–The first three sente...
Examples of Effective First Sentences 
“GE has asked us for 1,000 units and we are here today to raise money for our…” 
“O...
Should You Raise Money? 
•Not every business should be financed by venture capital 
•Some businesses should be “bootstrapp...
Advice from
Americans Watch 16,000 hours of Television (before college)
We Learn 
On a great team: 
•Everyone is an extrovert 
•Everyone interrupts 
•Everyone talks without thinking
Leaders 
•Take bold action 
–Risk everything daily 
•Plan on the fly 
–Group decisions are a waste of time 
•Do it all the...
American Leadership “Training” 
Risk everything 
Do it yourself 
The law is irrelevant
•Risk everything 
•Do it yourself 
•Ignore the law
The ABC’s of Success 
A.Think boldly – be innovative 
B.Take frequent, small steps 
–Minimize risk 
–Be frugal 
C.Play wel...
Success 
Product Idea 
Founding Team 
– Experience 
– Skills 
– Teamwork 
– Leadership 
Myth 
90% 
10% 
Reality 
30% 
70%
Myth 
All about having great idea 
Reality 
Joining or assembling the right team
Conclusion 
•Focus on more than the idea 
–Usually 6 to 50 companies have similar ideas 
•Thoroughly research “competitors...
Next Steps
Research the Competition 
•Investor presentations 
•Customer presentations 
•Videos 
•Marketing materials 
•Open jobs 
•Te...
•Recruit Board of Advisors 
–3 to 8 people, informal 
–Don’t need a group meeting; no contract 
–1 x-Founder, 1 Tech pro, ...
Appendix
Why Are Some Entrepreneurs Doomed to Failure
Why Are Some Entrepreneurs Doomed to Failure
Why Are Some Entrepreneurs Doomed to Failure
Why Are Some Entrepreneurs Doomed to Failure
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Why Are Some Entrepreneurs Doomed to Failure

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I updated this presentation for a lecture I gave at Stanford last weekend. I added a few"quick start" slides upfront: What should you do first when you have an idea for a new business: recruit a board of advisers and a co-founder. Elton Sherwin July 31, 2014

Published in: Economy & Finance, Business
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Why Are Some Entrepreneurs Doomed to Failure

  1. 1. Why Are Some Entrepreneurs Doomed to Failure? Elton B. Sherwin University of San Francisco 2014
  2. 2. Do’s and Don'ts •Getting Started •Superbasics •Your Career and Leadership Skills •Tips •Two Common Fundraising Mistakes •Advice From Hollywood
  3. 3. Starting a New Business
  4. 4. Steps #1 and #2 •Recruit Board of Advisors –3 to 8 people, informal –1 x-Founder, 1 technology, 1 marketing, 1 industry –Coffee/lunch once a month •No contracts, no group meetings •CoFounders –1 or 2 people –Passionate, but with different skills
  5. 5. Avoid Kamikaze Co-founders Some people enjoy •Making life hard •Cheating •Lying •Breaking the law •Gossiping •Withholding information Any ONE of these will cause you great pain
  6. 6. Don’t Start a Business with People You Don’t Like
  7. 7. Work with People You Like •You will be spending a lot of time with them •Successful founding teams like each other 80% of the time
  8. 8. Think Baseball, Not Tennis Entrepreneurship is Not a Solo Sport Takes a team to refine the product –The idea is important, BUT –Original idea is rarely the winning product One person is rarely great at: –Finance, Marketing, Product management and technology MSG: Build a Team First
  9. 9. Your Roster Season One If no one joins your team: think about joining someone else's team Advisors (minimum: 3) ___ Industry expert ___ Technology expert ___ Finance/legal expert ___ Sales/marketing expert ___ Founder, another company ___ Someone famous Co-founders (minimum: 1) ___ Technology ___ Marketing/Product management ___ Finance/Administration
  10. 10. Tips for Finding Your Dream Team
  11. 11. Back to Starting Your Own Team Season One Advisors (minimum: 3) ___ Industry expert ___ Technology expert ___ Finance/legal expert ___ Sales/marketing expert ___ Founder, another company ___ Someone famous Co-founders (minimum: 1) ___ Technology ___ Marketing/Product management ___ Finance/Administration
  12. 12. Your Roster Season One Season Two Advisors (minimum: 3) ___ Industry expert ___ Technology expert ___ Finance/legal expert ___ Sales/marketing expert ___ Founder, another company ___ Someone famous Co-founders (minimum: 1) ___ Technology ___ Marketing/Product management ___ Finance/Administration Board of Directors (min: 2) ___ Rich person ___ Rich person ___ Someone loyal to you ___ Someone loyal to you Early employees ___ Developers ___ Product management ___ Admin/Office manager
  13. 13. Work on Things You Are Interested In •It is not all about profit. God gave you interests and passions for a reason
  14. 14. Research the Competition I see entrepreneurs who have not Googled their business ideas or don’t know who their competitors are
  15. 15. It Is Shocking! I see entrepreneurs who have not Googled their business ideas •Sometimes invent a wheal 20 years after someone else. •Don’t know about other’s failures •Don’t know about other’s successes •Don’t know who is friend or foe •Miss opportunities to partner Forget to use
  16. 16. Research the Competition •Investor presentations •Customer presentations •Videos •Marketing materials •Open jobs •Technical presentations & white papers •All documents ending with: .pdf; .ppt; and .mp3
  17. 17. Summary of Getting Started •Work with people you like to work with and who aren’t pathological •Work on stuff you are interested in •Research the competition •Recruit: –Board of Advisors –Cofounder
  18. 18. SuperBasics of Business Sometimes even experienced people forget
  19. 19. Need Customers Before you build your business ask prospective customers: •If we build this product/service would you buy it? •How much would you pay?
  20. 20. Early Customers Early customers: •Difference between success and failure •Clarify goals •Credibility with investors •Fund development
  21. 21. Make Money •Positive gross margin (usually above 40%)
  22. 22. SuperBasic Summary Find Customers Make Money
  23. 23. Your Career and Leadership Skills •Work in a restaurant before you start one –Run a restaurant before you buy one –Join a team before you start one (usually) •Write down your best idea every day –In Notes or Dropbox •Try different jobs –Which position is right for you: Coach, pitcher, second base or right field? Which is right for you? –Babe Ruth started as a pitcher •Join a winning team
  24. 24. Two Common Fundraising Mistakes
  25. 25. “Uncompelling” PowerPoint Presentations No compelling reason to invest
  26. 26. Look at the Outline in The Silicon Valley Way The complete business plan presentation is attached in the appendix and all The Silicon Valley Way worksheets are available on Slideshare
  27. 27. No Elevator Pitch •Start with an elevator pitch –VCs make up their minds in the first 30 seconds –The first three sentences really matter –Don’t start with Bios •It should be COMPELLING –One to three sentences –Practice it everywhere –When people offer to invest in the grocery store checkout line: You have a compelling story
  28. 28. Examples of Effective First Sentences “GE has asked us for 1,000 units and we are here today to raise money for our…” “Our applet is currently one of the ten most downloaded applications on the iPhone…” “In our lab we have successfully used sunlight to create hydrogen and…”
  29. 29. Should You Raise Money? •Not every business should be financed by venture capital •Some businesses should be “bootstrapped” •Hard to be successful with low margin business
  30. 30. Advice from
  31. 31. Americans Watch 16,000 hours of Television (before college)
  32. 32. We Learn On a great team: •Everyone is an extrovert •Everyone interrupts •Everyone talks without thinking
  33. 33. Leaders •Take bold action –Risk everything daily •Plan on the fly –Group decisions are a waste of time •Do it all themselves –Do it their way •Don’t tell anyone the plan •Ignore the law
  34. 34. American Leadership “Training” Risk everything Do it yourself The law is irrelevant
  35. 35. •Risk everything •Do it yourself •Ignore the law
  36. 36. The ABC’s of Success A.Think boldly – be innovative B.Take frequent, small steps –Minimize risk –Be frugal C.Play well with others For more information, see: Len Schlesinger, Action Trumps Everything
  37. 37. Success Product Idea Founding Team – Experience – Skills – Teamwork – Leadership Myth 90% 10% Reality 30% 70%
  38. 38. Myth All about having great idea Reality Joining or assembling the right team
  39. 39. Conclusion •Focus on more than the idea –Usually 6 to 50 companies have similar ideas •Thoroughly research “competitors” –Consider joining a winning team •Don’t let failure discourage you –Winners have lots of failures –Failures get discouraged and give up •Be reluctant to borrow money –Personally and professionally
  40. 40. Next Steps
  41. 41. Research the Competition •Investor presentations •Customer presentations •Videos •Marketing materials •Open jobs •Technical presentations & white papers •All documents: .pdf; .ppt; mp3, etc.
  42. 42. •Recruit Board of Advisors –3 to 8 people, informal –Don’t need a group meeting; no contract –1 x-Founder, 1 Tech pro, 1 marketing type –Coffee/lunch once a month •CoFounders –1 or 2 people –Passionate, but with different skills
  43. 43. Appendix

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