Presentation to the Old Dominion University (ODU) MBA Association, 3/20/13
Let’s talk about …1. Entrepreneurship and new venture formation as the primary driver of economic growth.2. Why entrepreneurship should be considered as a career path3. Aspects of a successful new venture4. Success factors for entrepreneurs and their teams5. The value of community
Company Size # of US Companies … Small Companies: Represent ~99% of all employer firms The size of this box represents the total # of US Companies …
Where do we all work? # of current jobs in the US …~ ½ of all jobs are with a large company But … What matters is whether the company is growing or shrinking …~ ½ of all jobs are with a small company
Growth Companies Matter# of US Companies … Small Companies: Represent ~99% of all employer firms # of US High- Growth Companies
Growth Companies Matter Net New Jobs Created by High-growth companies !!! They start small, but are designed to get big! Net New Net New Jobs, Big Jobs, Small company company
“New” beats small and large every time …• Kaufmann Foundation: “… it is clear that new and young companies, and the entrepreneurs that create them, are the engines of job creation and eventual economic recovery.“ “… 1980-2005, nearly all net job creation in the United States occurred in firms less than five years old.”• Kaufmann makes a clear case that it is a firm’s age, not its size, that is the driver of job creation – this has many implications, particularly for policymakers who are focusing on small business as the answer to a dire employment situation.
You will have the time of your life• Starting anything new is difficult, but if it was easy everyone would do it!• It’s something you will remember for the rest of your life whether things go very well or things go poorly.• “Everyone should try to be a rockstar at least once in their lifetime.”• It will test your abilities and teach you more about yourself than anything else you’ll ever do.
You will make friends andconnections that will last a lifetime.• There is no substitute for being with people with whom you’ve accomplished great things (or failed miserably at something worth trying …)
It is a rare chance to create something from nothing• Very few professions put you in position to create something of value where nothing was before.• Your idea probably isn’t unique ... But by applying your time, passion, and energy to the venture you have a chance to do something no one has ever done …
It is easier than it used to be … • Clouds, frameworks, apps, Oh My!In the olden days … productdevelopment took years,required large teams andmassive investments inequipment and infrastructure.
You can do it from (almost) anywhere!Silly-con Valley is no longer thebe-all-and-end-all location. If youhave skill and passion, you canmake your location into whateveryou want it to be.
It’s easier to find customers than it used to be … • Google changed the world forever … • Big data and deep analytics are changing it again … • And social media gets customers engaged in ways we old guys could only dream of ...
A traditional job isn’t as secure as it used to be … • Big, global companies are vulnerable in ways they’ve never been. • Global competition affects every industry. • You control your career and “personal brand” in ways previous generations couldn’t.
The “worst that could happen” ain’t so badI can accept failure, everyone fails atsomething. But I cant accept not trying.”-- Michael Jordan
We (mostly) know what works.*• Stick with something you know. • 96% of founders ranked prior work experience or hobbies as an extremely important or important success factor.• It’s the learning; not success or failure, that makes the difference. • Successful founders try and try again. 88% attributed their success to prior successes; 78% attributed success to prior failures.• The management team is critical. • 82% of the founders attributed their success to strength of the management team (not the idea, business plan, or money).• A little luck never hurts. • 73% said that good fortune was an important factor in their success • 22% even ranked this as extremely important. • There is nothing like being in the right place at the right time.*Ewing Marion Kauffman Foundation for Entrepreneurship, titled “Making of a Successful Entrepreneur.”
We (mostly) know what works.*• Use your network. • Professional networks were deemed important in the success of 73% of the founders. • 62% of the respondents felt the same way about their personal networks.• Dropping out of school is not recommended. • 95% of these founders had earned Bachelor’s degrees and 47% had more advanced degrees. • 70% said their university education was important • College helps with knowledge, discipline, and networks• First-timers usually fund their own venture. • Venture capital and private/angel investments play a small role in the startups of first-time entrepreneurs. • 70% said they had to use personal savings as a main source for their first business.*Ewing Marion Kauffman Foundation for Entrepreneurship, titled “Making of a Successful Entrepreneur.”
We (mostly) know what works.*• Willingness to take a big risk. • When asked what may prevent others from starting their own business, the highest ranked factor by 98% was lack of willingness or ability to take risks. • Founders clearly found entrepreneurship to be a risky endeavor.• Huge time and effort commitment. • 93% felt that the work and time challenges were a major barrier*Ewing Marion Kauffman Foundation for Entrepreneurship, titled “Making of a Successful Entrepreneur.”
We also (mostly) know what fails.• Hero myth: Believing in your product is important … to a point. • Founders too-often fall in love with their products or technology, ignore negative feedback from customers, and spend years building a product based on a vision that no one else shares.• Process myth: There is no direct path to success … • Conventional wisdom is: have a great idea, raise money, build a product, then go sell the product… • This doesn’t work when attacking unknown problems with untested solutions.• Money myth: Too much money is (almost) as bad as too little! • Too much money, too soon, allows a flawed business model to hide behind the perception of progress. • Better to stay lean, focused on the market, and adapt as necessary.
The single biggest risk any new venture faces is … … trying to grow the venture before the model is fully proven.
One way to think about it (from “Nail It then Scale It: The Entrepreneurs Guide to Creating and Managing Breakthrough Innovation,” Nathan Furr and Paul Ahlstrom)• Nail the pain: Begin with a real problem • Nail the go-to-market strategy: There’s that has a big and monetizable pain no substitute for a deep understanding of points. the target customer: • Pick a big problem to solve! • What’s their buying process? • Pick something with a lot of • What are they trying to accomplish? potential customers. • What are they really willing to pay?.• Nail the solution. Neither breakthrough • Nail the business model: All aspects of technology nor maximum features will operating the business! assure that “if we build it, they will • Distribution channels come.” • Revenue streams • Start with a minimal focused set of • “Relationship” with the customer features that someone will pay for • Cost of materials and customer • Test the solution early and quickly in acquisition the market, and iterate to get it • Partnerships, suppliers, etc. right. • Key activities.
One way to think about it (from “Nail It then Scale It: The Entrepreneurs Guide to Creating and Managing Breakthrough Innovation,” Nathan Furr and Paul Ahlstrom)• Scale it. Don’t attempt to scale it until you have a proven repeatable business model that predictably generates revenue. • Conserve cash • Build the team • Repeat the customer acquisition, product delivery & support processes until they are bullet-proof.
Building the team starts at the top "Observe all men; thyself most.“ — Benjamin Franklin“No man is the worse for knowing the worst of himself.“ — Thomas Fuller
20 Core Functions/Skills that need to be considered1. Team Building Leadership 11. The Core Technology Technology2. Ability/Willingness to Delegate 12. Keeping it Safe3. Articulating a Coherent Vision 13. Technology Assessments4. Build and Maintain Momentum 14. Managing the Techies5. Perceptions 15. Priming the Pump6. Using the Tools Management 16. The Overall Market Marketing7. Managing the People 17. Marketing Channels8. Building the Organization 18. Market Assessments9. Working the Numbers 19. Sales10. Making the Deals 20.Managing the Brand
What happens in the garage stays in the garage unless …… there’s a complementary “ecosystem” outside thegarage In a healthy ecosystem, everyparticipating species benefits from the presence of every other participating species.
Things to rememberNew beats small and large every time!No reason not to start something.Nail it, then scale it.Get out of the garage!