BMoE2: Berkeley Method for Execution
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Berkeley Method of Entrepreneurship. Principles of Execution in New Venture Development by Ikhlaq Sidhu
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BMoE2: Berkeley Method for Execution
- 1. Ikhlaq Sidhu Ikhlaq Sidhu Founding Faculty Director, Sutardja Center for Entrepreneurship & Technology IEOR Emerging Area Professor, UC Berkeley Department of Industrial Engineering & Operations Research, UC Berkeley From Opportunity to Execution
- 2. Ikhlaq Sidhu 1. Ideation: Finding an Opportunity 2. Execution: Developing the Venture Author: Ikhlaq Sidhu
- 3. Ikhlaq Sidhu Story/Pitch Prototype Validation Now that you have the starting point: Ready to Execute? A B 2. Your target1. Your high concept 3. Match with your team What’s Next: How do you execute?
- 7. Ikhlaq Sidhu Demystify New Venture Journey Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Time FundingMVP T S A B Your high concept Match with your team
- 8. Ikhlaq Sidhu Demystify New Venture Journey Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Time FundingMVP T S A B Your high concept Match with your team
- 9. Ikhlaq Sidhu Demystify New Venture Journey Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Time FundingMVP T S A B Your high concept Match with your team
- 10. Ikhlaq Sidhu Demystify New Venture Journey Company Stages over Time Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Time FundingMVP T S A B Your high concept Match with your team
- 11. Ikhlaq Sidhu Demystify New Venture Journey Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Time FundingMVP T S A B Your high concept Match with your team
- 12. Ikhlaq Sidhu Demystify New Venture Journey Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Time FundingMVP T S A B Your high concept Match with your team Ikhlaq Sidhu End of Section
- 17. Ikhlaq Sidhu Execution: Work Backwards Story/Pitch Prototype Validation Market Traction Funding Scale/ Goal Sell First/ Build Later Prior to Traction: You need to be in the market What can you be selling (testing) now – before you spend too much money: • MVP • Advertisement • An NRE Agreement • A Service • Consulting • Why: Validation, Commitment, Stakeholders.
- 18. Ikhlaq Sidhu Execution: Work Backwards Story/Pitch Prototype Validation Market Traction Funding Scale/ Goal Sell First/ Build Later My Advice: 1. Make a list of stakeholders (ecosystem) 2. Get the ones your funders will care about later 3. Tell the “story”, “listen” and “collaborate” 4. Initially ask for advice, not money 5. Sometimes get them all together 6. Know how to close the deal (time limit, scarcity, ..).
- 20. Ikhlaq Sidhu Execution: Work Backwards Story/Pitch Prototype Validation Market Traction Funding Scale/ Goal Sell First/ Build Later What is Traction: • Revenue • Customers • Downloads • Usage • Trial • Promise to Buy • (else the story is fiction)
- 21. Ikhlaq Sidhu Funding Request Based on Traction Subject: Introducing Ning to Blue Shirt Capital Hi [Middleman], Thanks for offering to introduce us to Blue Shirt Capital. I've attached a short presentation about our company, Ning. Briefly, Ning lets you create your own social network for anything. For free. In 2 minutes. It's as easy as starting a blog. Try it at: http://ning.com We built Ning to unlock the great ideas from people all over the world who want to use this amazing medium in their lives. We have over 115,000 user-created networks, and our page views are growing 10% per week. We previously raised $44M from Legg Mason and others, including myself. Before Ning, I started Netscape (acquired by AOL for $4.2B) and Opsware (acquired by HP for $1.6B). Blue Shirt’s investments in companies like Extensive Enterprises tell me that they could be a great partner for Ning. We're starting meetings with investors next week, and I would love to show Blue Shirt what we're building at Ning. Best, Marc Andreessen xyz@ning.com 415.555.1212 Source: Pitching Hacks, by VentureHacks.com
- 22. Ikhlaq Sidhu Funding Request Based on Traction Subject Social Proof What is it and for whom? Traction We are credible Why them? A reasonable request Source: Pitching Hacks, by VentureHacks.com Subject: Introducing Ning to Blue Shirt Capital Hi [Middleman], Thanks for offering to introduce us to Blue Shirt Capital. I've attached a short presentation about our company, Ning. Briefly, Ning lets you create your own social network for anything. For free. In 2 minutes. It's as easy as starting a blog. Try it at: http://ning.com We built Ning to unlock the great ideas from people all over the world who want to use this amazing medium in their lives. We have over 115,000 user-created networks, and our page views are growing 10% per week. We previously raised $44M from Legg Mason and others, including myself. Before Ning, I started Netscape (acquired by AOL for $4.2B) and Opsware (acquired by HP for $1.6B). Blue Shirt’s investments in companies like Extensive Enterprises tell me that they could be a great partner for Ning. We're starting meetings with investors next week, and I would love to show Blue Shirt what we're building at Ning. Best, Marc Andreessen xyz@ning.com 415.555.1212
- 24. Ikhlaq Sidhu Execution: Work Backwards Story/Pitch Prototype Validation Market Traction Funding Scale/ Goal Sell First/ Build Later This is a real company Example • Sales Targets: $5M this quarter • Customer Base: Top 10-30 Customer List • A Leading Product • Sales / R&D / Marketing / Operations • Operational Measures: • Customer Happiness Proxy • Churn / Subscriber Growth.. • Costs of Goods • Development Cycle Time • Market Share • Defect Rate • … • The entrepreneur is now thinking about leaving (or converting into an executive)!
- 27. Ikhlaq Sidhu Demystify New Venture Journey Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Stage FundingMVP T S External World is changing Background of team/
- 28. Ikhlaq Sidhu Demystify New Venture Journey Types of Risk and Progress: q Technology Capability q Business Model q People and Team q Funding & Resources Story/Pitch Prototype Validation Market Traction ✔ Business Model ✔ Sale Process Sell First Momentum Stage FundingMVP T S External World is changing Background of team/ Key Question: How will you handle the changes that you don’t know about yet? Depends on: • Technical skills • People skills