Sunday Morning - Effectuation & pitch
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The document discusses the principles of effectual thinking used by successful entrepreneurs. It provides examples of entrepreneurs who focused on affordable loss, leveraging contingencies, and forming partnerships with available resources and networks. The document advocates an iterative process of taking action with available means and allowing outcomes to develop organically rather than relying solely on predictive business plans and analyses.
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Sunday Morning - Effectuation & pitch
- 2. FOUNDERS CIRCLE • Invite only group of entrepreneurs • Smart entrepreneurs sharing great ideas • Structured best-practice programme • Community of ambitious entrepreneurs • Weekly meetup
- 3. Source: Sarasarvathy (2011) 3 40 start upsto $200 million to $6 billion 1IPO
- 7. Opportunities Knowledge People Resources Outcome Outcome Outcome Outcome Outcome Outcome (Imaging a possible new end using a given set of means) EFFECTUAL THINKING
- 9. Opportunities Knowledge People Resources Outcome Outcome Outcome Outcome Outcome Outcome Effectual Thinking (Imaging a possible new end using a given set of means)
- 12. Think a lot. Let’s create a plan. Start acting as soon as you can.
- 13. WHOM DO YOU KNOW? WHAT RESOURCES CAN I ACCESS?
- 14. AFFORDABLE LOSS: PROTECT THE DOWNSIDE
- 15. RICHARD GRIFFIN
- 16. RICHARD GRIFFIN “It was the first time in business that I felt real shame,” he says. “I couldn’t pay bills, I couldn’t pay staff, family and friends who had invested in me and the business lost huge amounts of money and it was all because of me. It was the first time in my life where I just couldn’t find a way to come up with a second plan. There was this thing that was beyond my control that I couldn’t fix – and it just broke me.”
- 17. RISK TAKERS?
- 18. RISK TAKERS?
- 19. Risk Taking
- 20. I’ll start cheap make sure I… cover my cost don’t have to take huge risks…. uhm… one thing I’m sure about my experience… never take any risk if you can help it… it is just the opposite of what most people think about…. Entrepreneurs [E5]
- 22. Source: Omidyar (2002) “Back when I launched eBay on Labour Day 1995, eBay wasn’t my business – it was my hobby. I had to build a system that was self-sustaining… …because I had a real job to go to every morning. I was working as a software engineer from 10 to 7, and I wanted to have a life on the weekends. So I built a system that could keep working – catching complaints and capturing feedback – even when Pam and I were out mountain-biking, and the only one home was our cat.
- 23. Jean Marc-Tostee
- 24. Time Size ‘92 – Gotcha, Wrangler Agencies & Biotribe factory R30 million – ‘98 100 employee – ‘97 R50 million - ‘01
- 27. Time Size ‘92 – Gotcha, Wrangler Agencies & Biotribe factory R30 million – ‘98 100 employee – ‘97 R50 million Chinese Imports R6 to R13 to dollar - ‘01
- 28. Having lost my business so suddenly, I was now setting up a licensing base and succeeding in spreading my risk across a number of products, licensees and manufacturers. We have the brands, they have the factories. With this licensing model, we find the best manufacturers and negotiate a win/win partnership with them – I provide the product ideas and brand knowledge and they produce products they are already successful at making, but under our brand. Together we have a thriving business.
- 29. Time Size ‘92 – Gotcha, Wrangler Agencies & Biotribe factory R30 million – ‘98 100 employee – ‘97 R50 million Chinese Imports R6 to R13 to dollar 2 employees – ‘05 - ‘01 R160 million – ‘09 ’04 – 20 Licenses ‘01 – Licensing model
- 30. With the benefit of hindsight, I know now that back in 2001 the business I had built was hugely exposed to external risks. Today, I would not employ that many people. I would not make and distribute so many diverse products from just one facility. It makes far more sense to outsource production to manufacturing and distribution experts who have all the expertise and channels in place. I would, and do, take forward cover on any international forex importing and exporting we do. I keep overheads to an absolute minimum and maintain tight control over all financial aspects of the business.
- 31. Do everything you can to lower the risk of failure and protect yourself if you fail.
- 32. I always go into a deal anticipating the worst. If you plan for the worst—if you can live with the worst—the good will always take care of itself.
- 35. WHOM DO YOU KNOW? WHAT ARE YOU PREPARED TO LOSE? TIME? MONEY? REPUTATION? WHAT RESOURCES CAN I ACCESS?
- 36. CO-CREATION PARTNERSHIPS: CRAZY QUILT
- 37. How will we beat the competition? Who can we bring along?
- 38. AMAR BHIDE
- 42. Larry & Sergey (PageRank) Jim Reese (Tight server farm) John Doerr (OKR) Urs (New code)
- 43. Larry & Sergey (PageRank) Jim Reese (Tight server farm) John Doerr (OKR) Yahoo (Billion page index) Urs (New code)
- 44. Larry & Sergey (PageRank) Jim Reese (Tight server farm) John Doerr (OKR) Yahoo (Billion page index) Urs (New code) Yahoo (Faster crawler)
- 45. Larry & Sergey (PageRank) Jim Reese (Tight server farm) John Doerr (OKR) Yahoo (Billion page index) Overture (Auction adverts) Urs (New code) Yahoo (Faster crawler)
- 46. Larry & Sergey (PageRank) Jim Reese (Tight server farm) John Doerr (OKR) Yahoo (Billion page index) Overture (Auction adverts) Urs (New code) Yahoo (Faster crawler)
- 47. How can we beat the competition? Who can we partner with?
- 48. “I want to see… kinds of resources… geographically… finances… track record… people they hire… “ “Your competition is a secondary factor” “I order people not to think about competitors. Just do your job.”
- 49. WHAT ARE YOU PREPARED TO LOSE? TIME? MONEY? REPUTATION? WHO COULD I PARTNER WITH? WHOM DO YOU KNOW? WHAT RESOURCES CAN I ACCESS?
- 50. LEVERAGE CONTINGENCIES: LEMONADE PRINCIPLE
- 51. “Never underestimate serendipity. And again I think that… in these types of situations, the traditionalists, which I call MBA from Harvard versus the entrepreneur… the MBA from… Harvard would confine themselves to certain paradigms that existed before.”
- 53. Avoid surprises. Learn and benefit from surprises.
- 54. Bring the plan back on track. Redesign the plan or get a new plan.
- 55. CONTROL VS. PREDICTION: PILOT IN THE PLANE
- 56. What should we do? What can we do?
- 57. “If I had a budget, I could ask specialist in the field of education to go through data and give me ideas” “You can sit and analyse these different markets forever and ever and ever… and they still may be wrong.”
- 58. “just kind of sit and listen to them telling me… what new features they’d like” “Ultimately, the best test of any product is to go to your target market and pretend like it’s a real business. You’ll find out soon enough if it is or not.”
- 59. We predict the future. We create the future.
- 60. EFFECTUAL CYCLE: THE SNOWBALL EFFECT
- 61. Action with means Partnerships Affordable loss Leverage contingencies
- 62. Action with means Partnerships Affordable loss Leverage contingencies
- 63. Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies
- 64. Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies
- 65. Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies
- 66. A growing cycle of resources and progress Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies Action with means Partnerships Affordable loss Leverage contingencies
- 67. Big bold visions with a clear plan and big rewards. Lets work with what we have an build as we go.
- 69. WHOM DO YOU KNOW? WHAT ARE YOU PREPARED TO LOSE? TIME? MONEY? REPUTATION? WHO COULD I PARTNER WITH?
- 70. HOW TO PITCH YOUR BUSINESS
- 71. OWLET TEAM
- 72. COMPANY: OWLET BABY MONITORS INTERVIEWS: 200 PITCHES: 240
- 73. Problem-Customer fit Evidence What evidence do you have of your target customers problems? 1 Who is your customer? What problem are you solving for them? Mum’s – 6 mths pregnant to age 2 worried about babies health. Problem Interviews: 14/23 worried of babies dying of SIDS.
- 74. Problem-Solution fit Evidence What evidence do you have that customers will purchase the solution? 2 What solution(s) are you offering the customer? Owlet: Baby monitor. Be empowered by seeing your babies health at a glance $250 Pitched 4 monitors at store with A4 ads: 16/81 would buy 477 parents inquired about the product via email
- 75. Proven Market Size Evidence What evidence do you have of the market size? How many potential customers are there? 3 4 million babies born a year Parents of 0 to 2 years that want to monitor their babies 81 parents interested in monitors pitched and 20% will purchase ours Industry report 1 million purchase baby monitors 200 million is that total number that we predict will buy our product US census data
- 76. Proven Market Size Evidence What evidence do you have of the market size? How many potential customers are there? 3 4 million babies born a year Parents of 0 to 2 years that want to monitor their babies 81 parents interested in monitors pitched and 20% will purchase ours Industry report 1 million purchase baby monitors 200 million is that total number that we predict will buy our product US census data
- 77. Financial Projections Evidence What evidence do you have that your financial projections assumptions are right? 8 What are your financial projections and what assumptions are they based on? 3 Projections Year 1: $500 000 Year 2: $1 000 000 Year 3: $2 000 000 We will be able to sell everything we make in 2 months. Evidence: Pre-sold first batch Assumptions 1. No. of batches produced 2. Sales projections No. batches produced Assumption: 2 per year Evidence: 4 months to produce first batch
- 78. Investment Readiness Scale / Business Model Validation 10 Update financial projections 9 Optimise customer acquisition 8 Proven feasible customer acquisition Proven you can produce at scale 7 Proven customer satisfaction 6 Proven you can repeatably sell solution Proven can produce solution 5 Update finanical projections 4 Proven can sell MVP Proven you can create MVP ✓ ✓ 3 Problem-Solution fit Create financial model ✓ 2 Customer-problem fit Proven Market Size ✓ ✓ 1 Identified target customer ✓ Where is your business on the investment readiness scale?