Entrepreneurial Strategy Flashcards
What are common traits of an entrepreneur
- Unhappy with the status quo
- problem solver
- prime vision
- bold ideas
- courage
- team builder
- action oriented
- RISK MANAGER
What is the de-risking strategy in chronological order (7)
- Idea
- Technology validation
- Problem
- Solution
- Business model
- Efficiency
- Scaling
What are some myths about startups (15)
- It’s all about the idea
- You need a detailed business plan to get started
- You need to raise money to start the business
- Start-ups are created by 18 year old geniuses
- It is all about execution
- The founding team is the most important thing
- Lifestyle businesses are the best
- You have to do everything yourself to start with
- If you build it, they will come
- Founders get to be the boss and do their own thing
- Hire the developers first
- Best friends= best cofounders
- Price yourself lower than your competitors and win
What are realities about startup (5)
- Ideas are everywhere
- A coachable, multi-talent team is required
- Traction with real customers is critical
- You will likely bootstrap your start up until you get revenue
- 2-6-2 VC model
Jean Baptiste Say
“The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.”
Contribution?
Entrepreneurs must allocate limited resources toward the most profitable opportunity.
- Maximizing scarce resources
Joseph Schumpeter
“The introduction of truly revolutionary changes in business methods and practices, including the launching of outstanding new products, production techniques, and organizational approaches.”
Contribution?
-This definition introduces the idea of revolutionary practices and outstanding new products
- He also mentions the idea of creative destruction (new and creative ideas sometimes involve the destruction of an existing business model)
(Revolutionary changes in business methods + Outstanding new products)
Peter Drucker
“One who always searches for change, responds to it, and exploits it as an opportunity.”
Contribution?
There is an expanded focus in Drucker’s definition on innovation, but also the idea of responding to change and exploiting opportunities
Innovating to respond to change
Howard Stevenson
“The pursuit of opportunity beyond resources controlled.”
Scott Shane
“An activity that involves the discovery, evaluation, and exploitation of opportunities.”
▪ This definition further doubles down on entrepreneurs being action oriented with the words “pursuit of opportunity”
▪ Exploiting opportunities
Can entrepreneurship be learned?
Yes
What are 3 problems with creating business plans rather than a pitch in a startup
- Detailed business plans take time and effort, which takes away from engaging with customers and building the actual business
- Environment changes rapidly, detailed business plans are usually outdated by the time they’re done
- Detailed business plans can be anchors and PREVENT PIVOT when the business needs it
Myth: VCs are plentiful and easy source of early-stage financing
Reality?
VCs fund momentum
Such funds will be relatively small amounts of money ($50,000 to $150,000) and any follow-on investment will be closely tied to short-term progress.
What do ideas not have to be (4)
- New inventions
- Unique
- First to market
- Stagnant (can change idea overtime)
What do great ideas have? (3)
- Based around some disruptive opportunity
- NEED to have a differentiated value proposition (a compelling reason why your target customers would buy from you instead of your competition)
- Are all about solving compelling customer problems
- Solving a problem that customers care about, and solving it in a unique way that makes it a “no brainer” for them to adopt or switch to your solution.
How can you have a successful startups that is focused on iterative execution rather than detailed business plans (4)
- Move quickly to market instead of engaging in detailed planning
- Find a first customer to test and evolve your offering
- Adapt and pivot based on market feedback
○ Pivot: When a start-up takes an entirely new direction for its product or service offering based on early customer feedback. - Iteratively refine and build out your business model in parallel
Pre-seeding definition of early-stage financing
- Start up is really just forming and has an idea and vision
- Just starting to build its MVP and identify potential early customers
- They need to show some early traction to get any significant financing, but they need at least a MINIMAL level of financing to help them build out that early traction.
Seeding definition of early-stage financing
The start-up has a more refined offering and has engaged with early customers
The company likely has some initial REVENUE and direction and needs about an 18-month window to really figure things out
What are the 5 disruptive forces. Give examples of each
- Technology
- IOT
- Faster computing AI
- cloud based technology - Globalization
- significant trade of goods and services globally - Climate change
- Rising sea levels
- increased CO2 level
- severe storms - Demographic change
- Declining population in western markets
- growing population in developing economies - Geopolitical change
- Forces on nationalism
- changes in wealth distribution
- Redrawing alliances
Why do incumbents/companies fail to adapt (6)
- Short-term, profit driven demands of shareholders
- Management bias to “doing what has made us successful so far”
- Management bonuses tied to quarterly metrics
- Existing customers demands
- Sustainable innovation is easier
- Capital markets support proven approaches
Define the innovator’s dilemma
A common occurrence in a market where the established incumbents focus on sustainable innovations for the SHORT-TERM benefit of their current customers and shareholders rather than reacting appropriately to the threat of a new entrant whose disruptive innovation.
While not an immediate threat, will grow quickly in popularity from the fringes of the market to become the dominant technology capable of stealing the incumbent’s customer base.
Define sustainable innovations
Innovations that are focused on providing incremental improvements to existing products based on customer demand
Define disruptive innovation
Innovations that result in simple, affordable solutions designed to be attractive to customers outside the mainstream of the market
Which 3 disruptive forces are accelerating. What is the supernova effect
Technology (AI)
Climate change (tourism, healthcare)
Globalization (integrated global supply chains)
a massive collusion of capacity, intelligence, and computational power that can be harnessed to bring us solutions we never thought possible.
