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Entrepreneuship WS 17/18 > Korbo Zusammenfassung > Flashcards

Korbo Zusammenfassung Flashcards

1
Q

What is necessary for entrepreneurism

A
  • For new markets do need radical new technologies: improved vs disrupted (schumpeter)
  • Capital
  • Policy (lower regulation)
  • Support (cultural support in society, as well as support from certain people)
  • Culture and community (Group of founders)
  • Market characteristics(demand/supply —> new markets)
    Talents
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2
Q

Reasons for startup explosion:

A

Reasons for startup explosion:

  • Speed of consumer adoption of new technology
  • Building startups is cheaper (thousands, not millions of $ anymore)
  • Higher resolution venture finance industry
  • Entrepreneurship is developing its own management science
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3
Q

Who is financing startups

A
  • There are a lot of people helping startups with money, especially in Silicon Valley and in the Ivy League Universities.
  • In Germany Business Angels fund more than venture-capital, but most of the time public money is invested
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4
Q

Are entrepreneurs born or made?

A
  • Children of entrepreneurs are 60% more likely to become entrepreneurs
  • Importance of adoptive parents is twice as large as the influence of biological parents
  • Parental role modeling based on an analysis of gender specific parent-child transmissions of entrepreneurship
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5
Q

Types of innovation

A
  • Technology Push innovation (New Problem with Old Solution): Looking for new applications
  • Radical innovation (New Problem with New Solution): Looking for a new solution
  • Incremental innovation (Old Problem with old solution): Optimizing
  • Market Pull (Old Problem with new solution): Looking for new solutions
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6
Q

Entrepreneurs versus Managers

A
  • Entrepreneur are less loss averse then managers
  • Same risk averse, but loss averse greater
  • Entrepreneurs have a more intuitive decision making styles than managers
  • Entrepreneurs are more optimistic than managers (NOT over confident)
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7
Q

Name the 5 discovery skills of an entrepreneurs

A
  • Associating (Steve Jobs typology): Combine different cultures, things, ideas —> new ideas get formed
    The more you expose yourself to new ideas, the more you will have
  • Questioning (Question daily life; Why this way, why not in another way?)
  • Observation (Look at people, how they behave and conclude on that
  • Experimenting (Try something new and learn from failure. Take small steps —> POSITIVE THINKING: „I haven’t failed. I’ve just found 10000 ways that won’t work“ - Edison)
  • Networking (Find people, who are better than you)
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8
Q

Likelihood of opportunity recognition and financial success

A
  • Data suggests correlation between discovery skills and financial success.
    BUT: More factors: Personality traits/motivation, Execution skills, experience, Timing, Competition/Technology, Capital, Luck, organizational constraints.
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9
Q

What is Effectuation?

A

Effectuation: how do entrepreneurs build their companies? And what can we learn from that?

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10
Q

Causal rationality versus effectual reasoning

A
  • Causal rationality begins with a predetermined goal and seeks to identify the optimal alternative
  • Effectual reasoning begins with a given set of means and allows goals to emerge contingently overtime from varied ideas
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11
Q

4 basic principles of effectuation:

A
  • Bird in the hand principle — start with your means: start taking action, based on what you readily have available.
  • Affordable loss principle — set affordable loss: evaluate opportunities based on whether the downside is acceptable.
  • Lemonade principle — leverage contingencies: embrace surprises that arise from uncertain situations
  • Crazy-Quilt-principle — form partnerships: look for people who are willing to commit for real
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12
Q

Name Business Models examples

A
  • Haloid: 1958 - First big printer ; Good a good product, but way to expensive. → Monthly fee + 2000 Pages for free; Then pay for additional pages
  • 1998: Google designs new business model → Auction search words -→ It is very important to look at a business model
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13
Q

Name the 9 building blocks of the business model canvas

A

Key Partners
Key Activities
Key Resources

Value Proposition

Customer Relationships
Customer Channels
Customers

Costs
Revenue

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14
Q

Describe the McDonalds milkshake problem

A
  • People hire products to do things for us
  • For what kind of a job do people hire a milkshake? → Data analysis→ Last time you didn’t hire that product, what did you hire?
  • If you understand the job you can improve the product
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15
Q

Describe: Customers from the Business Model Canvas

A
  • Which customers / users are you serving?
  • Which job they want to get done?

–> Customer driven

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16
Q

Describe: Value Propositions from the Business Model Canvas

A
  • What are you offering them?
  • What is getting that done for them?
  • Do they care?

–> Offer driven

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17
Q

Describe: Customer Channels from the Business Model Canvas

A
  • How does the customer segment want to be reached?
  • Interaction points

–> Customer driven

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18
Q

Describe: Customer Relationships from the Business Model Canvas

A
  • What kind of relationships do you develop?
  • personal, retentive, automated?

–> Customer driven

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19
Q

Describe: Revenue from the Business Model Canvas

A
  • What are the customers willing to pay?
  • How?
  • Transactional or recurring revenues?

–> Finance driven

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20
Q

Describe: Key Resources from the Business Model Canvas

A
  • Essential assets/resources for your business?

–> Resource driven

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21
Q

Describe: Key Activities from the Business Model Canvas

A
  • What activities are crucial?

–> Resource driven

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22
Q

Describe: Key Partners from the Business Model Canvas

A
  • which partners/suppliers leverage your business?
  • Do you need to rely on somebody?

–> Resource driven

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23
Q

Describe: Costs from the Business Model Canvas

A
  • What is the resulting cost structure?
  • Which key elements could ruin your business?

–> Finance driven

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24
Q

Business Model Innovators outperform traditional innovators – Name 4

A

Produce and sell
Freemium
License / Franchise
Multisided platforms (Google) / Long-Tail (Amazon)

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25
Q

Leap of faith

A

Commuters will stop and buy a refreshing drink –> They pay a premium for fresh lemonade

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26
Q

Hypothesis for business

A

At least 10 ppl per day will stop and buy lemonade –> Coke costs 1$ –> They could pay 1,5$ for lemonade

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27
Q

Success metric for your business

A

Number of glasses you sell and/or price at which customers most willingly buy

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28
Q

Actual results from testing your business

A

Sold only 2 glasses – Several people stopped, but did not buy

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29
Q

Insights and course corrections of your business

A

Started placing signs for lemonade versus dropping the price

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30
Q

Different Approaches: cost vs. Value driven

A
  • Finance driven: Minimizing costs (Low price value, maximum automation, outsourcing)
  • Customer driven: Focus on value creation l Aim at creating and maintaining value and personalization)
  • One-off consumption: single buy of a product
  • Recurring consumption: Buy things multiple times (Nespresso coffee)
  • Freemium: High conversion rate elasticity (profit extremily sensitive to conversion) - easily profitable , but need to be studied over timeto be studied over time
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31
Q

Challenges for start-ups regarding market entry

A
  • Low awareness of company and product → Build a brand
  • Limited resources: financial, personnel, time
  • Existing market vs. New market: type of market changes everything: Varying parameters make it necessary to approach every market differently (Regarding sales, marketing, Business development strategies etc.)
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32
Q

Targeting & Positioning

A
  • Product / Market fit;
  • Packaging and pricing;
  • Channels and Distribution;
  • Messaging and communication ⇒ depend on targeting &
  • Segmentation
  • Starbucks (coffee → Lifestyle) ⇒ Pure perception by customers
33
Q

Focus on the right customer:

A

Focus on the right customer:
Has a problem → Is aware of the problem → Has actively looked for a solution → Has put together a own, bad solution → Has a budget

34
Q

Customer discovery:

A

Customer discovery:Find a problem, worth solving → Find a potential solution

35
Q

Customer validation:

A

Validate, that solution works → Validate a business model

36
Q

How do you find information about customers?

A
  • Exploratory approach: Interview / Observation vs.

- Assumption approach: Questionnaire

37
Q

Product development

A

Concept/Bus. Plan –> Product Dev. –> Alpha/Beta –> Launch/1. Shipping

38
Q

Customer development

A

Customer discovery –> Customer validation –> Customer creation –> Company building

customer validation –> Customer discovery

39
Q

Main challenges for product development

A
  • Customer often don’t know themselves about their needs
  • Misleading information due to personal influence
  • “Sticky information”-Problem: Difficult to describe → Knowledge of customer often limited → less imagination
    ⇒ Important to understand whom to listen to and why
40
Q

Explain the Customer Validation approach:

A
  • Do they: Care, Need it, can afford it. Who are they for real?
  • Does our solution solve the problem? Do they understand it? Would they pay?
41
Q

Problem-Solution fit:

A
  • 10-20 customers, telling them, they must have the solution to a problem you are trying to solve
  • A high number should say that your solution solves their problem
  • A handful of them is willing to help you to grow
  • Some are paying for a prototype
42
Q

The Mom-Test

A

The Mom-Test (Find out, what customers want)

  • People are lying bastards! (They tell us what we want to hear, if he ask wrong)
  • Mom tries not to hurt your feelings
43
Q

What are Customer interviews for?

A

Customer interviews:

1. Find out if they are the customer; 2. Explore their world view; 3. Get commitment

44
Q

What are good questions for an interview guide?

A
  • Tell me about X (Not: Do you have a problem with X / Do you think, it is a good idea ? / Would you buy a product which solves X?)
  • How do you currently deal with this problem?
  • Talk me through the last time you had this problem
  • How much does that problem cost you? (Not: How much would you pay?)
  • Is there a budget for it? who else should i talk to?
  • Did or do ! ⇒ Never would! (Do not assume problems / Give hints)
  • Let them speak about experiences/ examples (Do not ask for opinions)
  • Opinions are worthless — Commitments & Think is. Do!
45
Q

Focus on the customers in an interview

A

Know what you want to learn: 1. Find customers; 2. Validate Problem; 3.Validate solution; 4. Learn and Iterate

  • We are looking for expert feedback; Ask open questions; Let them speak; Let them be the expert; In Person
  • Don’t delegate the interviews; Precisely table to people; Come back to the interviewees; Review the team
46
Q

What are Major team challenges

A

Clear responsibilities - clear goals - making strategic decisions - personal conflicts - Equity splits

47
Q

3 R´s

A

Relationships – Roles – Rewards

48
Q

Roles in a startup

A

Roles: functional, skill related roles
- Consultant: analyzes situation & derives recommendation
Ability to learn, empathy, apprehension

  • The boss: leads, gives orientation, keep’s team together, supports, motivates
    Initiative, risk-taking, ability to motivate, ability to make decisions
  • Artist: nonconventional questions, different viewpoints, impulses
    Creativity, communication skills, open, risk initiative, risk taking, the ability to motivate, and ability to make decisions
  • Maker: execution, pushes others
    Endurance, discipline, ability to motivate
  • Enthusiast: brings fun and is able to inspire
    Teamwork, optimist, ability to communicate, motivate
  • The organizer: plans and controls, has overview
    Flexibility, teamwork, structured, reliable
  • Helper: always there
    Initiative, open, empathy
49
Q

The great team is characterized by?

A
  • Equal distribution of talking and listening (focused and short)
  • Team members look at each other during conversation
  • They interact beyond daily work with each other
  • Explore new information in their networks, then come back and share
  • Who is on the team matters less than how the team members interact, structure their work, and view their contributions
  • Heterogeneous in terms of competencies and roles
  • Business acumen + technical expert
  • Someone who executes + someone who looks at the details + someone who connects people
  • Shared vision, working culture, ambitions
50
Q

Rewards in a startup

A

Equal splits vs. the founders pie calculator

ESOP = employee stock option plan (critical!)

51
Q

Name Categories of investors:

A
  • Family and friends: altruistic/idealistic (seed)
  • Business Angels: monetary/ idea of being the mentor (seed/early stage)
  • Incubators, accelerators: monetary (M&A advisory, Commission, stakes) (seed)
  • Venture capital: monetary return on investments (seed, early & later stage)
  • Corporate venture: strategic motivation (seed & early stage)
52
Q

Major Terms for valuation

A

Money: valuation, pre-money, Post-money, milestones, Virtual stock options, Exit preference, down round protection

Control: Vesting of founders shares, transfer restrictions, drag-along/tag-along, supervisory board, veto rights, information rights

53
Q

Stages of funding

A

Early stage: Seed stage –> Start-Up

Expansion stage: Expansion

Late stage: Bridge –> MBO

54
Q

Valuation Variables

A
  • Comparables: similar deals in history
  • Key assets of the company: management (commitment, knowledge, experience), intellectual property, financials, Time to profit, milestones achieved, revenue, customers and feedback, barriers to entry
  • Financing history: funding today, future funding, Post money valuations
  • Size and growth of market: current size, targeted size
55
Q

Problems with Net Present Value

A

Net present value: forecast of profit / discount rate —> (turnover - costs)/ discounted rate —> discounted rate = what is the risk, that my forecast is wrong

56
Q

Problems with DCF

A

Discounted cash flow: there are no cash flows

57
Q

Dave Berkus Method

A

Dave Berkus Method: Add 500k for every thing, that exists (sound idea + 500k, quality team + 500k etc. )

58
Q

Scorecard method:

A 
30% Management
25% Opportunity
15% Product
10% Sales
10% Competition
10% Other factors
59
Q

Wisdom of the crowd:

A

Wisdom of the crowd: pre-money valuation of all business angels —> take mean and mode

60
Q

Cost validation:

A

Cost validation: do salaries scale? above or below market rates? What are other cost drivers?

61
Q

Profit validation:

A

Profit validation: Enough demand? Deal closure rate? Sales team internal/external/size?

62
Q

B2B vs. B2C

A
  • B2C Startups: Traction, Vanity metrics vs. real key metrics, e-commerce: cac vs. lcv, scalabe?
  • B2B startups: Scalable, technology, team, network, comp.?
63
Q

Unicorns:

A

Unicorns: Venture backed, private, < 10 years, > $1 billion

64
Q

Customer Lifecycle

A
  • Visitor: Everyone, who gets in touch with the product —> If they sign up for beta or so, they become prospect —> Action to move to next stage: Conversion
  • Prospect: potential customer who has expressed interest —> Conversion rate
  • Activated user: delivering the core value unit for the first time —> activation rate
  • Customer: as soon as he/she pays —> daily/weakly active user rate
  • Active customer: regulary uses your products —> renewal rate
  • Loyal customer: customer renews or signs up for additional features —> net promoter score/referrals
65
Q

Sales Funnel

A
  • Leads: can enter the sales funnel from outbound or inbound channels —> action required —> filtering bad data
  • Marketing qualified lead (MQL): scoring system that correlates with the historic probability of closing the deal —> action required
  • Sale qualified lead (SQL): sales development team conducts lead qualification —> provide sales team with information about customer —> SDR qualifies prospect using BANT approach
  • Opportunity: When a lead passes all the necessary qualification parameters, it becomes an opportunity —> SDR schedules a demo
  • Proof of concept (PoC): negotiate, if your product needs access to other platforms/products from other companies
  • Closed: customer send in the signed proposal and pays for the first invoice —> customer success team
  • Onboarding: customer success team (CST) trains the customer on how to use the solution
  • Renew/upsell: effectiveness of your customer success team is measured by renewal, upselling and churn metrics
66
Q

Customer Awareness

A

Marketing: Enlighten customers about industry trends

67
Q

Customer Education

A

Marketing/Sales/Customer Success: Educate customers on more effective and efficient ways

68
Q

Customer Selection

A

Marketing/Sales/Customer Success: Tell customers about other products

69
Q

Customer Training

A

Sales/Customer Success/ Support: Train customer to use product

70
Q

Entrepreneurial ecosystem

A
  • Old top-down strategy: Government —> Incubators & Venture funds —> EPs
  • New Entrepreneur-centered approach: network

Needed: policy, finance, culture, supports, human capital, markets

71
Q

Founders pie

A
  • Idea: Company wouldn’t exist without an idea
    Business plan preparation: the plan is a necessary element of starting a business — but it all comes down to execution
  • Domain expertise: where does someone have meaningful expertise?
  • Commitment and risk: full-time workers (opportunity costs) / investments
  • Responsibilities: who is going to do what and who is responsible for failure

Relative importance of elements:
- The elements above create weights on a scale from 0 to 10, showing their importance to the business

Relative importance of founders:
- Founders get points on a scale from 0 to 10, based on how they are involved in an element.

In the end the weights get multiplied with the founders points of every founder and get summed up into total points per founder

Then you can derive the percentage of total pie everyone gets

72
Q

Validated UX Concept

A

Validated concept — solution that communicates the value proposition — in the form that works for the user

Makes the users life easier — goal focused — forgiving — consistent — creates meaningful delight

73
Q

How do you know when the UX is bad?

A

Low conversion, high drop-off rates, angry users and a lot of questions/ Assistance needed

74
Q

Causes of bad UX?

A

Not fully developed/bad ideas, too many features, ambiguous timelines, Poor planning, no research/testing

75
Q

How to plan for UX Design?

A

Observation —> ideation —> prototyping —> testing

76
Q

What is the relevant IP?

A
  • Copyright (design and software)
  • Know-how (business processes and data)
  • Trademarks and designs(company name)
  • (Utility) patents
  • Business ideas and concepts, web developments, customer data/business contacts
77
Q

Hotspots of IP

A
  • Does the company hold all the relevant IP rights — proper transition of rights
  • Who owns employee/freelancer developments — proper transfer of rights
  • Do you have all licenses you need to run your business — license status
  • Do you have a reliable relationship with your supplier — check Agreements
  • Proper know-how protection
  • Can you ensure proper use of your IP — audit rights and defined sanctions
  • IT security
78
Q

Sales channels for a startup

A
  • Direct to customer channel — indirect channel — Direct channel
  • Load touch channel ($) — High touch channel ($$$$)

Internet – Telesales – volume distributors – value-added partners – field sales

Entrepreneuship WS 17/18 (1 decks)

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