5/17/21

Entrepreneurial Flexibility

Professor Costas Andriopoulos

Bayes Business School, City, University of London
Tel: 020 7040 8460
Email: [email protected]

Introduction – Why me?

• Professor of Innovation and Entrepreneurship, Director of Cass X and
Associate Dean for Entrepreneurship, Bayes Business School

• Visiting professor: Said Business School - University of Oxford (Oxford, UK),

IHU and ALBA (Greece)

• Advisor (Maven Global)

• Consultant

• Cass Entrepreneurship Fund and Angel Investor

• Interests: Music, Traveling, Cars/Quadbikes, Collecting vintage comics, vinyl

records, vintage watches and rare books

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Introduction – Why me?

Teaching Philosophy

•Two-way relationship between teaching staff and students

Provide:
•Latest knowledge and thinking to achieve your objectives
•Series of presentations and in-class discussions
•Frameworks to capture principles of entrepreneurial
flexibility
•Series of cases studies to bring the concepts and tensions
alive

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Teaching Philosophy
•Entrepreneurship is taught as a practical discipline

•It is about thinking bigger, becoming bolder and fearless

•It is about creating, innovating, learning, team working,

leading, building resilience

•We are all co-producers of this course

•You are expected to work hard to complete course

objectives

"80 percent of success is just showing up"

Woody Allen
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Teaching Philosophy

It is your responsibility to be prepared, contribute actively, and

treat everyone with respect

I have no problem giving good grades to everyone…

But the bar is VERY HIGH!

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Aims of the course

•Fully understand and develop the capabilities required

when growing their venture
•Apply several contemporary tools, techniques and
practices to better manage their venture
•Understand and apply a powerful set of tools for
innovating ‘inside the box’
•Understand venture capital finance, business angels
and crowdfunding
•Understand how it’s possible to build long-term
competitive differentiation and superior company
performance in their venture

Assessment
•Portfolio (Group, 70%, 30 June 2021)
• Explain how your venture and product offering(s) are different and
better (5%)
• Conduct a SWOT analysis for the phase of your venture and
brainstorm several strategies to be considered (7.5%)
• Develop vision (2.5%) and mission statements for your venture
(2.5%)
• Write down several company values (e.g. behaviours and skills that
are internally valued) that can aid your team members
better understand what’s important for success, what to expect
from each other and how your company really operates (5%)
• After conducting a founders’ matrix analysis and you have identified
skills gap (5%), write a job advertisement (2.5%)
• Develop an advisory board and explain who you are going to invite
and explain your rationale (5%)

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Assessment
• Develop a product interview script (5%), conduct two interviews with
“strangers” (5%), and explain how you developed the product further
(2.5%)
• Explain your product via an Instagram post (2.5%)
• Write one press release explaining your product and your company
(2.5%)
• Write a sales cold-outreach email script (2.5%)
• Create a list of potential VCs and write a cold-outreach email to a
VC (5%)
• Build a growth plan for the next 12 months and anticipate
challenges/risks that may arise, and explain how you plan to mitigate
them (7.5%)
• Create a list of potential acquirers and explain your rationale (2.5%)

• Action Plan (Individual assignment, 30%, 30 June

2021)
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Why are you here?

•Stretch yourself

•Find your purpose

•Become a maker

•Learn how to become an effective leader

•Find ways to make your venture more successful

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What is entrepreneurship?

Self-employment

The creation of a new organisation (Gartner, 1988)

The process by which individuals pursue opportunities

without regard to the resources they currently control
(Stevenson and Jarillo, 1990)

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The entrepreneur
•Who regards themselves as a future entrepreneur?

•Who believes they are entrepreneurial?

• Join the side gig movement!

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Characteristics of successful entrepreneurs

•Passion for the business

•Product/customer focus

•Tenacity despite failure

•Execution intelligence

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Classwork: Personal Failure Resume

•Capture all your biggest

mistakes—personal,
professional and academic

•Below each failure, describe

what you learned from the
associated mistakes.

•Continue to add to your

failure resume

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Estimating entrepreneurial quality

(Guzman and Stern, 2015)

•Eponymous firms are more than 70% less likely to grow than
non-eponymous firms
•Firms with short names are 50% more likely to grow than firms
with long names
•Firms that include words associated with high-technology
clusters are 92% more likely to grow than others
•Corporations are >6 times more likely to grow than non-
corporations
•Firms with trademarks are >5 times more likely to grow than
non-trademarked firms

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Innovate! Innovate! Innovate!

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Start with a difference

1. Records

2. Cassette tapes

3. CDs

4. MP3 players

5. iTunes

6. Spotify

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Geoff Moore’s VP Statement

Part 1 – Value of the offering

• For (target customer) • For internet users
• Who (statement of need or • Who enjoy books,
opportunity)
• (Product name) is a (product • Amazon is a retail bookseller
category)
• That (statement of key benefit) • That provides instant access to over 1.1
million books.
Part 2 – Positioning of the value
• Unlike (competing alternative) • Unlike traditional book retailers,
• (Product name)(statement of • Amazon provides a combination of
primary differentiation) extraordinary convenience, low prices
and comprehensive selection

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Innovation

•Innovation includes the scientific, technological,

organizational, financial and business activities leading
to the introduction of a new (or improved) product or
new (or improved) production process (Dodgson, 2000)

•Innovation is the successful application of new ideas to

products, processes and services (Dodgson, Gann and
Salter, 2005)

•Innovation is invention + commercialization (Freeman,

1982)

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Levels of innovation

•Incremental innovations – small changes based on

established knowledge and existing organizational
capabilities

•Breakthrough innovations – occur when current

knowledge and capabilities become obsolete. They involve
features that are entirely fresh and new. They create a new
market that the innovator can dominate for some time

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Types of innovation

Product innovations

Service innovations

Process innovations

Business model innovations

Market innovations

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Re-imagining!

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Re-imagining!

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What is an opportunity?

•An opportunity is a favorable set of circumstances that

creates a need for a new product, service or business

•It has four essential qualities (Jeffrey Timmons):

1. Attractive
2. Durable
3. Timely
4. Anchored in a product, service or business that
creates or adds value for its buyer or end user

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How are opportunities identified?

1. Observing trends (economic and social trends,

technological advances, and political action and
regulatory changes). We are always looking for
trends and NOT Fads

2. Recognizing problems and finding ways to solve

them

3. Finding gaps in the marketplace

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1. Recognizing trends

Changing Examples Resulting new Companies that

environmental trends business, product, resulted
and service
opportunities
Economic trends Sales of upscale Sites that sell
items at a discount specialized items at
a discount
Social trends Increased interest in Fitness-focused
fitness smartphone apps
Technological Miniaturization of Laptop computers
advances electronics
Political and Political instability Back-up data
regulatory changes storage

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How to spot a game changer

(Aris, 2015)

•Does the new technology meet a fundamental

need?

•Is it easy to use?

•Is it affordable?

•Is the right ecosystem in place?

•…what do teenagers do in their leisure time?

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2. Solving a problem

•Observing challenges (or complaints, frustration) that

people encounter in their daily lives

•Own lives or by observing other people

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3. Finding gaps in the marketplace

Gap in the marketplace Resulting new business Companies that resulted

opportunity

No fitness centers that 24-hour fitness centers

are open 24 hours a day

Restaurants that are Fast-casual restaurants that

both fast and serve combine the advantages of
good food fast-food (fast service) and
casual dining (good food)

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Techniques for generating ideas

1. Brainstorming

2. Focus groups

3. Observation

4. Desk research

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Five skills of disruptive innovators

(Dyer, et al. 2011)

1. Associating
2. Questioning
3. Observing
4. Networking
5. Experimenting

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1. Associating

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2. Questioning

1. “What is?” questions

2. “What caused?” questions

3. “Why?” and “Why not?” questions

4. “What if” questions

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3. Observing

Seek as many external stimuli as possible and develop a

mindset that is not “if-then” but “how and how else?”:

1. Look outside your industry

2. Put yourself in a new environment and then observe
what is happening

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4. Networking

Reach out to (or create a roundtable with) venture

capitalists, executives, consultants, academics,
independent research groups, professional associations,
trade press (e.g. develop an experts rolodex)

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5. Experimenting

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Why do new products fail?

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Step 1: Understand your goal – Why?

(Dashinsky, 2018)

1. Why is the product or feature important?

2. What problem are we trying to solve?

3. What impact does it have on the world?

4. How does this product benefit the customers?

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Step 2: Define the audience – Who?

(Dashinsky, 2018)
“In a sense there's just one mistake that kills start-ups: not
making something users want. If you make something users
want, you'll probably be fine, whatever else you do or don't do.
And if you don't make something users want, then you're dead,
whatever else you do or don't do.” (Paul Graham, Y Combinator)

1. What are the categories of people who have

significantly different motivations for using this
product? (High-level audience)

2. What characterizes your audience? Age, Gender,

Location, Occupation, Mobility
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Step 3: Understand customers’ context and

needs – When and Where?
(Dashinsky, 2018)

When and where they experience this problem

1. Where are they physically?
2. Is there a trigger event causing this need?
3. How much time do they have?
4. Are they on a specific digital app or platform?
5. What emotions do they experience?

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Step 3: Understand customers’ context and

needs – When and Where?
(Dashinsky, 2018)
•Now we want to understand the needs that our product
needs to fulfil
•What is the customers’ high-level motivation for solving
the problem we are tackling?
•The “user stories” technique: As a <role>, I want
<goal/desire> so that <benefit>
As a bike commuter, I want to navigate without distracting
myself from the road, so that I can commute safely
•Map out the current customer journey

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Run mini tests

(Path Forward)
•Don’t ask them what they want, ask them what they are trying to
achieve
•Speak to different types of customers
•Finding customers to talk to
•Create a discussion guide
•Very brief intro to the general theme of the company
•Ask for demographic data
•Ask about real examples of their problem and how they have solved it
in the past. Can you tell me about that in more detail? What was
frustrating? What were you trying to achieve? How did that make you
feel? That’s interesting tell me more? What do you feel about it now?
What were the fun parts of this? How do you do that today? What
information did you find useful? How did you discover the solutions you
used to solve this problem? Did you look for other solutions?

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Run mini tests

(Path Forward)

• Share the concept

• Ask for a referral to some more people to interview

•Record the important phrases

•Stop when you start hearing the same things

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Cambridge Soundworks
•The managerial problem: Men stood wide-eyed when sales
reps showed off the company’s hi-fi stereo speakers…but the
enthusiasm was not translated into sales!
•Ethnographic research: Followed a dozen prospective
customers for 2 weeks (retail stores, houses)
•Findings: The high-end market suffered from S.A.F. It became
the fastest-growing and best-selling product line in the firm’s
14-year history

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Build a user persona

Overall a persona should include:
•Background – age, location, social, relationship/marital
status

•Needs, goals, motivations

•Habits (behavioural and consumer)

•Job Title (and areas of expertise, if appropriate)

•Must do’s/Must never do’s

•UX wants

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Build a user persona

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Bad persona Good persona – Frustrated owner

• 18-40 year old • 29 year old female Business
• Female major, married with 2 year old
• Likes tech stuff daughter
• Lives in a house • MSc from Alba, paid for tuition
• Drives a car with loans, owns a business
sometimes • Founded the business 3 years
• Drinks coffee ago after working for a
multinational
• Frustrated with employee
turnover, loses one employee per
month
• Makes €100K/year, sometimes,
less in bad years

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The user journey map

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Step 4: List concepts – What?

(Dashinsky, 2018)

•Now is the time to explore what your start-up could

build to fulfil the customers’ needs
•Type of product: physical product or digital, etc.?
•Platform: Smartphone, tablet, smartwatch, etc.
•Type of interface: graphic, audio/voice, VR, AR, etc.

Build X for <Who/Step 2>, that <When and

Where/Step 3> to <Why/Step 1>

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Step 4: List concepts – What?

(Dashinsky, 2018)

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Step 5: Prioritize and Choose

(Dashinsky, 2018)

•Once you have explored what could be built to solve

the problem, it’s time to choose the product
concepts you believe are optimal
•Reach – how many customers this product could
potentially reach
•Value for customer – how satisfying this solution is
for the customers
•Potential revenue – how well this solution meets the
business goals of the start-up
•Implementation effort – how hard it would be for the
start-up to build

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Step 5: Prioritize and Choose

(Dashinsky, 2018)

Great Good
Impact

OK Bad

Effort

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Step 6: Solve
(Dashinsky, 2018)

•Develop concepts

•Wireframes,
sketches, etc.

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How to user test new designs

(Path Forward)

• Show the prototype

• Record your session

• You need actual people to test (make it clear that you are testing
the new prototype to gain insights on its performance, encourage
them to think out loud, no wrong answers, gain some insight on
the person)

• Questions: What do you think of X? What do you think the purpose

of X is? How do you find the layout of the site/features of the
product? What would you expect to happen when…? Does
anything stick out to you?

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Cost-effective ways of validating

• Create an online landing page

• Launch your product/service on a crowdfunding page

• Hire a stall at a local market or sell online (Etsy or Ebay)

• Visit or phone stores that sell similar products and speak to

general managers or buyers

• Create an online shopfront (e.g. Shopify)

• Start speaking to online communities

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Decide how to build your product

Route 1 Route 2 Route 3

DIY Hire developers Find a technical
cofounder

Adalo Upwork AngelList

Glide Workhoppers CoFoundersLab

Webflow Hacker News

V.One

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2 more things!

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How to build habit-forming products

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How to build habit-forming products

1. Triggers: Internal: What product do people use when they are

feeling lonely and seek connection? What do we do when we feel
uncertain? When we are bored? External: Emails, notifications

2. Action: Clicking or scrolling…The key is to make these behaviors

as easy as possible

3. Reward: Variable rewards

4. Investment: Repeated investment into the product, it actually

gets better with use

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Packaging

• …is the activities of designing and producing containers or

wrappers for a product

• Marketers must choose the aesthetic and functional

components

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Leading the new venture team

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The end of the great woman/man

•“None of us is as smart as all of us”

•The myth of the victorious individual

•Leadership is linked with our notion of heroism

•…but we all know that cooperation and collaboration
grow more important every day

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“Sell yourself”

•For the next 5 minutes, write a short paragraph to

”sell” yourself

•What are your USPs?

•What value do you bring to the venture?

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New Venture Team

•A new-venture team is the group of founders, key

employees, and advisers that move a new venture
from an idea to a fully functioning firm

•The team doesn’t come together all at once

•The high failure rate is due in part to what is known as

the liability of newness

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New Venture Team

•Prior experience: Shared prior experience can enable NVTs to

make quick and unified strategic decisions (Baum & Wally, 2003;
Kor, 2003) but can also potentially constrain strategic choices
(Beckman, 2006)

•Functional experience: Firm performance was highest when the

functional experience of NVTs aligned with their competitive
strategy (McGee, Dowling, and Megginson, 1995)

•Social capital: Having a broad range of business-related

connections is particularly important for identifying new venture
opportunities (Baron, 2006; Ozgen & Baron, 2007)

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New Venture Team

•Membership changes: The dismissal of NVT members
by VCs negatively impacted firm survival (Busenitz, Fiet,
and Moesel, 2004). Adding new members to NVTs,
especially those with diverse backgrounds, enhances
firms’ chances of reaching IPO (Beckman et al., 2007)

•Conflict: Cognitive conflict positively associates with

profit, sales, and growth in new ventures (Ensley and
Pearce, 2001). There is a strong negative relationship
between affective conflict in NVTs and firm performance
(Ensley, Pearson, and Amason, 2002)

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New Venture Team

•Cohesion: Team commitment is positively associated with NVT

effectiveness (Chowdhury, 2005: 736)

•Cohesion: Experienced VCs prefer to fund ventures with NVTs

that possess high levels of cohesion (Franke, Gruber, Harhoff,
and Henkel,2008)

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Crafting a vision

•“Why = Vision” and “What = Mission”

• Linkedin’s vision is to:
Create economic opportunity for every member of the global
workforce

•And their mission is to realize part of the vision by:

Connect the world’s professionals to make them more
productive and successful

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Guidelines for mission development: the

creation

+What’s our purpose / reason for being?

+Why do we exist? (Who do we serve? How do we serve?
What problem do we solve? How do we add value? How do
we make others’ lives better?)
+What was the unmet need, inspiration, or event that
compelled us to start a new business?

Source: http://gistbrands.net/mission-vision-for-startups/
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The vision: Envisioned Future

Common-enemy Role-model
Target visions
visions visions

1990 1960s 1940s

Become a $125 Crush Adidas Become the Harvard

billion company of the West
by 2000

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Guidelines for vision development: the vision

+Where do we want to go?

+Why do we get up and go to work each day? What
truly motivates us about what we do?
+What do we want our brand to become?
+What do we want to achieve in the future? 10 years
form now, how would we know if we’d been
successful?

Source: http://gistbrands.net/mission-vision-for-startups/
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Guidelines for vision development: the

evaluation
§ Keep it short and simple
§ Believe in it
§ Make it personal, motivating, and captivating
§ Walk the line between boring and too abstract or flowery

We believe in giving everyone the power

to create and share ideas and
information instantly, without barriers

Source: http://gistbrands.net/mission-vision-for-startups/

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Creating a New Venture Team

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Creating a New Venture Team

“Hipster” - Design

“Hacker” - Programming
CEO
“Hustler” - Business

CTO CPO/CMO
(Tech) (Product)
(Marketing

Board of Investor
Mentor Entrepreneur
Advisors:

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Is there a magic team number?

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Common mistakes when putting together a

new venture team
•Placing unqualified friends or family members in management
positions

•Assuming that previous success in other industries translates to

your industry

•Presenting a “one man team”

•Hiring top managers without sharing ownership in the firm

•Not disclosing or talking dismissively of management team skill

or competency gaps

•Vague or unclear plans for filling the skill or competency gaps

that clearly exist
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The Founder or Founders

•Size of the founding team: more than one individual starts 50 to
70 percent of all new firms (Miller et al. 2011; He, 2008)

•Several issues affect the value of the team:

•Have team members worked together before? If people have
worked together before, it usually means that they get along
personally and trust one another (Foo, 2011)

•Are team members heterogeneous? These different points of

view generate debate and constructive conflict among the
founders (Webb et al., 2010)

•Is the founding team too big? A founding team larger than four
people is typically too large to be practical (Vissa, 2011)

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Qualities of the founders

•The level of a founder’s education (Gedeon, 2011)

•Prior entrepreneurial experience (Hoang and Gimeno,

2010)

•Relevant industry experience (Sardanna and Scott-

Kemmis, 2010)

•Broad social and professional network (Lau, 2011)

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Qualities of the founders/leaders

founders/leaders

“A good CEO is always challenging themselves, there is nothing

worse than complacency”

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Founders’ matrix
Founder 1 Founder 2

Product/ Technology
Tasks:

Sales
Tasks:

Marketing
Tasks:

Operations
Tasks:

Financial
Tasks:

R&D
Tasks:

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Recruiting and Selecting key employees

•A skills profile

• How are current skills gaps being covered?

•Finding good employees is not an easy task. In

the Talent Shortage Survey, the Manpower Group in
2015 surveyed 41,700 hiring managers in 42 countries;
the survey revealed that 38% of participating
employers said they had difficulty filling jobs

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Recruiting key employees

•Founders differ in their approach to the task of

recruiting key employees:
•Draw on their network

•Employee referrals

•Internet – Find great talent by looking at the products you

admire (e.g. Google, AngelList, KickStarter, Indiegogo,
Hacker News, Stack Overflow, etc.)

•Social media (Linkedin, Facebook, Twitter, etc.)

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Hiring Process

1. Work Challenge
2. 30 min phone Interview
3. Onsite or video chat interview, ~3 hours
4. Offer—usually given these on the day of the
onsite/video interview

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Test!

Person A

He grew up in a relatively poor family. Buried in his books, he saw college as his
ticket to a better life. It paid off. Earning an academic scholarship, he attended a
small community college. He excelled and was offered a scholarship to study
alongside some of the best students in the world at Stanford University. In this
new terrain he was transformed. He was good looking, stylish, witty and refined
in his manners

He worked as a counselor for a suicide crisis hotline, saved a 3-year old boy
from drowning in a lake, and the police department called him a hero for
apprehending a purse snatcher on the street

After graduating, he became a rising star in the Republican party and worked on
the committees of various governors and congressmen

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Test!

Person B

He needed to understand how things worked and so he set up bizarre

experiments. No living creature was spared. Waiting until mother hens left their
nests, he would steal fetuses from eggs. What other families kept as pets, he
dissected. It is unclear how many rabbits, birds, cats and dogs took their last
breaths in his hands. Many of his nights were spent robbing graves…His actions
led to public outcry and fear in local news. Dissatisfied with the pace of
expanding his “collection”, he turned inward, experimenting on himself

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What should startups look for in

employees/VC Partners?

•People with high standards and good judgment

•People with rare intelligence and creativity

•People who can work collaboratively

•People with diverse networks

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How to conduct a job interview

(Sarah Kessler, Inc Magazine)

•Fact-based or general questions: How many years did

you work at company X?

•Situational or hypothetical questions: What would you

do if you…?

•Behavioral questions: “Tell me about a time when you

had to get a diverse group of workers to cooperate.
How did you do it?”

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How to conduct a job interview

(Sarah Kessler, Inc Magazine)

•Interview structure: •Some tips:

1. Introduction 1. Do your homework
2. Behavioral questions 2. Be nice
3. Wrap-up 3. Take notes
4. Consider adding a test 4. Aim to evaluate each
criterion
5. Don’t talk too much

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Allocating founder stock

•What role will each co-founder have in the business?

•Who is working full-time on the business?
•Ideas are important!
•But so is execution!
•Are you raising outside capital, and does one person have
access to that capital?
•Are any of the co-founders experts?
•Does any co-founder have tons of contacts in the target
industry?
•Who is critical to launching your product?
•Who is critical to generating revenue? Turns out that all
businesses need revenues, so that co-founder should get
equity

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Allocating founder stock

http://www.andrew.cmu.edu/user/fd0n/35%20Founders'%20Pie
%20Calculator.htm

http://foundrs.com/

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The roles of the Board of Directors

•If a new venture organizes as a corporation, it is legally

required to have a board of directors—a panel of
individuals who are elected by a corporation’s
shareholders to oversee the management of the firm
(Dalziel et al. 2011)

•A board is typically made up of both inside and outside

directors

•Provide guidance and legitimacy

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Rounding out the team

•Board of advisors (Look for an advisor just like you’d

look for a cofounder and interview prospective
advisors)

•Lenders and/or Investors

•Lawyers, Accountants and Business Consultants

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Board of Advisors

•Why?
Find people who have been there and done that before
•When?
Consider having a board from the beginning
•How does one attract the right people?
Sell yourself and convince them about the product and
how they can add value
•How many meetings should one hold?
Hold 4 to 10 meetings per year
•Compensation?
Set aside 3 to 10% of the company as compensation

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Build your board

You

1. Who?
2. Why?

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Developing a creative
and ethical culture

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Organizational Culture

●“the rules of the game” (van Maanen, 1976, 1977)

●“the way we do things around here” (Deal and
Kennedy, 1982)
●Schneider (1988: 353), for instance, defines culture
as “the values that lie beneath what the
organization rewards, supports and expects; the
norms that surround and/or underpin the policies,
practices and procedures of organizations; the
meaning incumbents share about what the norms
and values of the organization are”

107

Organizational Culture

Three dominant characteristics:

•culture is a shared phenomenon
•culture exists at two levels, namely: the surface
(visible) level and deeper (less visible) level;
‘espoused values’ and ‘values-in-use’
•culture is learned

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“Integrity, Communication, Respect, Excellence”

M A N Y C O M PA N I E S H A V E N I C E S O U N D I N G
V A L U E S TAT E M E N T S I N T H E I R L O B B Y

109

“Integrity, Communication, Respect, Excellence”

ENRON, WHICH WENT BANKRUPT FROM

FRAUD AND WHOSE LEADERS WENT TO JAIL
H A D T H E S E V A L U E S D I S P L AY E D I N T H E I R
LOBBY

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The actual company values

●…as opposed to the nice-sounding values, these

are exhibited by who gets rewarded, promoted or let
go
●Actual company values are the behaviors and skills
that are valued in daily practice

●Aviva wants their people to “kill complexity”

●J Sainsbury asks their people to “spend every
penny like it is their own”

111

JUDGMENT
C O M M U N I C AT I O N
I M PA C T
CURIOSITY
I N N O VAT I O N
COURAGE
PA S S I O N
HONESTY
SELFLESSNESSS
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Innovation

You re-conceptualize issues to discover practical

solutions to hard problems

You challenge prevailing assumptions when warranted,

and suggest better approaches

You create new ideas that prove useful

You keep us nimble by minimizing complexity and

finding time to simplify

113

Culture

1. Formal statements of organizational philosophy

2. Design of physical spaces
3. Deliberate role modeling, teaching, and coaching
4. Explicit reward and status system
5. Stories, legends, myths, and parables

114

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Culture

6. What leaders pay attention to

7. Leader reactions to critical incidents and crises
8. Organizational design and structure
9. Organizational systems and procedures
10. Criteria for recruitment, selection, promotion,
retirement

115

Creating an ethical workplace

116

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Some interesting and recent cases

1. Firestone and Ford

2. Siemens (Prosecutors found €1.3bn of suspected

payments)

3. Financial meltdown

4. Yahoo CEO agreed to resign (misstated academic

record)

5. Professor Diederik Stapel (Tilburg University)

117

What about Ethics?

118

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People lie more when they’re tired

According to recent studies from

three researchers (Barnes, Gunia
and Sah), people not only become
less productive when they are tired,
but they are also more likely to lie,
cheat, or act unethically in other
ways.

They found that morning people

tend to act more unethically at
night, and night owls tend to act
more unethically early in the day.

119

Business Development

120

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Sales process

121

Big fan of PSS model

•Identify your problem: What are the pain points you want to
solve? Who has them? How are they currently solved or not?
•Solution: What has changed to make new solutions to your
problem available? How does your new solution work to
solve the problem?
•Specifics: What are the quantitative and qualitative proof
points that validate your argument?

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Selling like a Pro

•Make it easy to buy your products (own website or third-

party, e.g. Etsy)

•Popular e-commerce platforms (e.g. Shopify)

•DTC vs Wholesale
•DTC (e.g. fashion and luxury items, repeat purchase items)
•Wholesale (e.g. Food, products where the tactile experience is
critical)

123

How to pitch the press

(Grant, Former VentureBeat Reporter & Path Forward)

• Find the right writer

• Most outlets look for newsworthiness

• Timing
• Significant
• Proximity
• Prominence
• Hunan interest

• Be clear about: ‘Who we are’ (You and your business in 100 words), ‘Our operating
philosophy’ (what’s your style and what’s the overarching mission/ problem you’re solving), ‘How
we got here’ (where did the business start, what have you as an entrepreneur achieved to date),
‘What we do’ (what does the business look like, what has the business accomplished to date),
‘Our role in society’ – are you tackling any bigger societal issues/ consumer problems?

• Schedule an interview

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125

Buzz Marketing

“explosive, self-generating demand” (Dye, 2000, p. 140)

• Word of mouth remains the most effective form of promotion

• Peer group recommendation is the ultimate weapon
• Stealth marketing attempts to present a new product by cleverly
creating and spreading “buzz” in an obtuse or surreptitious
manner
• Ries and Reis (2002) attributed the successful introduction of
Botox to skillful use of PR ($300 million brand)

126

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Buzz Marketing

127

What does buzz affect?

13% largely driven by buzz

toys, sporting goods, motion pictures, broadcasting,
amusement and recreation services, fashion

54% partially driven by buzz

finance, hotels, electronics, printing and publishing, tobacco,
automotive, pharmaceuticals and healthcare, transportation,
agriculture, food and drink

33% largely immune to buzz

oil, gas, chemicals, railroads, insurance, utilities

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How?

• Create hype

• Celebrity marketing

• Bait-and-Tease

129

How?

• Marketing in video games

• Marketing in pop and rap music

130

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Social media!

Most popular social network sites worldwide as of January 2021, ranked by number of active users (in millions),
Statista

131

How to make friends and influence people

1) Start a pod. Invite 20 of your friends to join a WhatsApp group and

message them the second you put up content on Instagram

2) Photos showing faces get 38% more likes

3) Ask your most-followed friend (10K+ followers) to like your content

4) Video is key

5) Don’t post landscape images on Instagram

6) Back yourself (put some spend behind a post so more people see
it)

7) Content is king, your Instagram post has to compete with Netflix,

iPlayer and Youtube

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Instagram Rich List 2020

133

How much are brands paying influencers?

134

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Social Media

Facebook…post:

1) links to interesting content

2) inspiring stories linked to your venture
3) beautiful or funny photos
4) inspirational quotes
5) quizzes

Also: a couple of posts/day, don’t just promote your

products, reply to comments as soon as possible, keep
content fresh

135

Social Media

Twitter

1) Use a twitter handle that it is easy to spell and remember

2) Don’t just promote your product
3) Include a link to your website in your profile
4) Post images and videos as these are shared more often
than text tweets
5) Focus on helping and connecting people
6) Join in conversations
7) Follow influential people

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137

Content Marketing
•Strategic approach to create, deliver and govern
content to attract and retain customers. It positions
the brand as a credible expert and, ultimately,
motivates a change in behavior (Pulizzi and Barrett,
2010)

•Why is it important?
•Influences almost every other online strategy
•Attracts new traffic
•Builds reputation
•Encourages trust and faith in a brand
•Influences conversions
•Generates alternative stream of revenue

Source: https://www.inc.com/jayson-demers/why-content-marketing-is-the-best-long-term-
marketing-strategy.html

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Anatomy of content

•Topic (Subject matter of the post, e.g. news, trends)

•Headline (Attention grabber)

•Format (Stories, quizzes, infographics, videos)

•Type (Different spins on the same story)

•Length (Helps Search Engine Optimisation (SEO))

•Buzzsumo (find top performing content ideas),

Copyblogger (content marketing advice)

139

140

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Grow a movement

•Focus on the community

•Engagement = Value

•Keep talking

141

When does content go viral?

• A New York Times study found that the number one reason participants cited for
sharing information online was “to bring valuable and entertaining content to others”

• According to Song and Schwarz (2008), individuals who read the same instructions
in an ornate font estimated that the activity would take nearly twice as long as
participants that read the same instructions in a clear-cut font

• According to social scientist Dan Zarrella, tweets with the words “please retweet”
received 160% more retweets than the average tweet

• Creating content that makes use of phrases in quotations may strengthen your
messaging in the eyes of your readers. Quotation marks signify that a statement or
phrase has a higher degree of legitimacy, and is therefore worth reading

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Funding the new venture

143

The ideal email deck

Email
• Revenue: now at £15K MRR, growing 30% MoM
• Pilot customers include Samsung, MSFT, and Oracle
• CEO previously founded a marketing tech company and sold it
to Marketo; CTO previously worked as a software engineer at
Google X; have worked together for 2 years

Deck
•Short & sweet
~5 slides is sufficient (Problem, Solution/Your Product, Traction/
Your Unit Metrics, Team, Market)
•Should be skimmable in 10-30 seconds; E.g.
• Fonts / colors that are easy to read
• Not too much text / content
•Include your contact info

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The art of Pitching: Content

•Begin with “the end”: Here is why you should invest in us

•Be brief
•Bait the hook!
•Simple Elevator pitch:
a) Call to action?
b) Why you?
c) Why now?
d) What/who?
•Create and keep momentum!
•Obey the 10-12/20 rule

145

The art of Pitching: Content

•Begin with “the end”: Here is why you should invest in us

•Be brief – Why is it compelling? Why are you the best person
to carry it out?

•Create and keep momentum!

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The art of Pitching: Content

(Steli Efti, 2017)
•Explain what you do

•Demonstrate value

•Create credibility

•Build understanding and rapport

•Manage objections

•Go for the close

147

1. Company purpose - Define the company/business in a single

declarative sentence

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Finding your purpose

•You must first ask yourself why: What is the real
intention? What have I come here to do with my life?

•And then, how will you execute the action?

•You must believe with your whole heart that you are
capable of achieving your goal

•For every dream, there is automatically going to be

resistance. But your sheer will and desire can be
stronger than the shadow!

•Life is not static

149

2. Problem - Describe the pain of the customer (How does the customer
address the issue today?)

150

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3. Solution - Demonstrate your company’s value proposition to make

the customer’s life better (provide cases)

151

4. Why now? - Define current trends that make your solution possible

152

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5. Market size – Data/Stats on market size (massive), existing proof points,

etc.

153

5. Market size – Data/Stats on market size (massive), existing proof points,

etc.

154

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6. Competition – List competitors

155

6. Competition – List competitors

156

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Competitor Analysis
You Competitor 1 Competitor 2 Competitor 3 Competitor 4

Feature 1

Feature 2

Feature 3

Feature 4

Feature 5

157

Examples of Features

•Price •Ease of Use

•Benefits •# of features
•Quality •Type of features
•Durability •Wow factor
•Image/style •Location(s)
•Service •Distribution/Sales
•Warranties •Certifications
•Convenience •Endorsements

158

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Where do you find information

1. Customer discovery interviews

2. Advertising
3. Sales brochure
4. Newspapers/Magazines
5. Website
6. Online sites that rate products/services
7. Your business and professional network

159

7. Product – Description of your product (How does it work?),

including key insights/differentiators, etc.

160

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7. Product – Description of your product (How does it work?),

including key insights/differentiators, etc.

161

8. Business model – Revenue model (different ways you will make

money, could be short and/or long term)

162

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9. Traction – List current stats on usage, traction, etc. or plans for getting initial
users

163

10. Team – Who we are (Highlight relevant previous experiences and areas of
ownership)

164

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11. Financial projections and Key metrics

• Include 3-5 years of financial projections

• Mention key & critical assumptions in your model of expenses, customer

conversion, market penetration %

165

12. Looking forward

• State how much Capital you are raising (e.g. Equity, Debt)

• Who are your existing & notable investors, if any?

• What are your key Use of Proceeds (as % of total raise)

• Founder salaries
• Sales & Marketing
• New hires
• Technology / Product or Service development
• Capital expenses / equipment

166

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Common mistakes entrepreneurs make in VC

pitches
(NextView)

• Mistake #1: Not clearly articulating the basics in the beginning of a pitch
• Mistake #2: Not knowing who they are talking to ahead of time
• Mistake #3: Not controlling the timing and pace of the meeting
• Mistake #4: Not following up in a timely manner
• Mistake #5: Inauthenticity

167

The art of Pitching: Delivery

•Change people’s pulse

•Tell stories that sell (passion, energy, compelling)

•T-shirts to suits, but suits and a tie are rare

•“How would you dress if you were meeting with a group

of customers?” If you are selling enterprise software, you
would probably have a sports coat, if not a suit.” No
matter what an entrepreneur wears, they need to ensure
they come across as trustworthy and confident (Conboye,
2017, FT)

168

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Some recent studies on pitching!

• Entrepreneurs and aspiring executives with foreign accents are

passed over for startup funding and management positions far
more than their competition (Huang et al., 2013)

• Investors prefer entrepreneurial pitches presented by male

entrepreneurs compared with pitches presented by female
entrepreneurs. This effect is moderated by male physical
attractiveness: attractive males are particularly persuasive, whereas
physical attractiveness does not matter among female
entrepreneurs (Wood Brooks et al., 2014)

169

There are two ways to influence people

(1) Using conventional rhetoric (ppt, statistics, facts and quotes

from authorities), you may experience two problems:
a) they are arguing with you in their head
b) if you do succeed in persuading them, you have done so
only on an intellectual basis

(2) Uniting an idea with an emotion (you provide information but

you also arouse your listener’s emotions and energy) – you
need to harness imagination and the principles of a well-told
story

170

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Muhammad Yunus

It was a village woman named Sufiya Begum who taught me

the true nature of poverty in Bangladesh. Like many village
women, Sufiya lived with her husband and small children in a
crumbling mud hut with a leaky thatched roof. To provide food
for her family, Sufiya worked all day in her muddy yard making
bamboo stools. Yet somehow her hard work was unable to lift
her family out of poverty.

Why?

171

Muhammad Yunus

Like many others in the village, Sufiya relied on local moneylender to provide the cash
she needed to buy the bamboo for her stools. But the moneylender would give her this
money only on the condition that he would have the exclusive right to buy all she
produced at a price he would decide. What’s more, the interest rate he charged was
incredibly high, ranging from 10%/week to as much as 10%/day.

I had the names of 42 victims who had borrowed a total of 856 taka – the equivalent of
less that $27 at the time – If I could make so many people happy with such a tiny
amount of money, why not do more?

172

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Storytelling

⦁ Title of the story

⦁ Situation/Desire

⦁ Complication/Obstacle

⦁ Solution/Outcome

173

Sources of personal financing

•Personal funds: Only 10% used external sources of funds in

their first year of operation (Ballou et al. 2008)

•Friends and family: loans or investments

1. The request should be presented in a business-like manner
2. If a loan is received, then have all the terms in writing, and all
parties should sign this
3. Only get money from sources who are in the position to offer
assistance

174

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Sources of personal financing

•Bootstrapping is finding ways to avoid the need for external

financing or funding through creativity, ingenuity, thriftiness,
cost-cutting, or by any means necessary
1. Buy used equipment or lease equipment
2. Minimize personal expenses
3. Avoid unnecessary expenses (build your own website:
www.wix.com, www.squarespace.com, www.weebly.com; look for
affordable services like logo design, etc. or websites, such as
www.fiverr.com and www.elance.com)
4. Share office space or employees with
other businesses or work from home or in a cafe
5. Hire interns

175

Preparing to raise debt or equity financing

1. Determine precisely how much money the company needs

2. Determine the most appropriate type of financing or

funding
a) Equity financing: Angel investors, VCs, IPOs
b) Debt financing: Angel investors, Commercial banks

3. Developing a strategy for engaging potential investors or

bankers (Elevator pitch: opportunity (20), product (20),
your qualifications (10), market (10))

176

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Define your investor message

1. Why did you found the business?

2. What is unique about you as an entrepreneur?
3. Be ready to talk numbers but understand that you do not have
to talk exact figures where you’re not comfortable in doing so
4. As well as discussing what you’ve done/achieved so far, be
prepared to discuss what your business will deliver over the
course of the next 5 years

177

Sources of Debt Financing and Grants

•Two types of loans

1. Single-purpose loan
2. Line of credit

•Commercial banks

•Peer-to-peer lending

•Grant programs

178

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Sources of Equity funding

•Business Angels: Early, $10K-500K, Companies that have

the potential to grow 30% to 40%,
• Where do they invest? 1. Healthcare services/medical
devices and equipment, 2. Software, 3. Biotech, 4.
Industrial/energy, 5. Retail, 6. IT services

•Venture Capital: Come in later, Invest in specific areas, Due

Diligence

•IPO: Why? 1. Raise equity, 2. Raise public profile, 3. Liquidity

event, 4. It creates another form of currency

179

Funding rounds…

$ Investor Valuation
Amou Friends/Family Zero
Pre-Seed Under £50k
nt Crowdfunding

Under £250k £450-750k

Seed (£150k SEIS) Angels (pre-money)
SEIS/EIS Funds
Crowdfunding
Seed VCs
Super £250k-£1m £1m-£3m
Seed
£1m-£5m VCs £3-£20m
Series A Corporate VCS

180

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Funding rounds

Investor Universe New Venture Support Networks

Private
Angel
Equity
Investors
Mentors

Entrepreneurs /
Venture Incubators Entrepreneurial
Founders
Capital Networks

Corporate
Venture Lawyers
Crowdfunding Capital

181

Funding rounds in real life

182

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Financing needs

•Entrepreneurs must understand their capital requirements

(e.g. estimates of machinery investment, the number of
personnel required at different stages of the business, etc.)

•Build a cumulative cash flow analysis

•Then consider how much financing to seek and how long will
it last them

183

Equity division

Pre-money valuation+investment amount=post-money valuation

New investors’ ownership=investment amount

post-money valuation

Previous investors’ ownership=pre-money amount

post-money valuation

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An example

• The entrepreneur may have agreed that the angel will invest £250,000 for a 20%
stake in the company on a £1 million pre-money valuation

• A Series A financing event that raises an additional £1 million from a VC firm on a

pre-money valuation of £4 million. The previous owners now include both the
entrepreneur and the angel investor. The post-money valuation is £5 million, and
the VC’s stake as the current investor is 20%. As a consequence, the
entrepreneur’s and the angel’s stakes are diluted:

Entrepreneur’s stake=80% x £4 million=64%

£5 million
Angel’s stake=20% x £4 million=16%
£5 million

185

Sample Capitalization Table

Stage Pre/Post-money Valuation Distribution of Equity Ownership

Pre-money Investment Post-money Team Angel VC1 VC2
Seed £1M £250K £1.25M 80% 20% - -
(angel)
Series A £4M £1M (VC1) £5M 64% 16% 20% -
Series B £16M £4M (VC2) £20M 51% 13% 16% 20%

186

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Sample Capitalization Table

Exit – sale price of £8.5m

187

Emerging Funding Models: Crowdfunding

188

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Emerging funding models: Partnering for success

• Y Combinator: Provides Seed Stage Funding ($125K), 3-month

mentorship and networking in exchange of 7% equity

• Techstars: Provides Seed Funding ($20K), 3-month mentorship in

exchange of 6% equity

189

Global picture

190

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What do Bono, Snoop Dogg, Jay Z and Ashton

Kutcher have in common?

191

How venture capitalists evaluate opportunities

•Criteria
Market: Market potential needs to be between $500
million to $1 billion; growth, size, competition, adoption
rates

•Competing against others in the market

Engineering challenge, IP advantage, technology
harder to execute

192

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How venture capitalists evaluate opportunities

•Business Model
Cost to build the product, price point and customer
acquisition strategy

•Founding team
Strong technical founder and a sales oriented
entrepreneur

•Due diligence
Professor/Experts, customer, industry and
entrepreneur and team

193

Due Diligence

• Internal
1. Financial review
2. Market review
3. Product demo

• External
1. Client interviews
2. Team meeting at start-up's office
3. Founder(s) reference check
4. Advisor and/or investor interviews

• Legal review

194

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Seven investor questions entrepreneurs need to

answer
1. What problem does your product solve/market need does it
fill?
2. Market: How big is the market for your product?
3. Revenue: How will your company make money now and in the
future?
4. Defensibility: What are the barriers to entry for your competitors
and new market entrants?
5. Team: How is your management team uniquely positioned to
execute on this idea?
6. Exit: How does the investor achieve liquidity?
7. Impact: How does your business benefit mankind?

195

Cold calling VCs

1. Do not cold call…Get a warm introduction instead!

2. Be relevant – Do your homework
3. Write a personalized email
4. “Massage” their ego
5. Target the analysts or associates
6. Provide all the required information
7. Understand the process
8. Be nice
9. Explore their network

196

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Red Flags

1. You send someone else to do your meeting with investors

2. Founders take more than 48 hours to respond to emails

3. KPI knowledge

4. Roles and responsibilities aren’t clearly defined

5. Unfamiliar with industry specific acronyms for their vertical

6. Overselling your prior experience

197

Red Flags
7. Suggesting an expensive restaurant for lunch meetings
and/or leaving before the bill is paid

8. When they treat analysts and associates like second class

citizens

9. When founders do not show the office, team and culture

10. Not sharing materials digitally

11.When a founder says another VC is “soft committed” but

you find out they are not

12.Won’t share financials after the first meeting

198

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What makes a VC investment successful?

(Marion, 2016)

•Female-founded startups outperformed all-male teams

•Younger founding teams outperformed older ones

•Founders from top schools performed better

•Experience at top tech companies predicts success as a

founder

•Not all startups come from Silicon Valley

199

Some advice for entrepreneurs

(Paul Graham, 2013)

•Don’t raise money unless you want it and it wants you

•Get introduction to investors

•Hear no till you hear yes

•Do breadth-first search weighted by expected value

•Close committed money

200

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Some advice for entrepreneurs

(Paul Graham, 2013)

•Underestimate how much you want

•Have one person handle fundraising

•You’ll need an executive summary and (maybe) a deck

•Don’t raise too much

•Be nice!

201

Mastering growth

202

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203

The big tech era

204

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Long-lived firms…

Company Founded Current Business Original Product

1870 • Aerospace • Fire Hose
1865 • Mobile Phones • Lumber
1902 • Office Supplies • Mining
1850 • Financial Services • Express Delivery
1885 • Pharmaceutical • Bandages
1853 • Media • Garbage
1927 • Hotels • Root beer

205

20 January, 2014

206

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Premature scaling up
• 74% of high growth internet startups fail due to premature scaling up

• No startup that scaled up prematurely passed the 100,000 user mark

• 93% of startups that scale up prematurely never break the $100K

revenue per month threshold

• Startups that scale up prematurely outsource 4-5 times as much of

their product development than startups that scale up properly

• Before scaling up, funded startups that scale up prematurely are on

average valued twice as much as startups that scale up properly and
raise about three times as much money

• The team size of startups that scale up prematurely is 3 times bigger

than the startups that scale up properly at the same stage

Startup Genome Report Extra on Premature Scaling, March 2012

207

Sustained growth

•…is growth in both revenues and profits over a sustained

period of time

•The first Inc. 500 list of the fastest growing companies was
published in 1982, 18,630 unique companies have made the
Inc. 500 or Inc. 5000. Just 119 businesses have made the
list six or more times; 35 have made it seven or more times;
and 14 have made it eight or nine times

208

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Preparing for growth

1. Not all businesses have the potential to be aggressive

growth firms (e.g. technology, social media)

2. A business can grow too fast (e.g. over-stretched staff,

declining product quality, emails starts going unanswered,
productivity is falling)

3. Business success doesn’t always scale

Staying committed to a core strategy?

209

Preparing for growth

1. Get the basics down

2. Clear out the negative behavior

3. Deal with your illusions

210

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Planning for growth

•Establish growth-related plans (think ahead and anticipate

the type and amount of growth it wants to achieve)

•Business Plan

•Determine the strategies it will choose to employ as a means

of pursuing growth

•“Be careful what you wish for”

211

Why do firms pursue growth?

1. Capturing economies of scale

2. Capturing economies of scope
3. Market leadership
4. Influence, power and survivability
5. Need to accommodate the growth of key customers
6. Ability to attract and retain talented employees

212

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Growth strategies

213

Advantages and Disadvantages

(Internal Growth)

Advantages Disadvantages
1. Incremental, even-paced 1. Slow form of growth
growth 2. Need to develop new
2. Provides maximum control resources
3. Preserves organizational 3. Investment in a failed internal
culture effort can be difficult to recoup
4. Encourages internal 4. Adds to industry capacity
entrepreneurship
5. Allows firms to promote from
within

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1. New Product Development

• Keys to effective new product development:

1. Find a need and fill it
2. Develop products that add value
3. Get quality and pricing right
4. Focus on specific target markets
5. Conducting ongoing feasibility analysis

Fail? Product doesn’t address important customer needs,

Product costs too much, Target market is smaller than originally
projected, Target market not defined correctly

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2. Improving on existing product or service

•Enhancing quality, making it larger or smaller, making it

more convenient to use, improving its durability, or making
it more up-to-date

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3. Increasing the market penetration

•…involves actions taken to increase the sales of a product

or service through greater marketing efforts or through
increased production capacity and efficiency

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4. Extending product lines

•A product line extension strategy involves making additional

versions of a product so that it will appeal to different
clientele or making related products to sell to the same
clientele

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5. Geographic expansion

The keys to successful geographic expansion:

1. Perform successfully in the initial location

2. Establish the legitimacy of the business concept in the

expansion locations

3. Don’t isolate the expansion location

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5. Geographic expansion

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6. International expansion

•“global startups”
1. Exporting

2. Licensing

3. Joint Ventures

4. Franchising

5. Wholly-owned subsidiary

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6. International expansion

•Licensing
ü Understand your product
ü Compare the market
ü Get face to face
ü Know the figures
ü Royalties
ü Minimum guarantee
ü Read the small print

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6. International expansion

•Franchising
(Andy Dick, compliance executive for British Franchise
Association)
ü Make sure your business offers franchisees a business format
which includes the brand, system, support and franchise
agreement
üResearch the market fully to ensure your products are
competitive and distinctive enough
üRegister your trademark
üPilot the operations for at least 12 months
üProduce a comprehensive operations manual and training
programme

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6. International expansion

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1. Mergers and Acquisitions

• Finding an appropriate candidate:

1. The strength of the target’s firm management team, its industry,
and its physical proximity

2. The perceived compatibility of the target company’s top

management team

3. The target firm’s past and projected financial performance

4. The identification of any legal complications that might impede the

purchase

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1. Mergers and Acquisitions

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2. Licensing

1. Technology licensing

2. Merchandise and character licensing

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Managing growth
(Gulati and DeSantola, 2016)

•Defining specialized roles

•Adding management structure

•Planning and forecasting with discipline

•Sustaining the culture

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Entrepreneurial Exits

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Session’s Agenda

• Describe the different

ways of saying
«farewell»
• Taking the company
public

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Exits/Harvest

•When do we get out of the business?

•How?

•In shaping a harvest strategy, some guidelines and

cautions help:
•Patience
•Realistic valuation
•Outside advice

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Entrepreneurial Exit decisions

•Personal circumstances and firm circumstances

•Entrepreneurs are more likely to choose to exit their

current business when:
(1) they are experienced and their firm is old (leading to an exit via
selling the business; Wennberg, Wiklund, DeTienne, & Cardon,
2010)
(2) a more attractive opportunity arises (Bates, 2005)
(3) there is greater conflict (both task and goal conflict) with the
business angel who partly funded the venture (Collewaert, 2012)

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Entrepreneurial Exit decisions

•Entrepreneurs are less likely to decide to exit their

poorly performing firms when:
1) they raise additional equity investment (Wennberg et al. 2010)
2) they have made considerable personal investment in the firm
3) there are low personal career options
4) the firm has achieved high performance in the past
5) there is high collective efficacy amongst organizational members

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Harvest options

•Sell or transfer ownership to

insiders (Succession, MBO/LBO)

•Sell or transfer ownership to

outsiders (Competitors, Clients,
etc.)

•Take the company public

through an IPO

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Selling to Outsiders

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Steps to attract buyers

•Sell at the right stage

•Sell when the business cycle is strong

•Compensate for loss of talent

•Identify and protect intellectual property

•Adopt transparent and conservative accounting policies

•Resolve open questions that make it difficult to estimate

value

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Preparing for acquisition

•Sign exclusivity with the buyer

•Give them open access to sensitive information about
the business for DD
•Agree to a letter of intent or heads of terms

•Virtual data room

•Things that can make, delay or break an acquisition are
often in the smallest details

•Other factors to consider: valuation of the company and

the negotiation process

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Create a list of potential acquirers - who and why?

(Hint: customers/clients, competitors, investors, partners)

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Five steps to acquiring a start-up

(Capital Insights, EY, Issue 13)

•Be clear on the issue you are trying to address

•Research that market thoroughly

•Know what you want to achieve

•Look carefully under the lid

•Learn from past mistakes

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A final thought…

“I don’t make movies to make money.

I make money to make movies”

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…and a reflection

“Most people leave this course with the desire to

build things, to put things in motion”

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