How entrepreneurs think, feel & act:

1. Cognitive aspect- Entrepreneurs are more: Optimistic, guided by heuristic (simplifying

strategies) - based logic, likely to have developed a cognitive adaptability
2. Emotional aspect- entrepreneurs: Often confronted with risks, Deal with stress, Prone to
overconfidence
3. Behavioral aspect Entrepreneurs: face uncertainty, have Resource constraints, Hustle
BRISK Framework
1. Business opportunity: Business concept, related trends, key data, obstacles &
barriers, company position, competition, timing
2. Risk mitigation: Do research, create MVP, invest in people
3. Innovation: Make sure IP is in place or not infringed
4. Strategy: Commercialization strategy – for products or technology ideas (licensing)
5. Knowledge: Main learning channels & investing into them

Opportunity: product or service that has significant value & profit potential, good fit with
capabilities, durable, & amenable to financing

Bias: barrier between ideas & business opportunities

- Sunk cost fallacy: next decisions based on where costs already occurred (ex. Time,
money)
- Conjunction fallacy: one event is more likely than both events occurring … more
complex is the more likely to be true
- Anchoring: decision without prior evidence or overlooking all evidence
- Optimism bias: less at risk of something happening than others
- Herd mentality: group think, following others with no clear reason why
- Confirmation bias: tendency to favor information that aligns with their beliefs
- Survivorship bias: prioritize those that have survived selection process
Potential of an idea to become opportunity MUST be tested – hypothesis

Pipeline businesses: pipeline value creation happens through managing a linear set of activities
Platform business: bring together producers & consumers in high value exchanges, based on
the type of users – can be one or multi sided
- Consist of 4 players: owners: control their IP & governance, providers: serve as the
platforms interface with users, producers: create their offerings & consumers: use
those offerings
- Scale more efficiently (eliminate gatekeepers), unlock new sources of value creation
& supply, benefit from community feedback
 - Network effects: driving force behind platforms; when another user adopts it creates
value for product
o Pipeline industries – supply side economies of scale
o Platforms – demand side economies of scale
o Harnessing the power of NE:
 Large initial group of users
 Start from industry niche? Find or build small social groups
 Offer killer offering
 Decrease users risk
 Compatible with older systems
Revenue models:

FUNDING

- Determinants of funding source:

o Underlying profitability: value of output vs. input
o Asset intensity: amt of assets tied up to generate sales
o Pace of growth: how fast does it need to grow?
- Bootstrapping: draws on personal resources; prevents dilution, instill discipline,
enforce a reasonable growth rate, limits growth, deplete personal resources
- Debt investment (banks): lend fixed sum for specific period at interest rate; upside is
limited, lose the full value of principle if default, pursue less risky projects
- Equity investment: receive long-term ownership stage in exchange for capital; can
lose the entire value of principle, but enjoy upside potential, push towards risker
projects & provide expertise, monitoring, governance
o Angels: investors or groups of investors who invest own personally raised
money, can be friends & family (easy to approach, deal terms more
reasonable, failure could damage relationships), can be local business
leaders, wealthy individuals, former entrepreneurs (invest in promising
opportunities, keep in touch with new generations of entrepreneurs, give
back to community; when entrepreneurs need <1,000,000; provide expertise
but less structure than VC)
o Venture capitals (VCs): receive if - entrepreneurs seek large sum$$$, funding
is staged, upside potential = high. Manage risks w/ diverse portfolio of
investments. Investments = large (1,000,000 – 10,000,000). Include structural
changes in venture
 o Strategic Investors: large corporations -> new ventures. Good liquidity
options. Close door on other funding. Entrepreneurs must understand
internal dynamics
- Crowdfunding: pooling of resources from many to contribute
- Accelerators/incubators: program, run by for-profit organizations, provide office,
mentoring, access to investors, seed funding
- Government: SB Innovation Research & STechTransfer programs. Highly competitive.
Encourage engagement w/ federal research & development w/ potential for
commercialization

The Lean Startup

- 3 dangerous approaches
o Build it & they will come: bypasses customer feedback & demand validation,
relies on founder vision, focusing an engineer-dominated team to make
reality
o Waterfall planning: divides product development work into phases,
completed in sequence by organizational units, phase commence when prior
phase passes formal review
o Just do it!: strong product vision or plan, relying on improvisational approach
that adapts product & business model based on feedback from resource
providers & customers
- The lean startup: testing hypotheses with series of MVPs. Based on test feedback…
persevere, pivot, or perish. Reduces risk of having unwanted product.
o The steps:
1. Develop vision: find problem and provide solution. Idea creation:

2. Translate vision into hypotheses: formulate set of falsifiable (can be

rejected) hypotheses. Require quantitative metrics.
3. Specify MVP test: fail early & often!, smallest set of features/ activities
needed to test hypothesis. Short product development batch sizes & cycle
times = accelerating feedback & facilitating bug discovery. Smoke tests:
constrain functionality & operations
4. Prioritize tests: prioritize tests that eliminate risk @ low cost. Can pursue
in parallel
5. Learn from MVP tests: gain customer feedback can be wrong –
preferences not always true. Entrepreneur bias can effect evaluation. Best
way = placebo and non-placebo (treatment & control)
 6. Persevere: continue on path, test remaining hypotheses or start scaling,
pivot, or perish. Pivot: changes some business model elements while
retaining others (core). Perish: cannot identify pivot, shut down business
7. Scaling & ongoing optimization: once validated all hypotheses = achieved
product-market fit (right product for market w/ early adopters & solid profit
potential). Scale! Hypothesis testing continues, shifts from business model
validation to optimization

VENTURE PITCHING
- Pitch deck: a series of words & images that illustrate a venture’s story & business
model. Get people to understand, care, & take action.
o presentation deck: visual to assist oral prestation
o reading deck: more thorough & detailed deck. Read & understood w/out you
- Building Blocks of pitch:
o Cover: grabs attention, sets tone, “white space” show gratitude, passion for
venture & build trust. Clean logo, inviting pic, descriptive title
o Overview: elevator pitch – 15 sec version. Problem, solution. Small taste of
company. Clarity, swagger, passion.
o Opportunity: describe industry & how business works within. Trends in
environment, size of market, growth potential.
o Problem: describe problem you are solving
o Solution: make realistic & interactive. Bring physical product or interactive
demonstration. Videos, illustrations, prototypes, etc.it is beauty, surprise,
repeatable & scalable, solving problem, team excellence
o Traction: venture is validated & making progress. Growing sales or users, key
metrics. Fast growing, clarity around measuring & why, clear sales process
o Customer or market: describe customers & why they want to buy your
product. Customer, defined market, revenue.
o Competition: competitors & how the compete. How you differentiate &
advantage over them. Industry knowledge, sober judgment, differentiation,
advantage
o Business model: how much does it cost to acquire customer, how much will
you earn from them, how do costs break down (unit & monthly basis).
Consistency, financial literacy, level-headedness
o Team: background of each member (current roles, experience,
accomplishments, education). Brevity, experience, passion, intensity, good
team culture
o Use of funds: clear ask of investor. Understanding of what they receive in
return. How you plan to use funds. Clarity, milestones.
- Other slides:
o Achieved milestones, patents, branding, mission, vision
- Pitch should capture YOUR & firms story