Entrepreneurship

Part I: Prepare
The Mindset
Let’s begin with “why”:

 To get rich?
 Follow a passion?
 Scratch an itch?
 Just got laid off?
 To manage your own destiny?
What it Takes

 Focus
 Passion
 Competitiveness And these are just
the genetic factors
 Common Sense
you need to get
 Confidence started!
This is Hard Stuff
 It takes a lot of hard work, good
timing, and luck to make a successful
company.

 You don’t control all these factors.

 The buck stops with you.
 There are many forces conspiring
against you.
This is Hard Stuff

 Learn to follow your strengths and

mitigate your weaknesses.

 Find a partner.
 Ask for help.
 It’s ok to screw up, but learn.
The Business
 What are you doing?
 Articulate it in 30 seconds.
 Make it clear to the layperson.
 Is it better, faster, or cheaper?
 It better be.
 And it better be 10x.
The Business

 How do you know there’s a market?

 What’s the total opportunity?
 What will it take to win?
 Ok, what will it really take to win?
Optimism
 MBA students: Do you know the startup
formula?

3 x (expected capital)
+ 3 x (expected effort)
+ 3 x (expected time)
--------------------------------
= ¼ x (expected result)
Pessimism
 Entrepreneurs are genetically optimistic.

 Plan for it.

 Take your most absurdly conservative
projections and apply a factor of three on the
downside.

 Dream of success, plan for struggle.

Objectives
 Ok, you have the genes.
 You have the idea.
 You’ve got realistic expectations.

 What are your objectives?

 Do some waterfall projections.
The Waterfall
 Make a five-year plan with top-line
revenue goals…
 The walk back and figure out the
drivers:
 How many customers added per month?
 How many employees?
 Rent? Other expenses?
The Waterfall

 Do the ratios!
 Revenue/Employee
 Profit
Margin
 Market share (…)

 Is your growth realistic?

The Waterfall
The idea is to demonstrate what you have to
do each month.
 Is it realistic?
 Are you growing faster than any company in
history?
 Is your revenue/employee higher than Google?
 Maybe you should be more realistic?
 How does that affect your plans?
The Customer

 It’s amazing how many people start a

business without talking to a
customer.

 It’s not hard.

 They usually want to help and

validate (or invalidate).
The Customer
 This can save you a lot of time.

 Not just “will they buy?”, but

 How they buy.
 What are the nuances?
 Other opportunities?
The Buck
 If all goes well, you’ll make a lot of them.
 But it stops with you.
 Don’t expect it to be easy.
 It can be tough when you’re all alone.
 The world is unfriendly towards entrepreneurs.
 You must be prepared for times that will test
you.
 Learn the difference between setback and
deadend.
 Trust yourself.
 Act! Adapt!
Part II: Jump
The Help
Meet with a variety of lawyers, accountants,
and bankers.

 They’re worth the money (usually).

 They’ll save you time and headaches.

Assemble a supportive cast.

 Favor those who offer flexibility to
entrepreneurs
 Deferred payments
The Money
Rare is the business that grows from $0.
 How will you fund early operations?
 Family? Friends? Credit Cards?
 Angel funding: popular source for
entrepreneurs.
 Venture capital: professional money, but need
certain criteria
 Debt: Avoid like the plague, early on.
The Intangible Assets
 Many startups are high-tech in
nature.
 Primary assets are knowledge-based.
 Learn the intellectual property
landscape.
 Up-front patent searches may seem
expensive, but so to is ignorance! (Ask
me, I know).
The Intangible Assets
 Consider protecting yourself.
 File patent applications?
 Worth your time and expense?

 Today, patents are more important

than ever: RIM, eBay, Blockbuster, …

 Build a defensible position.

The Competition
 Know your competition inside and out.
 Strengths?
 Weaknesses?
 Begin to formulate a plan to crush them.
 Be paranoid.
 Fly under the radar as long as possible.
Do

 Get cheap, short-term office space

 Use a real attorney and accountant.

 Be extraordinarily cheap.

 Did I mention be cheap?

Do

 Focus on what matters:

 Prove your product attracts customers
 Build a defensible position
 Create value

 Act with imperfect information.

 Adapt.
Don’t
 Assume that if you build it, they will come.
 Forget that the best technology rarely
wins.
 Equate funding with success.
 Focus on perfection.
 Fail to act.
In Closing
 Entrepreneurship: One of the hardest yet
most rewarding personal journeys you can
take.
 You can legitimately claim “I made this.”
 You control your destiny.
 You answer to yourself.
 Be prepared for challenges you can’t imagine.
 Stay true to yourself, trust your instinct.
In Closing

 Be scrupulously honest and ethical,

and never lose your head.