Session 2 Part One: Agenda

1. Session 2Part One: Agenda • Review • Venture Validation Process •  Market Validation Process • Pound Pavement Exercise: An explanation

2. Session 2Part Two: Agenda • Discussion:Rewriting The Book, Rob Adams. • Discussion: Rewriting The Book… other topics • Board of advisors/directors • EF and dilution • EM and word of mouth • Basic resource choice: bootstrap or critical mass • Team issues and others • Summary: Entrepreneurial Success Principles

3. Review of Session One • Of “Dead Horses” And Spurious Facts

4. REMEMBER….Old Dakota tribal wisdom says that when you discover you are riding a dead horse, • the best strategy is to dismount.

5. Problem is… in business, education, and government, we often try other strategies with dead horses, including the following:

6. Dead Horse Strategies • Changing riders. • Increasing the standards for riding dead horses. • Creating computerized training sessions to increase our ability to ride dead horses. • Hiring consultants to determine better ways to ride dead horses. • Hiring contractors to ride dead horses.

7. Plus… • Harnessing several dead horses together for increased speed. • Forming a quality circle to find better uses for dead horses. • Promoting dead horses to supervisory positions. • Creating a Committee to determine ways to improve dead horse riding. • Improving the “job description” for riders of dead horses.

8. Our Dead Horses … • Astronomically high venture failure rates are the norm. • Great success or outright failure are the norms.

9. Instead… • “Near Failure” is the norm during the pre-startup and startup phases.

10. Let’s pin down two definitions: • Prestartup Phase… from idea to when you officially open the doors for sales. • Startup Phase… from “first sales” to when you achieve positive operating cash flows.

11. The best empirical evidence suggests that the overarching principle of entrepreneurship is the Near Failure Syndrome • The first principle of life is to survive… the first principle of entrepreneurial life is also to survive. • Most ventures, for reasons of lack of resources, knowledge, tested capabilities, a sustainable strategy, etc. experience a “near death” experience

12. Three other concepts can help avoid/limit Near Failure • Corridor Principle • Sufficiency Cash Flow • Venture Enhancement

13. To avoid/limit near failure… • Don’t do a business plan first. • Do a venture validation exercise first.