MBAX 6100 Marshalling Resources

1. 0 MBAX 6100Marshalling Resources Frank MoyesLeeds College of Business University of ColoradoBoulder, Colorado Marshalling Resources

2. 0 Today’s Agenda • Barbara Mowry, CEO Silver Creek Systems • Strategic alliances • Marshalling resources • Bootstrapping • Mid-term review Marshalling Resources

3. Next Week • Legal Issues • Intellectual property • Employee agreements • Read BZ-9 & 10 • Case: Mason and Sheppard • Cooley Godward Marshalling Resources

4. Strategic Alliances Marshalling Resources

5. Strategic Alliances • Over 75% of technology businesses are active in strategic alliances. 63% said critical or very important. (PricewaterhouseCoopers, Trendsetter Barometer 2001). • Most are informal • Joint venture – jointly owned entity • Speed to market • Access to markets, technology or knowledge • Access to capital • Spin-ins & spin-outs Marshalling Resources

6. Strategic Alliances Forms • Marketing – access to distribution e.g. Nestle in Europe • Technological – joint research, e.g. Celebrex for Pfizer • Manufacturing – subcontract operations, e.g. Jurismonitor • Investment – Intel had 220 active investments in 2004 Marshalling Resources

7. Advantages to Strategic Alliances • Gain access to a resource, e.g. production, skills, capital • Economies of scale • Risk & cost sharing • Gain access to international market • Learning • Speed to market • Neutralizing or blocking competitors Barringer & Ireland, Entrepreneurship Marshalling Resources

8. Risks of Strategic Alliances • Loss of proprietary information • Management complexities • High risk of failure • Become dependent on partner • Risk of opportunism • Non performance • Loss of decision autonomy • Clash of cultures • Precludes partnership with another firm or exit Barringer & Ireland, Entrepreneurship Marshalling Resources

9. Marshalling Resources Marshalling Resources

10. 0 What Resources Do New Ventures Have? • People • Physical Assets • Intangible • Financial • Social & Personal Marshalling Resources

11. Social Network • Network • Industry contacts • Mentors, YPO • Family • Outside service providers- legal, accounting, bankers • Board of Directors and Advisors • Owe you favors Marshalling Resources

12. 0 Personal Resources • Staying power • Your personal resources • Borrowing capacity • Spouse who works • Culture that you create • Personal characteristics • You are likeable • Integrity Marshalling Resources

13. 0 What is Bootstrapping? • “Launching ventures with modest personal funds”, Bhide • Other People’s Resources (OPR), “Key is not to own resources, but to have use of & be able to control or influence deployment”, Timmons • Scrooge mode Attitude Marshalling Resources

14. 0 Bootstrapping Examples • Make vs. buy • Volume purchasing • Hiring employees vs. subcontract or temps • Employee benefits • Office and location • Used equipment • PR vs. advertising & promotion • Strategic alliances - Jurismonitor • Grants Marshalling Resources

15. 0 Benefits of Bootstrapping - Enhances Funding • Need less capital • Reduces financial exposure • Reduces amount of money need to raise - less dilution • Reduces risk • Obsolescence • Lower sunk costs • Investor's love it • Proves concept and management team • Reduces risk Marshalling Resources

16. 0 Benefits of Bootstrapping - Provides Flexibility • Permits strategic experiments • Make changes quickly • Cost of making a mistake is minimized • Mistakes less likely to be fatal • Inexperienced entrepreneurs can screw-up • Don’t have the pressure of high growth Marshalling Resources

17. 0 Benefits of Bootstrapping - Improves Problem Solving • Like zero inventory in JIT • Reveals hidden problems • Forces management to solve them • Focus is on profits • Forces management to solve problems • Price for profitability • Reduces costs • Lower fixed costs • Higher variable costs, but high Gross Profit Margin solves • Lower break-even point Marshalling Resources

18. 0 Benefits of Bootstrapping - Sets the Right Culture • Employees • Suppliers Marshalling Resources

19. 0 Can An Entrepreneur Have Too Much Money? • Don’t focus or address real issues • Throw money at it • Dot.bombs • Try-it, fix-it approach is difficult • “Are we being fooled twice” • Try to compete on price – buy market share • Don’t focus on achieving high margins Marshalling Resources

20. 0 What Is the Greatest Source of Cash? Don't Spend It Marshalling Resources

21. 0 Marshaling Resources Conclusion • Control rather than own - OPR • Money is not the solution. May be the problem. • Bootstrapping is an attitude • What is a downside of focusing on resources? Not Opportunity Driven Marshalling Resources