Introduction To New Business Ventures

1. Introduction To New Business Ventures PROFESSOR BALAGOPAL VISSA INSEAD 1, Ayer Rajah Avenue Singapore 138676 --- Office: (65) 67995382 Hand phone: (65) 94244573 Email: balagopal.vissa@insead.edu These notes are intended to support class discussions. They should not be considered a comprehensive set of issues to be dealt with.

2. Welcome! Something about me • Bala Vissa • Ph.D. from London Business School • Research focuses on new venture team dynamics and networks, Business Groups and entrepreneurship in emerging economies • Work experience: • 7 years with Unilever plc and HCL in India • 2 years experience in corporate entrepreneurship

3. Now, something about you Please take 5 minutes to fill in the questionnaire (whether registered or not)

4. Pair up with another person whose first name starts with the same letter as yours or is one letter away • e.g. John can pair up with Jane, Ian or Kate • Explain your favorite new venture idea to your counterpart • Your Task: Introduce your counterpart to the class in under 2 minutes focusing on: • His/her name and background • His/her favorite new venture idea • Is he/she seeking team members • His/her relevant prior experience

5. Sensing an opportunity & executing flawlessly, time after time … “She’s always in your face isn’t she. I don’t get it. What is it about her? She’s not a great dancer or singer.” Michael Jackson “As America turns prim and proper, radical Madonna, always ahead of trends, has been penning children’s books, dressing demurely in Laura Ashley florals, and exalting motherhood” Source: The Straits Times, July 10, 2004

6. Madonna: The serial entrepreneur? 1983 1988 1989 1995 1996 2003 “Like a Virgin” “Desperately Seeking Susan” “Like a Prayer”; “Sex”; “In Bed with Madonna” “What it feels like for a girl” “Evita” Positioning Music, sex and new age Music, sex appeal Music,sex and controversy Ambition; Relationship with Prince; Marriage to Sean Penn, ability to spot trends Relationship with Warren Beatty – played in several movies, ability to spot trends New producers; New staff; Guy Ritchie, ability to spot trends Leveraging Resources Discipline (with a softer face?) Self-development; Motherhood; Move to London; Guy Ritchie Discipline Building and using alliances; Manipulating the press Discipline, Breaking alliances; Creating Controversy; Film experience Growth and change

7. So, what is entrepreneurship? • Pursuing opportunities without regard to resources currently controlled • In this course, we are interested in a specific aspect of entrepreneurship Building a high growth venture

8. Common problem: How to start? « I always wanted to create a company…There were times I didn’t sleep when I was an employee just because I didn’t know how to go about starting something. I wanted to start something , I wanted to be an entrepreneur, but I didn’t know what to do, I didn’t know how to build on my knowledge and expertise. What could I do? It’s easy to say – everybody wants to be an entrepreneur. The question is, how do you go about it? » - Entrepreneurial INSEAD Alumnus

9. New business ventures For Entrepreneurs • You want to build a business: • How do you go about building a business? • What resources do you need? • How do you acquire & manage them? • How do you change your management style as the venture grows?

10. New business ventures For Venture Capitalists, Fund Managers, Consultants... • You are working with start-ups: • How do you judge the prospects of an entrepreneurial venture? • How can you anticipate potential problems? • How can you help the venture team build the business?

11. Course objectives • Learn how to turn opportunity into revenue-generating business • Experience the entrepreneurial process • Meet practice • Work with start-ups • Get your feet wet... • Discover / develop your entrepreneurial potential

12. What not to expect • A “boilerplate solution” • Logically, there cannot be one • Legal details on how to start a business • Talk to a lawyer in the country where you wish to incorporate • Deep industry expertise • Go find the experts!

13. Ideal course outcome « From the beginning, we had known that the New Ventures course would require a great deal of work. So we had decided to select a project which was potentially feasible, although at the time that didn’t necessarily mean we were going to go through with it. We worked hard on the project, and by the end of the course, after we had tested the idea with many people, seen the success of others… and got a better knowledge of the business, we became convinced that it was a real opportunity. » - Paul Chantler and Thor Gudmundsson, MBA ‘92

14. Success curves

15. Liabilities of newness and smallness • General knowledge only • Inadequate managerial knowledge • Inadequate financial management abilities • Conflict, worry, inefficiency during founding period • Few relations with outside individuals and organizations • Initial lack of trust • No stable ties with customers Sources: Stinthcombe (1965), Thornhill and Amit (2001)

16. There are many sources of risk Science/idea/ service Competition Market Business Models Economic regime Exit environment Management Culture Finance Source:

17. Focus on risks related to “Organizing”

18. Entrepreneurship is all about shifting the odds to your favor Risk versus Reward