January 2005

1. January 2005 Why Entrepreneurship? Douglas Abrams

2. Why entrepreneurship? • Why entrepreneurship? • Let’s fail! • So how?

3. What is an entrepreneur? A person who organizes, operates, and assumes the risk for a business venture. From Old French, from entreprendre, to undertake. Enterprise: An undertaking, especially one of some scope, complication, and risk. Enterprising: Willingness to undertake new ventures; initiative: "Through want of enterprise and faith men are where they are, buying and selling, and spending their lives like serfs" (Henry David Thoreau).

4. What are the qualities that make a successful entrepreneur? Intelligent Creative problem-solving skills Self-starting Committed Motivated Risk taking

5. What about luck? • Luck by definition is random • In the long run, luck evens out for everyone • Luck plays some role in success but much less than you imagine • Don’t wait to get lucky; make your own luck • Chance favors the prepared mind

6. Why is entrepreneurship important to Singapore? The development of a thriving entrepreneurial sector in Singapore is not just an economic "nice-to-have." In the knowledge- and innovation-driven globalized economy of the 21st century it is a competitive necessity. In 2000, venture backed companies generated $736 billion in revenues and have created 4.3 million new jobs, so the small number of venture backed companies account for 3.3% of total jobs in the US and 7.4% of GDP. Singapore itself is the product of entrepreneurship

7. Why is entrepreneurship important to you? • What type of life do you want to have? • An average life or an extraordinary life? • What do you want to do with your life? • Create something of value from nothing or just make money? • Do you want to: • Make a difference? • Change the world in some way? • Leave something of value after you are gone?

8. As an entrepreneur, you can: • Have an extraordinary life • Create something of value from nothing • Become rich • Make a difference • Change the world in a positive way • Leave something of value behind after you are gone

9. Obstacles to entrepreneurship in Singapore • Lack of entrepreneurial skills • Attitudes toward risk • Cultural attitudes toward failure • Entrepreneurial success is difficult

10. Entrepreneurship can be taught • Skills and talent are distinct • Talent is innate; everyone can improve their skills • Skills can be developed and improved through learning, training and practice • No matter what your innate level of talent, you can improve your performance by enhancing your skills

11. How can entrepreneurship be taught? • Simulation - learning through doing • Like learning to play a musical instrument • How would you like to learn to swim by reading up on swimming theory and then being thrown in the pool?

12. TR teams swept 2004 business plan competitions

13. Winning teams came from all courses

14. TR teams received more than S$200,000 in 2004 Total prize money and seed funding of S$215,357

15. This could be you - DermaTech • First Prize Winner – Lee Kuan Yew Global Business Plan Competition 2004 • Semi-Finalist – Wharton Business Plan Competition 2004 • Semi-Finalist and Youth Category Merit Award - Start-up@Singapore 2004 – Total funding S$37,000 • Featured on CNA and in Straits Times DermaTech - TBV3102

16. This could be you – World Indigo • First Prize Winner – Start-up@Singapore Business Plan Competition 2004 – S$30,000 • Representing NUS in the 2nd Global Start-up@Singapore Business Plan Competition in October 2004 World Indigo - TBV3102

17. This could be you – TMD and Help-to-Screen • TMD- 2nd Prize in Lee Kuan Yew Global Business Plan Competition 2004 – US$15,000 • Help-to-Screen – Finalist in LKY 2004, 2nd Runner Up and winner of 1st Youth Category Prize in Start-up@Singapore 2004, Semi-Finalist Wharton BPC – S$23,000 • Help-to-Screen has received a term sheet for up to S$40,000 in seed funding TMD - TBV3102 Help-to-Screen - TBV3102

18. This could be you: Fresnville, Liaser, XtenSan Frensville – TR3002 • Frensville – Semi-Finalist, NUS-Motorola BPC, seed funding of S$40,000 • Liaser – 1st Place Winner, NUS-Motorola BPC, Finalist, Start-up@Singapore – S$12,000 • XtenSan – 2nd Place Winner, NUS Motorola BPC, Semi-finalist, Start-up@Singapore, 2nd Place Winner – IIT Megabucks BPC – S$6,000 Liaser – TR5105 XtenSan – TR5105

19. This could be you – Geo-X and Apex Solutions • Both TR3002 teams – advanced to the final round in Start-Up@Singapore Competition 2002/3 • Only eight out of 230 entrants went so far • Apex won a total of $2500 in prizes in the competition • Geo-X won $10,000 runner-up prize; also a finalist in the Mega-Bucks business plan competition held in India Geo-X – TR3002 Apex Solutions – TR3002

20. This could be you - QuantaGen • Won top prize of $30,000 in Start-Up@Singapore Competition 2002/3 • Runner-up in the first Global Start-up@Singapore Business Plan Competition, beating out competitors from the top business schools in the world, including Harvard, Wharton and Stanford • Team members include Heng Eu Jin an NUS Overseas College student in Silicon Valley QuantaGen – TR3103

21. This could be you: Google • 1995: Sergey Brin and Larry Page, two Stanford University graduate students develop the technology that will become the Google search engine. • 1998: Sergey and Larry raise $1 million in funding from family, friends, and angel investors to start Google in a friend's Menlo Park, Calif. garage with four employees. • 1999: Google raises $25MM from VCs and angel investors • 2004: Google planning IPO at valuation of US$15-25 billion. Will sell 10-15% to public for $2 billion

22. Founded by undergrads: Dell and Microsoft • Michael Dell, who founded Dell in 1984 with $1,000 when he was 19 years old. The company now employs approximately 41,800 people worldwide and reported revenues of $38.2 billion for the past four quarters. • Bill Gates, who founded Microsoft in 1975 while still an undergraduate at Harvard. Microsoft had revenues of US$32.19 billion for the fiscal year ending June 2003, and employs more than 54,000 people in 85 countries and regions.

23. Why entrepreneurship? • Why entrepreneurship? • Let’s fail! • So how?

24. Let’s fail: the importance of failure for innovation

25. What is the relationship between risk and return? • Risk and return are highly correlated • You cannot increase return without taking more risk • How much risk do you want to take? • What type of life do you want to have? • How much return do you require?

26. Evolving cultural attitudes toward failure Traditional Failure is bad; avoid at all costs

27. Evolving cultural attitudes toward failure Traditional Current Failure is acceptable; leads to learning Failure is bad; avoid at all costs

28. Evolving cultural attitudes toward failure Traditional Current Future Failure is desirable; necessary for innovation Failure is acceptable; leads to learning Failure is bad; avoid at all costs

29. The rate of technological change is increasing exponentially

30. The rate of innovation is increasing

31. Ever-shortening product cycles require more innovation • Phonograph - invented in 1877 by Thomas Edison • 33 rpm/45 rpm discs - 1948 (75 years) • Cassette tapes - 1970s (25 years) • Compact disc - 1990s (20 years) • MP3 files - 2000 (10 years)

32. Innovation requires failure • “Failing is one of the greatest arts in the world. One fails toward success” - Charles Kettering - founder of Delco and inventor with 200 patents • “An inventor fails 999 times, and if he succeeds once, he’s in. He treats his failures simply as practice shots.” - Charles Kettering • Failure is “the opportunity to begin again, more intelligently” - Henry Ford, who started Ford Motors after failing at 2 previous ventures • “The fastest way to succeed is to double your failure rate” - Thomas Watson, founder of IBM • “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” - Bill Gates, founder of Microsoft.

33. Sometimes failure itself is innovation • Post-It notes - failed glue • Scotchgard - spilled on shoes • Combat - failed additive for cattle feed

34. The essence of risk is failure

35. Failure is necessary to achieve success

36. Why are people afraid to risk failure? • Fear of the unknown - “Why take a chance?” • Fear of looking stupid - “What will they think?” • Judging too quickly - “That will never work” • Attachment to the old - “We have always done it this way” • Attachment to past successes - “This approach got us here”

37. Do not let fear stop you • Why are you afraid to try? • The outcome must be important to you; otherwise no fear • This makes you afraid to fail • If you do not try, then you have already failed • “You miss 100% of the shots you do not take” - Wayne Gretzky • Fear causes you to fail at the things that are most important to you

38. Conquering your fear • Everyone is afraid • It is OK to be afraid • Don’t try to eliminate your fear • Work through your fear

39. If you don’t fail, you are not trying hard enough • Most learning and progress are achieved through failure • The top scientists in the world fail more than average scientists • Everyone who is now highly successful took significant risk to get there • We don't regret the things that we do and fail at; we regret the things that we fail to do. • A life lived in fear is a life half lived

40. Failure Success • 1895: Fails entrance exam to the Swiss Polytechnic, a top technical university • 1902: Unable to find work at a university, takes a job as a clerk at the Swiss Patent Office • 1905: Submits paper on Special Theory of Relativity to a leading German physics journal. At age 26, formulates the equation e=mc2. • Now recognized as one of the leading thinkers of the 20th Century Success from failure: Albert Einstein

41. What makes Silicon Valley different? • A different attitude toward failure • Many Silicon Valley VCs will only invest in entrepreneurs who have already failed • “I got my education on the mean streets of Silicon Valley, where I got to see how huge mistakes are made. Knowing what doesn’t work is perhaps more valuable than knowing what should work. Failure is just tuition. If you are in a failing start-up, take notes.” - successful start-up founder

42. Only do things that are difficult to do • Everything that is worth doing is difficult • If it is easy, it is probably not worth doing • You should never hesitate to do something difficult

43. Why entrepreneurship? • Why entrepreneurship? • Let’s fail! • So how?

44. From idea to business model • How do we create value? • Who do we create value for? • What is our source of competence/advantage? • How do we differentiate ourselves? • How do we make money? • What are our time, scope and size ambitions? Business model developed by Michael H. Morris, Ph.D

45. Key steps to success • Develop an innovative product - Innovation • Choose the right market - Customers • Create sustainable competitive advantage - Competitors

46. Product or service? • Odds of starting a company that made the Inc 500 list of fastest growing young private companies from 1982 to 2000 • Biotech – 265 times higher than restaurant • Software – 823 times higher than hotel • Choosing the right opportunity is the most important determinant of success

47. High risk, low return? • Product-based start-ups • High risk of failure • High return if successful • Service-based start-ups • Higher risk of failure • Lower return if successful • Choose an industry favorable to start-ups

48. Evaluating new ideas • Original? • Feasible? • Marketable? • Profitable?

49. What problem are you solving for customers? • You need to have a value proposition for customers • Start a business with a product that meet a real customer need • Develop a solution to the customers’ problem • Meet customer needs better than competitors • Evaluate customer preferences – traditional market research ineffective – listen to customers

50. Identify, analyze and strategize your market Identify market opportunity The niche that will make you rich Assess and analyze market Competitors - don’t say you don’t have any Customers Develop marketing strategy Differentiation that offers superior customer value Cost leadership