Strategy and the Entrepreneur

1. Strategy and the Entrepreneur

2. Big Idea Sufficient Money Competent Team Relentless Execution Good Plan Key Ingredients for Success And a generous helping of luck… Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

3. The Idea: 7 Tests for A Winner • Solve a realproblem • Solve a focused problem • Solve a bigproblem • Solve a hard problem • Solve an obvious problem • Solve a complete problem • Solve a worseningproblem Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

4. The Idea: Create a Value Proposition A concise statement of the compelling promise that your product or company makes to a set of target customers that is differentiated from available alternatives, and supported by reasons to believe in the promise. Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

5. The Idea: Assessing the Balance What’s in it for me? Why is yours better? Is it worth it? What are my costs of making it useful? Price Promise Differentiation Risk Effortrequired Support Why should Ibelieve you? What might Go wrong? Is this for me? Target Audience Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

6. The Idea: Key Questions to Ask • Who are the audiences you are addressing with your idea? • What pain points you are addressing for these audiences? • What evidence do you have that these pain points are real? • What are the current solution approaches? • What’s lacking in these approaches? • How is your solution approach better? • How big is this difference and what is it worth to customers? • What’s in it for other stakeholders besides end-customers? • Why hasn’t someone else thought of your idea yet? • Are you sure nobody has thought of your idea yet? • What is proprietary about your idea? • What makes your teamuniquely qualified to implement your idea? Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

7. The Team: A Good Foundation is Key • The 7 Deadly Sins: • Hiring based on convenience • Hiring without due diligence • Hiring big-company stars • Hiring the wrong attitude • Hiring poor listeners • Hiring cheap onshore executives • Hiring VP of Sales with no product BUILD STUFF Engineering/ Technology RAISE MONEY, HIRE TEAM, PROVIDE DIRECTION (CEO) SELL STUFF Marketing/Sales RUN THE SHOW Finance/ Administration Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

8. The Team: Questions Investors Ask • Is the team leader strong and passionate? • Will leader and team attract “A” players? • Is the team appropriate for the stage of the company? • Has the team worked together before? • What are the team’s values and what type of culture will they create? • Is there a strong technical leader? • Is there a strong marketing leader? • Does the team have deep domain or technical expertise? • Does the team listen and take criticism in a positive way? • Does team have a good blend of “thinkers” and “doers”? • If current plan doesn’t work out, will team adapt? • Will the founders give up control if that is what the venture demands? Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

9. The Plan: Why One is Needed • You need it as a roadmap • You need it to clarify priorities • You need it to attract funding • It is used as a guide when speed bumps happen • It is your company’s & your personal scorecard Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

10. The Plan: Some Truths • The planning process is more important than the plan • The assumptions are more important than the forecasts • Things will never turn out as planned • It should be short enough to be readable, long enough to be rigorous Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

11. The Plan: Tips for a Good One • Be brief and direct; get to the bottom line quickly • Identify what the business is immediately • Define the customers quickly and the customer problem clearly • Define what’s compelling and unique • Describe how you will make money • Provide a phased snapshot of your company 12, 24 and 36 months out • Describe how you propose to take your product to market • Make bottom-up as well as top-down projections • Know what 4 to 5 assumptions your plan pivots on • Discuss the key risk factors • State how much money you will need and how you will use it • State your possible exit strategies Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

12. The Money: A Typical Sequence • F&F (Friends and Family) • Angel Investors • Venture Investors (Series A and onwards) • Strategic Investors • Late-Stage and Mezzanine Funds • Public Markets Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

13. The Money: Important Considerations • Put some of your skin in the game • Size of the pie wins every time over share of the pie • Getting a high valuation early can be fatal • Don’t value the company in the angel round • Make advisors into angel investors and vice versa • More startups die of indigestion than of starvation • Venture capital is like synthetic fertilizer – use sparingly and with caution • Raise money when you can, not when you need it • It will take twice as long and thrice as much work as you think to raise money Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management

14. Final Thoughts…. • Growth vs. Profit • Growth today is worth many times the profits tomorrow • Speed vs. Deliberation • Know your speed limit, and don’t let VCs make you exceed it • Opportunism vs. Strategy • Start out being opportunistic, but quickly become strategic • Service vs. Product • Servicize to learn, then productize to earn Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management