P4E New Ventures 1

Kick-Off
October 29, 2015
Jon Fjeld, Howie Rhee
Center for Entrepreneurship and
Innovation
 The basics

Evaluation

Execution

Planning

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 Evaluation of an opportunity

1. Is there a sufficiently attractive market opportunity

(need or problem)?
2. Is the proposed solution feasible, both from a market
perspective and a technology perspective?
3. Do we have an team that can effectively capitalize of
this opportunity?
4. Can we compete (over a sufficiently interesting time
horizon?
5. What is the profile risk and return of this opportunity?

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 Core elements of a business plan
document

Investment prospectus:
Team
Need/problem
Solu7on
Compe77ve advantage
Risk / return

4
 Planning

1. Strategy
Target customers
Business model
Position / competitive advantage
Milestones / plan objectives
2. Operating plan
Plan for each functional area
Budget

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 Core elements of a business plan
document
Investment prospectus: Companys plan:
Team Strategy:
Need/problem Target customers
Business model
Solu7on
Compe77ve posi7on
Compe77ve advantage
Milestones
Risk / return Opera7ng plan:
Plan for each func7onal area
Budget

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 Framework for analysis

Investment Companys plan: Execu7on:

prospectus: Strategy: Market Research
Strategy development
Team Target customers Marke7ng
Need/problem Business model Business development
Comp. posi7on Sales planning
Solu7on R&D Management
Milestones
Compe77ve Opera7ons management

advantage Opera7ng plan: Process and infrastructure

management
Plan for each
Risk / return func7onal area Budge7ng
Financing
Budget People management

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 Entrepreneurial opportunity

Problem currently not solved

Potential for change in consumption

Requires:
Innovation
Capability to exploit the innovation

Not every idea is an opportunity

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 Sources of opportunity

Society Technology Markets

Changing Innova7on: new Change in

demographics combina7ons regula7on
Changing tastes New Supply chain
& interests technologies disrup7on
Fears & hopes New knowledge Ineciencies
Regula7on

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 Order effects

First order: Substitution - faster, better cheaper

Second order: More of the underlying task or
capability
Third order: Creation of new structure, institutions,
organizations, etc.

Entrepreneurial opportunities exist at all levels and

for those who can solve new problems created
by new structures, etc.
With thanks to John McCann

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 P4E history
Class of Class of Class of Cass of Class of Class of Class of Class of
2010 2011 2012 2013 2014 2015 2016 2017

Selec7on 30 ideas 70 ideas 80 ideas 50 ideas 71 ideas* 108 ideas N/A ideas N/A ideas
8 students* 68 students 90 students 100 students 104 112 students 110 students 105 students
* students*
*Handpicked
students Used an *Matchmake
applica7o r
n Directory

NV1 8 projects 13 projects 11 projects 17 projects 11 projects 11 projects 12 projects 16 projects

Opp. Eval. 48 students 37 students 53 students 38 students ~39 students 34 students 40+ students

NV2 4 projects 10 projects 7 projects 9 projects 6 projects 4 projects 5 projects

Strategy 32 students 22 students 25 students 16 students 14 students 20 students

NV3 3 projects 4 projects 3 projects 1 project 5 projects 2 new

Plan 14 students 20 students 14 students 2 students 17 students projects
9 students

Launch EntoGene7c Investors K Kane Jobbertunity CrowdTunes Physao

s Mosaic AIPatents Broota
Hootli All9s
Medici Jobbertunity
HowIDidIt
KOI
 P4E history
Class of Class of Class of Cass of Class of Class of Class of
2010 2011 2012 2013 2014 2015 2016

Selec7on 30 ideas 70 ideas 80 ideas 50 ideas 71 ideas* 108 ideas

8 students* 68 students * 90 students 100 students 104 students* 112 students 100-110
students
*Handpicked Used an *Matchmaker
students applica7on Directory

NV1 8 projects 13 projects 11 projects 17 projects 11 projects 11 projects 13 projects

Opp. Eval. 48 students 37 students 53 students 38 students ~39 students

NV2 4 projects 10 projects 7 projects 9 projects 6 projects 4 projects

Strategy 32 students 22 students 25 students 16 students 14 students

NV3 3 projects 4 projects 3 projects 1 project 5 projects 2 new

Plan 14 students 20 students 14 students 2 students 17 students projects
9 students

Launch EntoGene7cs Investors K Kane Jobbertunity CrowdTunes

Mosaic AIPatents Broota
Hootli All9s
Medici Jobbertunity
HowIDidIt
KOI
 P4E outcomes to date
Class% Projects% Type% Launch% Fail% Survive%
! ! IT% Life% Energy% Consumer% % Market% Tech.% Other% %
science% other%
2010! 9% 3% 3% 3% % 4% 5% % % 3%
2011! 16% 7% 4% 2% 3% 5% 11% % % 4%
2012! 12% 4% 2% 1% 5% 2% 9% 1% % 2%
2013! 17% 10% 2% % 5% 3% 11% % 3% 3%
2014! 13% 8% % 1% 4% 6% 5% % 2% 6%
2015! (11)% % % % % % % % % %
Totals! 67% 32% 11% 7% 17% 20% 41% 1% 5% 18%
!

67 projects over 5 years

20 launched
41 of 47 failures to launch (87%) due to
absence of market
18 survive or unknown
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 Market research

Is there an opportunity?

Market research

Operating Plan

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 How do you start?

You can observe a lot by just watching.

(Paraphrase of a famous philosopher)

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 Method
Hypothesis:
Observe Problem
Context / environment
Universe of poten7al customers

Qualify:
Context
Question Customer ahributes
Value
Alterna7ves
Obstacles
Buying process
Possibili7es: Quan7fy
Test Validate How many similar buyers
Revise / reject
Willingness to pay

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 What does it take to succeed?

Good idea + good execution + money + luck

=
Entrepreneurial Success

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 Does this imply a sequence?

Good idea + good execution + money + luck

Analysis
Planning
Operational
execution

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 A simple model

Goal of every new venture: nd the match

Market + Product
This is hard to discover by asking people (tradi7onal
market research oken doesnt work in a new
venture).
So just launch the product and see what happens.
But what can you conclude from failure? By itself a
failure tell you nothing. It does not guide the next
step.

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 A clash of methodologies?
The tradi>onal method: The new method, lean
1. Analyze the idea startup:
2. Create a plan 1. Launch
3. Fund the plan 2. Learn
4. Execute (according to 3. Iterate
the plan)
5. Hope (for good luck) No business plan required
Results in an elaborate
business plan

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 A better approach

Dont just do it, perform experiments.

What is an experiment?

Analysis
Clear ques7on
+ Execu>on
Well-designed, ecient test
And the order mahers. You need a well thought
out sequence to resolve uncertainty eciently.
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 A more realistic model:
many unknowns
Market + Product

Value / willingness to pay Features

Constraints / parameters Business model / price
of solu7on Compe77ve posi7on
Necessary complements Distribu7on
Alterna7ves Etc.
Inhibitors
Inuencers
Customer acquisi7on
Etc.

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 Efficient learning:
integrated analysis and execution

Business plan heavy Just do it

entrepreneurship: entrepreneurship:
Too much planning Not enough thought
and analysis given to what are
Too many unknowns cri7cal unknowns
Inecient learning

Ecient learning entrepreneurship:

Well formulated ques7ons
Integrated analysis and execu7on
Every ac7on has a learning objec7ve
Ecient use of resources

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 In the beginning

Opportunity evalua>on
Fact gathering, analysis, basis
for decision making The need is the primary
ques7on
Need / problem
Feasible solu7on Whether a solu7on is
Team possible is usually second
Possibility of comp.
advantage These are important but
Risk reward cant really be addressed
un7l the rst two are
somewhat sehled
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 Keys to success
1. Organize: divide responsibili7es / plan / track your
progress.
2. Get started early - pace yourselves s7ck to your plan.
3. Get started early on the primary market research this
will always take longer than you think.
4. Decide what is cri7cal to making a go/no go decision
and focus on that
5. Decide how you will make decisions in advance dont
wait for an issue to arise.
6. Be open and exible your specic idea may not be the
ul7mate idea.
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 Resources

Guidelines for the entrepreneur:

http://www.dukeven.com/

Program for Entrepreneurs:

http://www.dukep4e.org

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