Stanford London 2005 Slide 1

Technology Entrepreneurship:
A Personal Top 10 List
Stanford Club of Great Britain
10 November 2005
Professor Tom Byers
Department of Management Science and Engineering
Stanford London 2005 Slide 2
Dont Hate Me Cause Im a Weenie!
Then
Now
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A Stanford University Legacy
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Stanford and Silicon Valley
Research funding and culture of creativity
Silicon Valley as nearby planting ground
for ideas and early feedback
Role of students as inventors, disseminators,
and contributors to the workforce
Encouraging entrepreneurship
http://sen.stanford.edu
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Engineerings Research Highlights
Bioengineering
Information Technology
and Photonics
Nanotechnology
Environment and Energy
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STVP is dedicated to accelerating high-
technology entrepreneurship education and
creating scholarly research.
STVP believes that all majors including engineering,
science and humanities need entrepreneurial skills
to be successful at any level within an organization.
STVP prepares students for leadership positions in
industry, academics, and society.
http://stvp.stanford.edu
Stanford London 2005 Slide 7
From General Management Skills
toward Entrepreneurial Leadership
1980s and 1990s:
Craft Strategic Vision
Marshal Resources
Shape Work
Environment
Develop Star
Performers
Tune Organization
Supervise Operations
Today:
From Manager to Leader
Tangible Vision that is
Real and Useful
Develop a Team, not a
Group
Constructive Conflict
Strong Mutual Influence,
not Coercion
Culture of
Experimentation
References: Pearson, HBR, July-August, 1989 and
Bradford and Cohen, Power Up: Transforming Organizations through Shared Leadership, 1999
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Roundtable On
Entrepreneurship Education
http://ree.stanford.edu
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Video Clips
Podcasting
Case Studies
Curriculum
Presentations
Center
Development Tools
Free (No Charge)
Kauffman
Foundation Support
International
Partners
http://edcorner.stanford.edu
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Ten Enduring Success Factors of
High-Technology Entrepreneurship
(1-3-3-3)
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1. What is high-technology
entrepreneurship? What is the
difference between an idea and
a business opportunity?
Vinod Khosla
Entrepreneur and Venture Capitalist
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"Entrepreneurship is a management
style that involves pursuing opportunity
without regard to the resources
currently controlled.
Entrepreneurs identify opportunity,
assemble required resources, implement
a practical action plan, and harvest
rewards in a timely, flexible way.
References: Various Including Harvard and Babson
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2. Why do ventures require
dynamic leaders who understand
vision, strategy, tactics, and risk?
A race against
time to create
value and
reduce risk
Dynamics of the Start-Up Game
(1) Founding:
An entrepreneur begins with a vision and shares of stock in the new venture.
Entrepreneur trades stock for
ideas, money, and people
(2) Seed Stage:
Venture capitalists provide
money in return for stock
Employees join via friends &
associates in return for cash
salary and stock options
Ideas become intellectual
property which represents the
initial value in the company
Further growth is delayed
until milestones are
reached and risk of
failure is reduced
(3) Growth Stage:
More money, ideas, and people are
obtained, but for much less stock than
in the earlier stage due to lower risk
Company balances earning
cash, taking investment, and
spending cash to create value
(4) Exit Stage:
IPO or M&A?
Entrepreneur, investors, and
employees can cash in stock
for money
A viable company has been
created or expanded
Each entrepreneur continues
to build the company, retires,
or starts the game again
Value has been
successfully created.
Reference: Start-Up by Jerry Kaplan
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3. How does context (e.g., global
economic and political climate) play
a role in high-technology venturing?
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4. What is market
positioning? Why are
partnerships important?
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Moores Crossing The Chasm Model
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Bowling Alley
Main Street
Tornado
Source: Moore (1995), Inside the Tornado
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So How Does a Startup
Cross the Chasm?
1. Put Your Eggs in One Basket
A Target Market Segment.
2. Then Deliver a 100% Solution To Them
A Whole Product via Partnerships.
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Dogs Role Segment Brand Price/100 gr.
Dog as a family member Premium Chum 8.7 pence
Dog as a companion Moderate Pal and Bounce 6.4 & 7.9 pence
Dog as an animal Economy Chappie 6.3
pence
Reference: A. Ryans, IMD
An Example of the Power of
Segmentation and Target Marketing:
Pedigree Petfoods in UK
Dog as a substitute child? Super Premium
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Pedigrees Super Premium
Strategy and Results
Target Market? Intense relationships, own smaller dogs,
older and urban females
Benefits? Very best product that can be bought,
reassurance, confidence, leads to an enhanced relationship
Name? Mr. Dog (later Caesar)
Product? Very high quality ingredients, wide variety of
flavors, special packaging
Price? 17.7 to 30.7 pence per 100 grams
Advertising? Dog bringing newspaper, slippers, etc.
Results: Fours years later, it had a 10% share of the total dog food market.
The total super premium segment of the market was about 15% -- about
10% coming from dog food brands and about 5% coming from fresh foods.
In addition, Pedigree's premium brand retained its market share.
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Jeff Hawkins
Entrepreneur and Author
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5. What is the purpose of
the business plan?
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Sahlmans Entrepreneurship Model
Reference: Sahlman et al. (1999) The Entrepreneurial Venture
Reference: Bill Sahlman, HBS
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6. Why is cash flow so vital?
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CFIMITYM!
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7. What are the different sources
of capital for high-tech ventures?
What are the essentials of the
venture finance process?
Traditional
VC
Angel
Investors
Corporate
VC
Boot-
strapping
Other
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US and European Venture Capital:
Historically Different Approaches?
believe returns can be
earned across the portfolio
target a small number of big
winners home run
investing
Returns
minimise downside maximise upside
Philosophy
create medium
sized companies
create very large
companies
Objective
hands off hands on
Style
just money value added
Provide
early (A Round),
but not seed
seed
Stage
consultants and bankers
company founders and
builders
People
European Model US Model
Reference: Mowbray Capital, London
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8. Why is high-tech entrepreneurship a
team sport? How can reward systems
and company culture inspire innovation?
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9. Why are sales and business
development skills so valuable?
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5 Characteristics of Entrepreneurs
Reference: Kuemmerle, A Test for the Fainthearted, HBR, May 2002
Audacity
Closer
Adaptive
Patience
Courage
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10. What is the role of ethics
in high-tech entrepreneurship?
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or
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Thank You!
For our free online seminars:
http://etl.stanford.edu
For more information:
www.stanford.edu/~tbyers
For free online video clips:
http://edcorner.stanford.edu