Branson Centre - Passion to profits - Part 2

THE BEHAVIOURS OF PASSIONATE

ENTREPRENEURS

?

?

?

The first sale

WHAT PREDICTS SUCCESS?

1 Planning doesn’t predict

Source: Lange, Mollov, Pearlmutter, Singh and Bygrave (2007)

“new ventures launched with formal written business plans do not outperform ones

launched without them.”

Business Plan?

Source: Bhide (2000)

21%

79%

Yes!No!

No!

No!

No!No!

No!

Doh!?!

1 Opportunity Predicts

Source: Shane (2009)

Industry Number of Inc 500

firms

Firm starts Percent of Starts

Pulp mills 6 33 18.182

Computer and office equipment 99 2359 4.197

Guided missiles, space vehicles, parts 2 60 3.333

Nonferrous rolling and drawing 14 581 2.410

Railroad car rental 3 136 2.206

Measuring and controlling devices 49 2482 1.974

Paper mills 3 125 2.400

Search and navigation devices 6 310 1.935

General industrial machinery 26 2173 1.197

Photographic equipment and supplies 7 646 1.084

Manifold business forms 3 281 1.068

Household appliances 4 390 1.026

Electrical industrial apparatus 11 1080 1.019

Legal services 10 129207 0.008

Eating and drinking places 34 494731 0.007

Carpentry and floor work contractors 4 66383 0.006

Real estate operators 5 90042 0.006

Hotels and motels 2 39177 0.005

Painting and paper contractors 2 43987 0.005

Retail bakeries 1 22165 0.005

Grocery stores 5 112473 0.004

Used merchandise stores 1 24442 0.004

Automotive repair shops 5 124725 0.004

Beauty shops 3 79081 0.004

Residential care 1 27710 0.004

Videotape rental 1 27793 0.004

INDUSTRY CHOICE VS. INC 500

Computer and Office Equipment

(1/25)

Eating and Drinking Places

(1/14,550)

Source: Shane (2009)

Computer and office

equipment

582 succeed

Eating and

drinking places

1 succeeds

Source: Shane (2009)

Correlation between number of

startups in an industry and failure rate

0.77

Source: Shane (2009)

2 Team Predicts

13.1%

54.2.%

Source: Bruderl, et al. (1992)

+

>

5-YEAR FAILURE RATE?

90%

10%

1 founder

2 or more founders

Source: FinScope (2010)

TEAM SIZE SOUTH AFRICA

3 Advice seeking predicts

45%

80%

No advice

Source: Watson (2007)

Advice from

accountants 3+/yr

3-YEAR SURVIVAL RATE

Source: Pretorius & Le Roux (2011)

SUCCESSIVE ENTREPRENEURSHIP AND NO LEARNING

Source: Pretorius & Le Roux (2011)

4 Industry Experience

75%

25%

Source: Fresser and Willard (1990)

INC 100 ENTREPRENEURS WITH INDUSTRY EXPERIENCE

Source: Bruderl, et al. (1992)

25.5 %Industry

Experience

No Industry

Experience54.5 %

5-YEAR SURVIVAL AND INDUSTRY EXPERIENCE

Strong Team

(1) 3 + members

(2) 50% joint experience

(3) 3 year industry experience

(19%)

(73%)

Source: Eisenhardt & Schoovenhoven (1990)

5 Traction

“I'd just go sell it. I don't believe in market research. Somebody once told me the only thing you need is a

customer."

Source: Sarasvathy (2007)

Source: Reynolds (1987)

Source: Bhide (2000)

82%

8%

10%Somewhat Involved

Main Salesperson

Heavily Involved

FOUNDERS INVOLVEMENT IN SELLING

6 Avoid Pre-mature Scaling

Avoid

Pre-mature Scaling

AMAR BHIDE

Idea BuildNo

Facts

DON’T SKIP THE ASSUMPTION TESTING

paulshawsmithscientific business strategy

paulshawsmithscientific business strategy

of high growth internet start upsfail due to premature scaling.

Source: Start Up Genome Report(2011)

times faster than startups that scale prematurely

Startups that scale properly grow about

Source: Start Up Genome Report(2011)

8 Community

OBSERVATIONAL LEARNING

Mayans

Hutu

Greeks

Romans

Egyptians

Vikings

Khoisan

Persians

TRIBES

YPO

MBAs

Gamers

Sports centers

The Sharks

KIPPRhodes Rowing

Music Scools

TRIBES

7000 inc 500 companies assessed

9 best performers chosen for a study

4 belonged to YPO

THE BREAKTHROUGH COMPANY

THE OLD BOYS CLUB

“While some attribute YC dominate to Paul Graham’s excellent selection of founders, or his ability to coach founder to raise every-higher valuations,

ort he branding for YC alumni, and their willingness to support, mentor and fund each other to success. In my humble opinion, this is what is really valuable about YC, and why it’s

difficult for other to copy.”- Dave McClure, 500startups founder

9 Values Predict

WHAT ARE VALUES?

How importance or precious

something is to a person

VALUES DEFINITION

Time:

How does a person spend their time?

Show

Energy:

What activities gets the person excited?

Show

Money:

How do they spend their money?

Show

DETERMINING VALUES

6:00 – Wake up

6:30 – Arrived at office

7:30 – Make up and did 2 shows

11:30 – Snack and phone calls

12:35 – Did another show with Barbra Streisand

14:00 – Money issues and meeting plan next week’s shows

19:50 – Tread mill

20:50 – Made dinner for Steadman

(almost never happens)

22:00 – Reviewed books for book club

23:10 – Lights out

HOW DOES OPRAH SPEND HER TIME?

WHAT GIVE OPRAH ENERGY?

You know you are no the road to success if you would do your

job, and not be paid for it.

HOW DOES OPRAH SPEND HER MONEY?

Time:

How does a person spend their time?

Business

Energy:

What activities gets the person excited?

Business

Money:

How do they spend their money?

Business

ELON MUSK VALUES

8:00: Heads to SpaceX’soffice in his Model S.

How does Elon Musk spend his time?

8:00: Morning phone calls. Marketing VP, journalists, job candidates or conference calls

10:45: Week status review on the Falcon 9

HOW DOES ELON MUSK SPEND HIS TIME?

12:30: Propulsion schedule meeting

12:30: Building operations meeting

HOW DOES ELON MUSK SPEND HIS TIME?

16:30 Visits the rocket factory

HOW DOES ELON MUSK SPEND HIS TIME?

19:00 Interviewed by Sarah Lacy from Pando Daily

Attends premier of a film he has produced

HOW DOES ELON MUSK SPEND HIS TIME?

WHAT GIVE ELON MUSK ENERGY?

HOW DOES ELON MUSK SPEND HIS MONEY?

Time:

How does a person spend their time?

Business

Energy:

What activities gets the person excited?

Business

Money:

How do they spend their money?

Business

RICHARD BRANSON VALUES

AMAR BHIDE

“A business has to be involving, it has to be fun”

“My general attitude to life is to enjoy every minute of every

day. I never do anything without a feeling of, ‘Oh God,

I’ve got to do this today”

WHAT GIVES RICHARD BRANSON ENERGY?

WHAT DOES RICHARD BRANSON SPEND HIS MONEY ON?

Time:

How does a person spend their time?

Business

Energy:

What activities gets the person excited?

Business

Money:

How do they spend their money?

Business

RICHARD BRANSON VALUES

AMAR BHIDE

Values predict your future!

AMAR BHIDE

Becoming a great investor

Business and investing

Family and friends

Baseball

AMAR BHIDE

Eating

Movies

Partying?

Outcome 1

Outcome 2

Outcome 3

AMAR BHIDE

Business

Career

Investing?

Outcome 1

Outcome 2

Outcome 3

10 Vision Predicts

Source: Barringer et al. (2005)

54%

80%

FAST

GROWTH

SLOW

GROWTH

GROWTH COMMITMENT?

• Your workload

• Extend to which preferred tasks would dominate

• Your employee well being

• Ability to control operations

• Independence from customers, suppliers, etc.

• Ability to survive a crisis

• Ability to keep up quality products and services

IF YOU SALES DOUBLED HOW WOULD IT IMPACT ON YOUR:

“We will create products that become

pervasive around the world… We will be

the first Japanese company to go into the

US market and distribute directly.. Fifty

years from now, our brand will be as well

know as any in the world.”

“I will build a motor car for the great

multitude… It will be so low in price

that no man making a good salary will

be unable to own one. The horse will

have disappeared from our highways,

the automobile will be taken for

granted.”

ACTION LIST

• Validate you have a real opportunity

• Find co-founders

• Get an advisory board and listen

• Don’t scale until P/M fit

• Get traction

• Join a community

• Value your business

• Have a vision