Accelerating Information Technology

Innovationhttp://aiti.mit.edu

Entrepreneurial MindsetTuesday June 21, 2011The University of Ibadan

Morning Exercise• Name• Department and level• Your motivation for taking the course• What you hope to learn from this course• Any coding experience you have (be

specific i.e. theoretical or practical)

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Review from Yesterday• Class starts here at 10 AM

– Tuesday, Wednesday, Thursday

• Write down and submit what you hope to gain from this course

• Business Plan Review: July 12 (tentative)

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Agenda

• Entrepreneurial Mindset– Scenario– Entrepreneur– Startups– Business Plans

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Scenario

• Gary K of Digital Research has a proven product for a booming market. William G has a dream and a bunch of geeks following him –in the same market segment

• Compare and contrast the two situations. Which would you rather be?

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Compare and Contrast

Gary K/Digital Research

• Right product @ right time• Product focused company• Values are clear –programmers,

business, balance, founder had passion for flying

• Work is work, a means to an end• Money in and money out (over

simplification)• Real product & revenue• Very tactical, “let’s ring the cash

register now”• Little company spirit or vision for a

great cause

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William G/No Name

• More “bizarre” founder • 1 value clear: hard work• Want to join the company? You

have to believe in the great cause/vision and prove by working like a maniac for a lot less

• Believe can change world –“software on every computer”

• Is it a company or a cult?• Not much product but has strong

spirit & united group• Do they care about business?

More About the Case

• Booming Industry Sector: Personal Computers

• Software: Operating System– PC-DOS priced at $40– CP/M-86 shipped a few months later priced at

$240 but sold poorly• Gary K - Gary Kildall• William G - Bill Gates

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Moral of the Story

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• Mindset matters a lot• You can not hand over this responsibility –

it happens in any case• It is embodied in your beliefs & actions• Deeply personal & there is not one way• Better to know this & proactively deal with

it in dialogue with your cofounders

The Entrepreneur

• Agile• Passionate• Driven• Articulate• Resilient• Comfortable with uncertainty

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But…

• Personal characteristics are necessary but not sufficient

• Your capabilities and how you do things will likely make the difference between success and failure

• Past success is the best future indicator

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Capabilities• Fundraising• Team Building

– Build and manage a team– Utilize team to make decisions– Hire to augment weakness

• Focus and Execution– Create a niche– Get established and grow from there

• Vision and Intuition

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Consequences of No Focus

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Startups

• Building scalable startups that grow into sustainable companies– Often want them to be large companies

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Difficulties

• Possibility for failure– 1/3 of startups survive first 3 years

• Must act in low-cost manner– Small venture/startup

• Learn from experiences (mistakes)– Engage, then reflect

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Properties of Scalable Startup

• Clearly defined vision– Broad– Deep– BIG

• Opportunity– Create an industry, not just product or

company• Minimizes risk

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Lifetime of a Startup

• Limited life span• Temporary stage and organization to find

business model• Need to transition to company

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Startup• Find business model• Experiment with

product and market• Establish sales

strategy

Transition• Codify sales strategy• Hire managers• Prepare for expansion

Company• Breakeven cash flow• Profitable• Rapid scale• New senior

management

Business Plans

• A document about the business– Size of opportunity– Customers– Channel– Current and Future Demand– Revenue, Expenses, Profit

• Investors Require one– Don’t actually read it

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Business Plans: How Useful?

• Each team will develop one but NOT the focus of the course

“In preparing for battle, I have found that planning is essential, but plans are useless,”

-- Dwight D. Eisenhower, Former US President

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Project Showcase

• Business plan• Working Mobile Demonstration• 8 to 10 slide maximum presentation• Competition on Friday, July 29• Panel of judges• Prize for winner

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Next Time

• Assign teams

• Idea generation dry run

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Additional Sources

• 15.390 New Enterprises, MIT Sloan School of Management

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