Why Are Some Entrepreneurs Doomed to Failure

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I updated this presentation for a lecture I gave at Stanford last weekend. I added a few"quick start" slides upfront: What should you do first when you have an idea for a new business: recruit a board of advisers and a co-founder. Elton Sherwin July 31, 2014

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<ul><li>1.Why Are Some Entrepreneurs Doomed to Failure?Elton B. SherwinUniversity of San Francisco2014 </li></ul> <p>2. Dos and Don'tsGetting StartedSuperbasicsYour Career and Leadership SkillsTipsTwo Common Fundraising MistakesAdvice From Hollywood 3. Starting a New Business 4. Steps #1 and #2Recruit Board of Advisors3 to 8 people, informal1 x-Founder, 1 technology, 1 marketing, 1 industryCoffee/lunch once a monthNo contracts, no group meetingsCoFounders1 or 2 peoplePassionate, but with different skills 5. Avoid Kamikaze Co-foundersSome people enjoyMaking life hardCheatingLyingBreaking the lawGossipingWithholding informationAny ONE of these will cause you great pain 6. Dont Start a Business with People You Dont Like 7. Work with People You LikeYou will be spending a lot of time with themSuccessful founding teams like each other 80% of the time 8. Think Baseball, Not TennisEntrepreneurship is Not a Solo SportTakes a team to refine the productThe idea is important, BUTOriginal idea is rarely the winning productOne person is rarely great at:Finance, Marketing, Product management and technologyMSG: Build a Team First 9. Your RosterSeason OneIf no one joins your team:think aboutjoining someone else's teamAdvisors (minimum: 3)___ Industry expert___ Technology expert___ Finance/legal expert___ Sales/marketing expert___ Founder, another company___ Someone famousCo-founders (minimum: 1)___ Technology___ Marketing/Product management___ Finance/Administration 10. Tips for Finding Your Dream Team 11. Back to Starting Your Own TeamSeason OneAdvisors (minimum: 3)___ Industry expert___ Technology expert___ Finance/legal expert___ Sales/marketing expert___ Founder, another company___ Someone famousCo-founders (minimum: 1)___ Technology___ Marketing/Product management___ Finance/Administration 12. Your RosterSeason OneSeason TwoAdvisors (minimum: 3)___ Industry expert___ Technology expert___ Finance/legal expert___ Sales/marketing expert___ Founder, another company___ Someone famousCo-founders (minimum: 1)___ Technology___ Marketing/Product management___ Finance/AdministrationBoard of Directors (min: 2)___ Rich person___ Rich person___ Someone loyal to you___ Someone loyal to youEarly employees___ Developers___ Product management___ Admin/Office manager 13. Work on Things You Are Interested InIt is not all about profit.God gave you interests and passions for a reason 14. Research the CompetitionI see entrepreneurs who have not Googled their business ideas or dont know who their competitors are 15. It Is Shocking!I see entrepreneurs who have not Googled their business ideasSometimes invent a wheal 20 years after someone else.Dont know about others failuresDont know about others successesDont know who is friend or foeMiss opportunities to partnerForget to use 16. Research the CompetitionInvestor presentationsCustomer presentationsVideosMarketing materialsOpen jobsTechnical presentations &amp; white papersAll documents ending with: .pdf; .ppt; and .mp3 17. Summary of Getting StartedWork with people you like to work with and who arent pathologicalWork on stuff you are interested inResearch the competitionRecruit:Board of AdvisorsCofounder 18. SuperBasics of BusinessSometimes even experienced people forget 19. Need CustomersBefore you build your business ask prospective customers:If we build this product/service would you buy it?How much would you pay? 20. Early CustomersEarly customers:Difference between success and failureClarify goalsCredibility with investorsFund development 21. Make MoneyPositive gross margin (usually above 40%) 22. SuperBasic SummaryFind CustomersMake Money 23. Your Career and Leadership SkillsWork in a restaurant before you start oneRun a restaurant before you buy oneJoin a team before you start one (usually)Write down your best idea every dayIn Notes or DropboxTry different jobsWhich position is right for you: Coach, pitcher, second base or right field? Which is right for you?Babe Ruth started as a pitcherJoin a winning team 24. Two Common Fundraising Mistakes 25. UncompellingPowerPoint PresentationsNo compelling reason to invest 26. Look at the Outline in The Silicon Valley WayThe complete business plan presentation is attached in the appendix andall The Silicon Valley Way worksheets are available on Slideshare 27. No Elevator PitchStart with an elevator pitchVCs make up their minds in the first 30 secondsThe first three sentences really matterDont start with BiosIt should be COMPELLINGOne to three sentencesPractice it everywhereWhen people offer to invest in the grocery store checkout line: You have a compelling story 28. Examples of Effective First SentencesGE has asked us for 1,000 units and we are here today to raise money for ourOur applet is currently one of the ten most downloaded applications on the iPhoneIn our lab we have successfully used sunlight to create hydrogen and 29. Should You Raise Money?Not every business should be financed by venture capitalSome businesses should be bootstrappedHard to be successful with low margin business 30. Advice from 31. Americans Watch 16,000 hours of Television (before college) 32. We LearnOn a great team:Everyone is an extrovertEveryone interruptsEveryone talks without thinking 33. LeadersTake bold actionRisk everything dailyPlan on the flyGroup decisions are a waste of timeDo it all themselvesDo it their wayDont tell anyone the planIgnore the law 34. American Leadership TrainingRisk everythingDo it yourselfThe law is irrelevant 35. Risk everythingDo it yourselfIgnore the law 36. The ABCs of SuccessA.Think boldly be innovativeB.Take frequent, small stepsMinimize riskBe frugalC.Play well with othersFor more information, see: Len Schlesinger, Action Trumps Everything 37. SuccessProduct IdeaFounding Team Experience Skills Teamwork LeadershipMyth90%10%Reality30%70% 38. MythAll about having great ideaRealityJoining or assembling the right team 39. ConclusionFocus on more than the ideaUsually 6 to 50 companies have similar ideasThoroughly research competitorsConsider joining a winning teamDont let failure discourage youWinners have lots of failuresFailures get discouraged and give upBe reluctant to borrow moneyPersonally and professionally 40. Next Steps 41. Research the CompetitionInvestor presentationsCustomer presentationsVideosMarketing materialsOpen jobsTechnical presentations &amp; white papersAll documents: .pdf; .ppt; mp3, etc. 42. Recruit Board of Advisors3 to 8 people, informalDont need a group meeting; no contract1 x-Founder, 1 Tech pro, 1 marketing typeCoffee/lunch once a monthCoFounders1 or 2 peoplePassionate, but with different skills 43. Appendix </p>

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