1. Chapter 1 The Power of Entrepreneurship
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

2. Definition of entrepreneurship
Schumpeter
An entrepreneur is the person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials.
Simpler
An entrepreneur is the person who perceives an opportunity and creates an organization to pursue it.
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

3. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Business in the US
99.5% are small
businesses
(with 500 or fewer
employees)
Part-time
employees
24 million
businesses
Full-time
employees
Have only
1 employee
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

4. 10-year survival rates of business establishments
81 % survive
40 % survive
1 year
5 years
2 years
10 years
65 % survive
25 % survive
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

5. Web 2.0 companies
From 2002 to 2006, some 40 percent of Web 2.0 deals were located in the Bay Area. That figure dropped to just 20 percent during the first half.
From , valuations of Web 2.0 companies doubled over the last year – VCs have to invest more than double the amount to get the same ownership slice as they did in 2006.

6. Change in share price for Web 2.0 companies since 2012

7. Chapter 2 The Entrepreneurial Process
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

9. Entrepreneurship Defined:
Entrepreneur: someone who perceives an opportunity and builds an organization to pursue that opportunity.
Entrepreneurship involves all the functions, activities, and actions associated with perceiving opportunities and creating organizations to pursue them. These include:
Market and Customer Research
Service and Product Innovation
Team Building
Finding & Managing Resources
Leadership
Etc…

10. Factors Influencing the Decision to Start a Company
Personal
Attributes
Environmental
Factors
Higher Internal Locus of Control
Desire for Financial Success
Desire to Achieve Self-Realization
Desire for Recognition
Joy of Innovation
Risk Tolerance
Local, Regional, or National attitudes towards entrepreneurship
Social and cultural pressures for or against risk taking and entrepreneurship
Access to entrepreneurial role models
Responsibilities to family and community
Remember: No single type of person is best suited for entrepreneurship!
Entrepreneurs come from all walks of life, backgrounds, etc!

11. Before Making the Commitment Would be Entrepreneurs Must:
1) Assess their own financial reality.
It can be very difficult to sustain a salary in the early years of starting a new business, and as a result it is essential for would be entrepreneurs to work through their own personal income needs. If they have a family or other responsibilities that make taking a financial risk more difficult, entrepreneurs must complete an honest assessment of whether and when the company will be able to match past salary levels.
2) Identify key contacts in their networks.
The people in an entrepreneur’s network are his or her greatest potential source of capital, clients, employees, and feedback. Before jumping into an entrepreneurial endeavor it’s essential to take an inventory of the resources in one’s network.
3) Reach out to sources of free advice and feedback.
Most people root for the underdog, and as a result would be entrepreneurs have at their disposal the advice and good will of countless people in their communities and the business world at large. The best entrepreneurs reach out to these communities for all the free advice and wisdom they can get.

12. The Timmons Model for Entrepreneurial Success:

13. The Tenets of the Timmons Model:
1) The Opportunity
Is there a clear customer need for the proposed product or service?
Is the timing right: is the team ready, is the market ready?
Ideas are a dime a dozen – it’s the combination of the factors above and the execution of the business plan that makes an idea an opportunity.
2) The Lead Entrepreneur and Management Team
Experience within the proposed industry can be essential to success.
Investors and other backers prefer to see a track record of driving growth and profits.
An ‘A’ team with a ‘B’ idea is almost always better than the opposite.
3) The Resources
Resources include capital, technology, equipment, and most importantly – people.
The entrepreneur’s mantra is one of Low Overhead, High Productivity, and Controlling but not Owning resources.
The best entrepreneurs are incredibly creative at finding ways to get things done inexpensively and effectively. You can always find ways to do things faster, cheaper, or better!

14. There are Two Key Forms of Start Up Capital
Debt
Equity
Requires no transfer of ownership of the company.
Presents potential for higher risk for the entrepreneur.
Requires repayment, and therefore careful cash flow planning.
Investors gain an ownership stake in the company through a transfer of shares.
This transfers most of the risk to the investor, which explains the costs and expected returns.
Does not require repayment, but does require careful capital planning and investment.
Remember: Most companies will never take on outside investors,
and many will never use debt financing for growth.

15. Happiness is a Positive Cash Flow!
It’s Essential to Understand the Difference between Profits and Cash Flow:
A profitable company can have a negative cash flow and risk running out of money.
An unprofitable company can have a positive cash flow and be on a healthy trajectory.
Profit is measured as a Gain or Loss on the Income Statement, however…
It is typically measured on an accrual basis, and therefore does not accurately reflect the cash inflows and outflows of the company.
Some transactions of cash occur off the Income Statement, and therefore impact cash flow but not profits. A good example is repayment of a loan, which reduces cash balances but has no impact on profits or losses.
Cash Flow measures the increase/decrease of cash during a given timeframe:
It is comprised of three elements: operations, investing, and financing.
Each of these areas can have a tangible impact on the Cash Flows of a business, and must be planned and monitored closely.
Positive or Negative Cash Flows are not necessarily good or bad on their own. What matters is the context – is the company growing, struggling, etc?

16. Entrepreneurial opportunities
Attractive, timely, durable, provide value

17. Defined
Situations in which new goods, services, raw materials, and organizing methods can be introduced and sold at a price that is greater than their cost of production (Casson, 1982)
An opportunity that is attractive, durable, timely, and grounded in a product or service that delivers value to a customer (Armstrong)

18. Run a prison! Timely? Durable? Attractive?
Grounded in a product or service that delivers value to a customer?

19. Pet rocks! Timely? Durable? Attractive?
Grounded in a product or service that delivers value to a customer?

20. Type writer repair! Timely? Durable? Attractive?
Grounded in a product or service that delivers value to a customer?

21. “Handheld electronic device”
Timely?
Durable?
Attractive?
Grounded in a product or service that delivers value to a customer?
Apple Newton Message Pad,

22. Takeaways
You must meet all criteria (attractive, timely, durable, provides value) to ensure quality of opportunity
Experiment, prototype, and protect intellectual property (see Apple Newton example)
Prepare for imitators – what is unique about your offering?

23. Opportunity Recognition, Shaping and Re-shaping

24. Idea-to-opportunity transition
Seed of idea
Idea
Viable
Opportunity
Passion
Professional
Experience
Idea
Multiplication

25. Designing a better consumer experience
Observation
Brainstorming
Rapid prototyping
Refining
Implementing

26. Government Regulations
The opportunity space
Global Business Environment
Competitors
Suppliers
Your Company
Customers
Competitors
Competitors
Government Regulations

27. Target Audience Categories
The customer
Target Audience Categories
Primary
Target Audience
Secondary
Target Audience
Tertiary
Target Audience
Common Demographic/Psychographic Categories
Demographics
Psychographics
Age
Gender
Household Income
Family Size/Family Lifecycle
Occupation
Education Level
Religion
Ethnicity/Heritage
Nationality
Social Class
Marital Status
Social group (e.g., white collar, blue collar, etc.)
Lifestyle (e.g., mainstream, sexual orientation, materialistic, active, athletic, etc.)
Personality Traits (Worriers, Type A’s, Shy, Extroverted, etc.)
Values (Liberal, Conservative, Open-Minded, Traditional, etc.)

28. Macro trends Important Trends over the Last 50 Years Trend Impact
Baby Boom Generation
Pampers, Rock & Roll, Television, Minivans, Real Estate, McMansions, etc.
Personal Computing
Internet, media on demand, electronic publishing, spreadsheets, electronic communication
Obesity
Drain on healthcare system, growth of diet industry, changes in food industry, health clubs, home gyms
Dual-Income households
Child care, Home services – landscaping, house cleaning, prepared foods

29. S-curve Market Adoption Time 1 2 3 Obsolescence Phase Competitors New
Enter
Market Adoption
Window of
Opportunity 1 2 3
Time

30. Setting prices

31. Reaching customer – the value chain
Example - Value Chain of Gourmet Chili
Base
Ingredients
Gourmet
Chili
Food
Distributors
Grocery
Stores
Beef,
Sauce, etc.
From Food
Distributor
80%
90%
85%
75% - -
30% - -
30%
25%
35% - - -
COGS 70 -
COGS 75
COGS 65
COGS 70
GM 20
GM 25
GM 10
GM 15
Example in Excel

32. Using the “business model canvas”
Business Models
Using the “business model canvas”

33. The business model canvas

34. 1 Customer Segments The Customer Segments Building Block defines
the different groups of people or organizations an
enterprise aims to reach and serve

35. Customer Segments Customer groups represent separate segments if:
Their needs require and justify a distinct offer
They are reached through different distribution channels
They require different types of relationships
They have substantially different profitabilities
They are willing to pay for different aspects of the offer

36. Examples of Customer Segments
Mass market
Niche market
Segmented
Diversified
Multi-sided platforms (or multi-sided markets)

37. 2 Value Propositions
The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment
The Value Proposition is the reason why customers turn to one company over another.

38. Examples of Value Propositions
Newness
Performance
Customization
“Getting the job done”
Design
Brand/status
Price

39. 3 Channels
The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition

40. Channels
Communication, distribution, and sales Channels comprise a company's interface with customers.
Channels are customer touch points that play an important role in the customer experience.

41. Channels Channels serve several functions, including:
Raising awareness among customers about a company’s products and services
Helping customers evaluate a company’s value Proposition
Allowing customers to purchase specific products and services
Delivering a Value Proposition to customers
Providing post-purchase customer support

42. Channels – Key Questions
Through which Channels do our Customer want to be reached?
How are we reaching them now?
How are our Channels integrated?
Which ones work best?
Which ones are most cost-efficient?
How are we integrating them with customer routines?

43. Channel phases Awareness: raise awareness about products and services
Evaluation: help customers evaluate product
Purchase: how do customers purchase?
Delivery: deliver the value proposition to the customer
After sales: provide post-purchase customer support

44. 4 Customer relationships
The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments
Driven by customer acquisition, retention, and upselling

45. Categories of customer relationships
Personal assistance
Dedicated personal assistance (bankers for high net worth individuals)
Self-service (no direct relationship with customer)
Automated service (personal online profiles give access to personalized services)
Communities (especially online)
Co-creation (e.g., Amazon’s customers write reviews, eBay’s seller ratings)

46. 5 Revenue Streams Transactions from one-off customer payments
Recurring revenues from ongoing payments for continuous delivery of value proposition or post-purchase consumer support

47. Revenue Streams come from
Asset sales – sales of a physical product
Usage fee – minutes on phone, nights in hotel room
Subscription fees – selling continuous access to a service
Lending/renting/leasing – temporarily grant exclusive access to an asset
Licensing – give customers permission to use protected IP
Brokerage fees – intermediation services
Advertising – fees for promoting product, service, or brand

48. 6 Key resources
Allow the business to create and deliver the value proposition, reach customers, maintain relationships, and generate revenues
Physical, financial, intellectual, human ; owned, leased, or borrowed

49. 7 Key activities Actions a company must take to be successful
Microsoft – develop software, Facebook – develop platforms, Dell – supply chain management, McKinsey – problem solving
Categories: production, problem solving, platform/network

50. 8 Key partnerships
Alliances to optimize business models, reduce risk, or acquire resources
Four types
Strategic alliances between non-competitors
Cooperation between competitors
Joint ventures to develop new businesses
Buyer-supplier relationships to ensure reliable supplies

51. 9 Cost structure
The costs associated with the other 8 pieces of the business model
Approaches: cost-driven versus value-driven
Characteristics: fixed, variable, economies of scale, economies of scope

52. Chapter 5 Entrepreneurial Marketing
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

53. Entrepreneurial Marketing
Definition of marketing by the American Marketing Association:
an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders.
Marketing practices vary depending on the type of company and the products and services it sells.
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

54. Entrepreneurial Marketing
Why Marketing is Critical for Entrepreneurs
Because no venture can become established and grow without a customer market;
Because it is difficult and expensive to bring new products and services to market;
To differentiate product or service to customers makes the company distinctive and valuable;
Companies must be able to switch marketing gears quickly to attract new customer segments.
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

55. Entrepreneurial Marketing
Entrepreneurs Face Unique Marketing Challenges
limited resources in financial, managerial, and time;
limited market information;
decision-making inclined to be muddled by personal biases and beliefs;
poorly established relations with multiple audiences.
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

56. Entrepreneurial Marketing
Acquiring Market Information
Marketing research could cover information such as:
-Product attributes important to customers;
-Possibility of customers’ buying willingness by marketing behaviors;
-Market trend;
-The location of the customers’ preference.
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

57. Entrepreneurial Marketing Acquiring Market Information
Two basic types of market data
Primary data
Data you collect yourself
Limitations of primary data
Secondary data
Economical and usually used to collect baseline information
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

58. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Market dynamics
Entrepreneurs are more successful in large and growing markets
Large markets amortize the fixed costs of getting started over a larger number of units
It’s easier to sell into rapidly growing markets
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

59. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Market dynamics
The performance of product adoption follows an S shape
Initially, need a large amount of effort to achieve small improvements in product performance
Then performance improvements accelerate and small efforts can lead to large improvements
Later, must make large efforts to achieve small improvements
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

60. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Market dynamics
Established firms rarely compete with entrepreneurs to develop new products on the early part of the S curve
The new product usually begins with inferior performance that hurts the company’s overall performance
Managers of established companies believe they can always improve the performance of their existing products to compete with new products
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

61. Entrepreneurial Marketing
Marketing Strategy for Entrepreneurs
A company’s marketing strategy must closely align with its resources and capabilities;
Segmentation, targeting, and positioning are key marketing dimensions that set the strategic framework.
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

62. Entrepreneurial Marketing
Marketing Strategy for Entrepreneurs/the Marketing Mix
promotion
Product
Strategy
place
Pricing Strategy
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©

63. Entrepreneurial Marketing
Marketing Skills for Managing Growth
Understanding and Listening to the Customer
Building brand awareness and building brand equity
Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. ©