1 Countdown to Launch Startup 101 Patrick Vernon Clinical Assistant Professor, Executive Director Center for Entrepreneurial Studies ©2013 Patrick Vernon

2 Agenda Value Network VC’s Razor Value Proposition

3 Your startup idea

4 You

5 You and your idea

6 I Have a Dream! Is it a good idea? Is it feasible?

7 Your Startup Idea

8 Value Network Customer Competitor Customer Partner Partner Partner Competitor Supplier Customer Your Startup Idea Competitor Service Provider

9 Value Network Customer Competitor Customer Partner Partner Partner Competitor Supplier Customer Competitor Service Provider Your Startup Idea

10 Value Network Customer Competitor Partner Partner Service Provider Customer Your Startup Idea Partner Customer Supplier Service Provider Partner MarketIndustry Competitor Customer Supplier

11 Value Network Customer Competitor Partner Partner Service Provider Customer Your Startup Idea Partner Customer Supplier Service Provider Partner MarketIndustry Competitor Customer Supplier

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13 Agenda Innovators’ Dilemma VC’s Razor Value Proposition

14 18th century definition: “Bearing the risk of buying at certain prices and selling at uncertain prices” Entrepreneurship

15 PV’s Definition: “Taking good ideas, assessing the value they could create, and building an organization (people and systems) to distribute that value” Entrepreneurship

16 Taking good ideas, assessing the value they could create, and building an organization to distribute that value Begs the questions: what value can you create? And is it enough to sustain a new venture? Entrepreneurship Opportunity Risk

17 VC’s Razor Go or No-Go? Razor

18 Go or No-Go?

19 1.Value Proposition 2.Market Size 3.Return Potential 4.Team 5.Competitive Advantage 6.Business Model 7.Customer Pain VC’s Razor Defining Opportunity Mitigating Risk

20 VC’s Razor Mitigating Risk 1.What problem do I solve? 2.How big could this get? 3.What’s in it for me? 4.Why me? 5.Can I prevent copycats? 6.Can this sustain itself? 7.How bad might anyone want it? Defining Opportunity

21 Go or No-Go?

22 Value Proposition A statement explaining the value creating features of a platform of products Challenge: move away from “what is the idea“ toward “what value does it create”

23 How big could this thing get? 1.TAM (total addressable market) 2.Comparable products or ventures 3.Size of Cost Savings 4.Data from Existing Markets –Total Market Size –Market Penetration –Market Trends 5.Limitations Market Size TAM = # customers x price TAM = # customers x price

24 What is in it for us? Defining Success Comps Milestones Cash and Equity / ROI Exit Strategy Non-Financial Return Potential Return Potential

25 Why me? #1 way to mitigate risk (by far!) Track Record Skills and Attributes Connections Commitment Motivations Team

26 How do we prevent copycats? Intellectual Property Law Trade Secrets Partnerships and Exclusive Contracts Switching Costs Location, Location, Location Talent Network or Critical Mass Competitive Advantage

27 Can this venture sustain itself? Startup capital (including customer acquisition costs) Scalability Margins Revenue model Business Model

28 Will the dogs eat the dog food? Keyword: validation –#1 – paying customers –Non-paying (beta) customers –Sales of comparables or substitutes –Letters of Intent (LOIs) Go-to-Market Strategy Customer Pain

29 Iterative tool First pass is shallow, 2 nd pass is deeper… 1.What problem do I solve? 2.How big could this get? 3.What’s in it for me? 4.Why me? 5.Can I prevent copycats? 6.Can this venture sustain itself? 7.How bad might anyone want it?

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31 Value Proposition A clear and concise statement that explains the value creating features of a platform of products Individual products will also have their own value propositions The venture needs an overarching VP Ideally includes tangible results that customers would get from using products

32 Defining “Value” Creatingvs.Destroying Freedomvs.Corruption Peacevs.War Healthcarevs.Disease Traffic Lawsvs.Accidents Insurancevs.Disaster Constructionvs.Destruction Food Productionvs.Soil Erosion Not the same “value” as used by your grocery store.

33 Getting From “Idea” Product Description Problem Being Solved For Exactly Whom? Specific Customer Pain Points to “Value Proposition”

34 WasteVentures is a web-based marketplace for posting, buying, and selling waste-related materials and services “eBay for landfills” WasteGrid provides the global Waste industry what Electronic Trading Systems has provided Wall Street. Product Description Problem Being Solved For Exactly Whom? Specific Customer Pain Points Idea to VP

35 Extreme inefficiencies in waste disposal result in: –Loss of millions in potential new revenue –Unnecessarily cost on excessive waste disposal, often including expensive and divisive political battles to create new landfills Product Description Problem Being Solved For Exactly Whom? Specific Customer Pain Points Idea to VP

36 Municipalities Waste disposal contractors Product Description Problem Being Solved For Exactly Whom? Specific Customer Pain Points Idea to VP

37 Economy and real estate values are down -> lower sales and property tax revenues Recycling programs have helped, but landfills continue to fill Less space for new landfills Divisive political battles for new landfills Product Description Problem Being Solved For Exactly Whom? Specific Customer Pain Points Idea to VP

38 Value Proposition “WasteVentures provides an online marketplace, like eBay for landfills, enabling municipalities to save $XX (or x%) in excessive disposal fees while raising $X in new tax revenues to replace shrunken sales and property tax income.”

39 Getting From “Idea” Product Description Problem Being Solved For Exactly Whom? Specific Customer Pain Points to “Value Proposition”

40 Feasibility Key Dates 8/21 – Kickoff + Network 8/26 – VC Network 8/28 – Idea Roundtable 9/4 – Idea Roundtable 9/9 – MBA Network 9/18 – Idea Roundtable 9/23 – Startup Network 10/6 – Application 10/8-10 – Interviews 10/11 – Admit Notification 10/21 – Class Starts

41 Countdown to Launch Startup 101 Patrick Vernon Clinical Assistant Professor, Interim Executive Director Center for Entrepreneurial Studies ©2012 Patrick Vernon