Title: January 2005
1January 2005
Why Entrepreneurship?
Douglas Abrams
2Why entrepreneurship?
- Why entrepreneurship?
- Lets fail!
- So how?
3What is an entrepreneur?
- A person who organizes, operates, and assumes the
risk for a business venture. - From Old French, from entreprendre, to undertake.
- Enterprise An undertaking, especially one of
some scope, complication, and risk. - Enterprising Willingness to undertake new
ventures initiative "Through want of enterprise
and faith men are where they are, buying and
selling, and spending their lives like serfs"
(Henry David Thoreau).
4What are the qualities that make a successful
entrepreneur?
- Intelligent
- Creative problem-solving skills
- Self-starting
- Committed
- Motivated
- Risk taking
5What about luck?
- Luck by definition is random
- In the long run, luck evens out for everyone
- Luck plays some role in success but much less
than you imagine - Dont wait to get lucky make your own luck
- Chance favors the prepared mind
6Why is entrepreneurship important to Singapore?
- The development of a thriving entrepreneurial
sector in Singapore is not just an economic
"nice-to-have." - In the knowledge- and innovation-driven
globalized economy of the 21st century it is a
competitive necessity. - In 2000, venture backed companies generated 736
billion in revenues and have created 4.3 million
new jobs, so the small number of venture backed
companies account for 3.3 of total jobs in the
US and 7.4 of GDP. - Singapore itself is the product of
entrepreneurship
7Why is entrepreneurship important to you?
- What type of life do you want to have?
- An average life or an extraordinary life?
- What do you want to do with your life?
- Create something of value from nothing or just
make money? - Do you want to
- Make a difference?
- Change the world in some way?
- Leave something of value after you are gone?
8As an entrepreneur, you can
- Have an extraordinary life
- Create something of value from nothing
- Become rich
- Make a difference
- Change the world in a positive way
- Leave something of value behind after you are gone
9Obstacles to entrepreneurship in Singapore
- Lack of entrepreneurial skills
- Attitudes toward risk
- Cultural attitudes toward failure
- Entrepreneurial success is difficult
10Entrepreneurship can be taught
- Skills and talent are distinct
- Talent is innate everyone can improve their
skills - Skills can be developed and improved through
learning, training and practice - No matter what your innate level of talent, you
can improve your performance by enhancing your
skills
11How can entrepreneurship be taught?
- Simulation - learning through doing
- Like learning to play a musical instrument
- How would you like to learn to swim by reading up
on swimming theory and then being thrown in the
pool?
12TR teams swept 2004 business plan competitions
13Winning teams came from all courses
14TR teams received more than S200,000 in 2004
Total prize money and seed funding of S215,357
15This could be you - DermaTech
- First Prize Winner Lee Kuan Yew Global Business
Plan Competition 2004 - Semi-Finalist Wharton Business Plan Competition
2004 - Semi-Finalist and Youth Category Merit Award -
Start-up_at_Singapore 2004 Total funding S37,000 - Featured on CNA and in Straits Times
DermaTech - TBV3102
16This could be you World Indigo
- First Prize Winner Start-up_at_Singapore Business
Plan Competition 2004 S30,000 - Representing NUS in the 2nd Global
Start-up_at_Singapore Business Plan Competition in
October 2004
World Indigo - TBV3102
17This could be you TMD and Help-to-Screen
- TMD- 2nd Prize in Lee Kuan Yew Global Business
Plan Competition 2004 US15,000 - Help-to-Screen Finalist in LKY 2004, 2nd Runner
Up and winner of 1st Youth Category Prize in
Start-up_at_Singapore 2004, Semi-Finalist Wharton
BPC S23,000 - Help-to-Screen has received a term sheet for up
to S40,000 in seed funding
TMD - TBV3102
Help-to-Screen - TBV3102
18This could be you Fresnville, Liaser, XtenSan
Frensville TR3002
- Frensville Semi-Finalist, NUS-Motorola BPC,
seed funding of S40,000 - Liaser 1st Place Winner, NUS-Motorola BPC,
Finalist, Start-up_at_Singapore S12,000 - XtenSan 2nd Place Winner, NUS Motorola BPC,
Semi-finalist, Start-up_at_Singapore, 2nd Place
Winner IIT Megabucks BPC S6,000
Liaser TR5105
XtenSan TR5105
19This could be you Geo-X and Apex Solutions
- Both TR3002 teams advanced to the final round
in Start-Up_at_Singapore Competition 2002/3 - Only eight out of 230 entrants went so far
- Apex won a total of 2500 in prizes in the
competition - Geo-X won 10,000 runner-up prize also a
finalist in the Mega-Bucks business plan
competition held in India
Geo-X TR3002
Apex Solutions TR3002
20This could be you - QuantaGen
- Won top prize of 30,000 in Start-Up_at_Singapore
Competition 2002/3 - Runner-up in the first Global Start-up_at_Singapore
Business Plan Competition, beating out
competitors from the top business schools in the
world, including Harvard, Wharton and Stanford - Team members include Heng Eu Jin an NUS Overseas
College student in Silicon Valley
QuantaGen TR3103
21This could be you Google
- 1995 Sergey Brin and Larry Page, two Stanford
University graduate students develop the
technology that will become the Google search
engine. - 1998 Sergey and Larry raise 1 million in
funding from family, friends, and angel investors
to start Google in a friend's Menlo Park, Calif.
garage with four employees. - 1999 Google raises 25MM from VCs and angel
investors - 2004 Google planning IPO at valuation of
US15-25 billion. Will sell 10-15 to public for
2 billion
22Founded by undergrads Dell and Microsoft
- Michael Dell, who founded Dell in 1984 with
1,000 when he was 19 years old. The company now
employs approximately 41,800 people worldwide and
reported revenues of 38.2 billion for the past
four quarters. - Bill Gates, who founded Microsoft in 1975 while
still an undergraduate at Harvard. Microsoft had
revenues of US32.19 billion for the fiscal year
ending June 2003, and employs more than 54,000
people in 85 countries and regions.
23Why entrepreneurship?
- Why entrepreneurship?
- Lets fail!
- So how?
24Lets fail the importance of failure for
innovation
25What is the relationship between risk and return?
- Risk and return are highly correlated
- You cannot increase return without taking more
risk - How much risk do you want to take?
- What type of life do you want to have?
- How much return do you require?
26Evolving cultural attitudes toward failure
Traditional
Failure is bad avoid at all costs
27Evolving cultural attitudes toward failure
Traditional
Current
Failure is acceptable leads to learning
Failure is bad avoid at all costs
28Evolving cultural attitudes toward failure
Traditional
Current
Future
Failure is desirable necessary for innovation
Failure is acceptable leads to learning
Failure is bad avoid at all costs
29The rate of technological change is increasing
exponentially
30The rate of innovation is increasing
31Ever-shortening product cycles require more
innovation
- Phonograph - invented in 1877 by Thomas Edison
- 33 rpm/45 rpm discs - 1948 (75 years)
- Cassette tapes - 1970s (25 years)
- Compact disc - 1990s (20 years)
- MP3 files - 2000 (10 years)
32Innovation requires failure
- Failing is one of the greatest arts in the
world. One fails toward success - Charles
Kettering - founder of Delco and inventor with
200 patents - An inventor fails 999 times, and if he succeeds
once, hes in. He treats his failures simply as
practice shots. - Charles Kettering - Failure is the opportunity to begin again, more
intelligently - Henry Ford, who started Ford
Motors after failing at 2 previous ventures - The fastest way to succeed is to double your
failure rate - Thomas Watson, founder of IBM - Success is a lousy teacher. It seduces smart
people into thinking they cant lose. - Bill
Gates, founder of Microsoft.
33Sometimes failure itself is innovation
- Post-It notes - failed glue
- Scotchgard - spilled on shoes
- Combat - failed additive for cattle feed
34The essence of risk is failure
35Failure is necessary to achieve success
36Why are people afraid to risk failure?
- Fear of the unknown - Why take a chance?
- Fear of looking stupid - What will they think?
- Judging too quickly - That will never work
- Attachment to the old - We have always done it
this way - Attachment to past successes - This approach got
us here
37Do not let fear stop you
- Why are you afraid to try?
- The outcome must be important to you otherwise
no fear - This makes you afraid to fail
- If you do not try, then you have already failed
- You miss 100 of the shots you do not take -
Wayne Gretzky - Fear causes you to fail at the things that are
most important to you
38Conquering your fear
- Everyone is afraid
- It is OK to be afraid
- Dont try to eliminate your fear
- Work through your fear
39If you dont fail, you are not trying hard enough
- Most learning and progress are achieved through
failure - The top scientists in the world fail more than
average scientists - Everyone who is now highly successful took
significant risk to get there - We don't regret the things that we do and fail
at we regret the things that we fail to do. - A life lived in fear is a life half lived
40Success from failure Albert Einstein
41What makes Silicon Valley different?
- A different attitude toward failure
- Many Silicon Valley VCs will only invest in
entrepreneurs who have already failed - I got my education on the mean streets of
Silicon Valley, where I got to see how huge
mistakes are made. Knowing what doesnt work is
perhaps more valuable than knowing what should
work. Failure is just tuition. If you are in a
failing start-up, take notes. - successful
start-up founder
42Only do things that are difficult to do
- Everything that is worth doing is difficult
- If it is easy, it is probably not worth doing
- You should never hesitate to do something
difficult
43Why entrepreneurship?
- Why entrepreneurship?
- Lets fail!
- So how?
44From idea to business model
- How do we create value?
- Who do we create value for?
- What is our source of competence/advantage?
- How do we differentiate ourselves?
- How do we make money?
- What are our time, scope and size ambitions?
Business model developed by Michael H. Morris,
Ph.D
45Key steps to success
- Develop an innovative product - Innovation
- Choose the right market - Customers
- Create sustainable competitive advantage -
Competitors
46Product or service?
- Odds of starting a company that made the Inc 500
list of fastest growing young private companies
from 1982 to 2000 - Biotech 265 times higher than restaurant
- Software 823 times higher than hotel
- Choosing the right opportunity is the most
important determinant of success
47High risk, low return?
- Product-based start-ups
- High risk of failure
- High return if successful
- Service-based start-ups
- Higher risk of failure
- Lower return if successful
- Choose an industry favorable to start-ups
48Evaluating new ideas
- Original?
- Feasible?
- Marketable?
- Profitable?
49What problem are you solving for customers?
- You need to have a value proposition for
customers - Start a business with a product that meet a real
customer need - Develop a solution to the customers problem
- Meet customer needs better than competitors
- Evaluate customer preferences traditional
market research ineffective listen to customers
50Identify, analyze and strategize your market
- Identify market opportunity
- The niche that will make you rich
- Assess and analyze market
- Competitors - dont say you dont have any
- Customers
- Develop marketing strategy
- Differentiation that offers superior customer
value - Cost leadership
51Create sustainable competitive advantage
- Competing with established companies
- Protect your intellectual property
- Create barriers to entry
52Writing a model business plan
- Concept
- Market opportunity strategy
- Value proposition and sustainable competitive
advantage - Products and services
- Team
- Financials, including pro-forma projections and
valuation, total funding, funding required,
equity offered and exit strategy
53Begin with an executive summary
- The executive summary contains the key points of
your business plan - This is all that most investors will read
- Approximately 2-5 pages long
- Define your business
- Why and how it is going to be a success
54A value proposition
- For (target customers)
- Who are dissatisfied with (the current market
alternative) - Our product is a (new product category)
- That provides (key problem-solving capability)
- Unlike (the product alternative)
55Amazon.coms value proposition (circa 1995)
- For people who buy books
- Who are dissatisfied with shopping in bookstores
- Our product is an on-line bookstore with millions
of titles - That uses the Internet to transform book buying
into the fastest, easiest, and most enjoyable
shopping experience possible. - Unlike Barnes Noble, Waldenbooks and other
brick-and-mortar bookstores
56Product, team and financials
- Describe the products and services in only enough
detail for investors to understand why they
should be interested - The team is the most important thing
- Go beyond the management team
- Financials
- Business model
- Projections and valuation
- Funding required and equity offered
- Exit Strategy and ROI
57Contact us
- Douglas Abrams
- dka_at_parallaxcapital.com
- necadk_at_nus.edu.sg
- 65-9780-5381 (hp)