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Did you Know?

Some Facts about Entrepreneurs

• 65% did not start business as children or students, and did not have parents who were entrepreneurs

•75% learned skills they used in starting their business after age 21

•65% developed their idea by talking to or working with customers or partners

•70% did not have a vision for a “venture-scale” business, they just wanted to start something

Source: Inc 500 Founders’ Survey (1996)

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William Henry Gates “Bill”

The Myth:

• Bill Gates was the visionary who saw the future that all PCs would run Windows

• Built Microsoft into the biggest software company in the world by himself because of his vision and talent

The Facts:

• Bill’s family was very wealthy, and Bill went to a gifted high school for children of rich families• Bill learnt how to program a computer in high school (in the late 1960s, computers were very rear)• Bill did not “drop out” of Harvard, but rather took a “leave of absence” and could come back any time• Bill’s mother introduced Bill’s new company, Micro-soft, to the CEO of IBM• A few weeks after the introduction, IBM signed a deal with Bill for MS-DOS, allowing Bill to retain the IP

Source: Leap, Rick Smith

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Elliot ZuckerbergMark

The Myth:

•Mark was a visionary who saw online social networks as the future of online media

• Mark built facebook by himself from the beginning based on his vision and talent

•Through his strong vision and character, was able to raise millions of dollars easily for facebook

The Facts:

• Learned how to write computer programs since he was 10 years old• Worked on many “projects” including Facemash and The Facebook, many of which failed early, but he learned from them• Started The Facebook with just $2000• Had a strong core team who helped him grow facebook before getting external funding• Met Sean Parker who helped him raise money to grown business

Source: The Facebook Effect, David Kirkpatrick

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Charles Nicholas Branson Richard

Could you guess how he started Virgin Atlantic?

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Jameel Shah “Shah” Shoes

Have you heard about his story?

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Through the study of several such Entrepreneurs….

…Some patterns emerge

The Effectual Principles

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How differently do entrepreneurs think?

1. Bird in Hand Principle – Start with who you are, what you know and whom you know, and not necessarily with a predetermined goal or a pre-envisioned opportunity

2. Affordable Loss – Invest only what you can afford to loose

3. Crazy Quilt – Create an expanding network of self-selected stakeholders, each of whom commits only what he or she can afford to loose. Focus on partnerships rather than on competitors.4. Lemonade – Be open to surprises and leverage them. Treat them as useful inputs rather than hindrances to be avoided.

5. Pilot in the Plane – Co-create the future with things within your control and with self-selected partners

If you use these principles you can shape your future and transform your environment in ways that matter to you and your stakeholders.

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How differently do entrepreneurs think?

Who am I?What I know?

Whom I know?What can I do? Interactions Commitments

New Means

New Goals

Leverage Surprises

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How is this different from how Managers think?

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How is this different from how Managers think?

Effectual Causal

Start with your means

Focus on your downside risk

Leverage Contingencies

Form Partnerships

Control Vs Predict

Pre-set goals and opportunities

Expected Returns

Avoiding Surprises

Competitive analysis

Inevitable trends

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Having said that:

Effectuation

is Not an invention or thought of a great mind

is not a Recipe guaranteeing success

does offer Control in an unpredictable Business Environment

does offer Insights how expert entrepreneurs cope with uncertainty

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Why does this difference exist?

Effectual thinking helps gain control in an uncertain future!

You are dealing with Uncertainty…… not with Risk

Uncertainty: Is a situation in which the probability of a future outcome cannot be determined in advanced

Risk: Is a situation in which probability distributions can be assigned to potential outcomes

So: Before one could pen down a B-Plan, it would be better to eliminate most of the uncertainty and get it into the realm of Risk. Till ten effectual principle could guide you.

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So what is a B-Plan then?

A business plan is a map.

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So what is a B-Plan then?

What is the treasure?

How do we get tothe treasure?

Who else is after thistreasure?

How much is there?Is it worth the cost?

Who is on my crew?

What are the dangerson the route?

Do we have the skills?

You see… someone has explored this already – you are now making the map

(c) Sachidananda Benegal

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So what is a B-Plan then?

What is the qualitative goal we are targeting?

Do we have adetailed execution

plan?

Who is the competition?How strong are they?

What are the quantitativegoals for the venture?

Who is on theteam?

What are the other dangers that we

will face?

What are the skillsthey have?

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Are you ready to write a B-Plan?

Note: Planning your Business……Writing a B-Plan

Lets use the Business Model Canvas to do this!

Do we have a check list to be sure?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

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So, Lets use the Business Model Canvas?

Now, we are ready to go!

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How do we define a B-Plan?

A written document that formalizes the vision, goals, thoughts and plans for the business for

the near to medium term;

It details the kind of company, the businessesthe company wants to be in and where, the strategy, structure, the operations and the

finances

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For whom should we write a B-Plan?

• Investors• Advisors• Hiring• Key First Customers• Partners• Suppliers

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Who writes a B-Plan?

• CONSULTANTS?• TEAM?• CEO?

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What form should the B-Plan be in?

15 slides, 20min < 5 pages

25 pages

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What should one note when writing a B-Plan?

• A Pictures = thousand words• Be clear about:

• HOPE? • ASSERTIONS?

• LOGIC: • FACTS• INFERENCE• IMPLICATION

• Don’t Appear:• Ignorant (RoI)• Consistently Inconsistent• Defensive• Arrogant

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What elements should a B-Plan possess?

Who are we?

Who? What? Where? Why? How Big & Fast?

How will we fix it? Knock socks off others?Customers: reach, retain & support?Costs & Pricing? Support/Service?Partners: Co-opt eco-system players?Money: How much, for what and what will Be made?

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What components should a B-Plan possess?

• Cover Slide – Business Positioning• Market – The Need and What customers have it• Solution – Product/Service, Core Benefits, IP• Competition Position – Who’s the competition & Defense• Marketing/Sales/Support – Channels and Skills• Business Strategy – How will you grow beyond launch• Financial Projections – Cash-flows, P&L, B/S• Funding Sought – How much and for what• Management Team – Complementary? Well rounded?• Milestones – Launch, next funding, break-even• Exit Strategy – IPO? Acquisition?

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Have you put milestones in your B-Plan?

• What are the planned outcomes, say monthly?• What are the activities required to drive these outcomes?• How much will these actions cost?• How much time will these actions take to execute?• What are the dependencies – people, infrastructure,..• Work towards “Fundable Events”

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What are the typical funding sources?

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Which is a better funding sources?

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THANK YOU

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References:• effectuation.org• Thomas Blekman – Effectuation 5 principles• Business Model Generation – the book• Bad to Worse – Greg Fisher• The Entrepreneurial Mindset (Part I) - Chris Zobrist