Why Are Some Entrepreneurs

Doomed to Failure?

Elton B. Sherwin

University of San Francisco

2014

Do’s and Don'ts

• Getting Started

• Superbasics

• Your Career and Leadership Skills

• Tips

• Two Common Fundraising Mistakes

• Advice From Hollywood

Starting a New Business

Steps #1 and #2

• Recruit Board of Advisors

– 3 to 8 people, informal

– 1 x-Founder, 1 technology, 1 marketing, 1 industry

– Coffee/lunch once a month

• No contracts, no group meetings

• CoFounders

– 1 or 2 people

– Passionate, but with different skills

Avoid Kamikaze Co-founders

Some people enjoy

• Making life hard

• Cheating

• Lying

• Breaking the law

• Gossiping

• Withholding information

Any ONE of these will cause you great pain

Don’t Start a Business with People You Don’t Like

Work with People You Like

• You will be spending a lot of time with them

• Successful founding teams like each other 80% of the time

Think Baseball, Not Tennis

Entrepreneurship is Not a Solo Sport

Takes a team to refine the product

– The idea is important, BUT

– Original idea is rarely the winning product

One person is rarely great at:

– Finance, Marketing, Product management and technology

MSG: Build a Team First

Your Roster

Season One

If no one joins your team:

think about

joining someone else's team

Advisors (minimum: 3) ___ Industry expert ___ Technology expert ___ Finance/legal expert ___ Sales/marketing expert ___ Founder, another company ___ Someone famous Co-founders (minimum: 1) ___ Technology ___ Marketing/Product management ___ Finance/Administration

Tips for Finding Your Dream Team

Back to Starting Your Own Team

Season One

Advisors (minimum: 3) ___ Industry expert ___ Technology expert ___ Finance/legal expert ___ Sales/marketing expert ___ Founder, another company ___ Someone famous Co-founders (minimum: 1) ___ Technology ___ Marketing/Product management ___ Finance/Administration

Your Roster

Season One

Season Two

Advisors (minimum: 3) ___ Industry expert ___ Technology expert ___ Finance/legal expert ___ Sales/marketing expert ___ Founder, another company ___ Someone famous Co-founders (minimum: 1) ___ Technology ___ Marketing/Product management ___ Finance/Administration

Board of Directors (min: 2)

___ Rich person

___ Rich person

___ Someone loyal to you

___ Someone loyal to you

Early employees

___ Developers

___ Product management

___ Admin/Office manager

Work on Things You Are Interested In

• It is not all about profit.

God gave you interests and passions for a reason

Research the Competition

I see entrepreneurs who have not Googled their business ideas or don’t know who their competitors are

It Is Shocking!

I see entrepreneurs who have not Googled their business ideas

• Sometimes invent a wheal 20 years after someone else.

• Don’t know about other’s failures

• Don’t know about other’s successes

• Don’t know who is friend or foe

• Miss opportunities to partner Forget to use

Research the Competition

• Investor presentations

• Customer presentations

• Videos

• Marketing materials

• Open jobs

• Technical presentations & white papers

• All documents ending with: .pdf; .ppt; and .mp3

Summary of Getting Started

• Work with people you like to work with and who aren’t pathological

• Work on stuff you are interested in

• Research the competition

• Recruit:

– Board of Advisors

– Cofounder

SuperBasics of Business

Sometimes even experienced people forget

Need Customers

Before you build your business ask prospective customers: • If we build this product/service would you buy it? • How much would you pay?

Early Customers

Early customers:

• Difference between success and failure

• Clarify goals

• Credibility with investors

• Fund development

Make Money

• Positive gross margin (usually above 40%)

SuperBasic Summary

Find Customers

Make Money

Your Career and Leadership Skills

• Work in a restaurant before you start one – Run a restaurant before you buy one

– Join a team before you start one (usually)

• Write down your best idea every day – In Notes or Dropbox

• Try different jobs – Which position is right for you: Coach, pitcher,

second base or right field? Which is right for you?

– Babe Ruth started as a pitcher

• Join a winning team

Two Common Fundraising Mistakes

“Uncompelling” PowerPoint Presentations

No compelling reason to invest

Look at the Outline in The Silicon Valley Way

The complete business plan presentation is attached in the appendix and all The Silicon Valley Way worksheets are available on Slideshare

No Elevator Pitch

• Start with an elevator pitch – VCs make up their minds in the first 30 seconds

– The first three sentences really matter

– Don’t start with Bios

• It should be COMPELLING – One to three sentences

– Practice it everywhere

– When people offer to invest in the grocery store checkout line: You have a compelling story

Examples of Effective First Sentences

“GE has asked us for 1,000 units and we are here today to raise money for our…”

“Our applet is currently one of the ten most downloaded applications on the iPhone…”

“In our lab we have successfully used sunlight to create hydrogen and…”

Should You Raise Money?

• Not every business should be financed by venture capital

• Some businesses should be “bootstrapped”

• Hard to be successful with low margin business

Advice from

Americans Watch 16,000 hours of Television

(before college)

We Learn

On a great team: • Everyone is an extrovert • Everyone interrupts • Everyone talks without thinking

Leaders

• Take bold action – Risk everything daily

• Plan on the fly – Group decisions are a waste of time

• Do it all themselves – Do it their way

• Don’t tell anyone the plan

• Ignore the law

American Leadership “Training”

Risk everything

Do it yourself

The law is irrelevant

• Risk everything

• Do it yourself

• Ignore the law

The ABC’s of Success

A. Think boldly – be innovative

B. Take frequent, small steps

– Minimize risk

– Be frugal

C. Play well with others

For more information, see: Len Schlesinger, Action Trumps Everything

Success

Product Idea

Founding Team

– Experience

– Skills

– Teamwork

– Leadership

Myth

90%

10%

Reality

30%

70%

Myth

All about having great idea

Reality

Joining or assembling the right team

Conclusion

• Focus on more than the idea – Usually 6 to 50 companies have similar ideas

• Thoroughly research “competitors” – Consider joining a winning team

• Don’t let failure discourage you – Winners have lots of failures

– Failures get discouraged and give up

• Be reluctant to borrow money – Personally and professionally

Next Steps

Research the Competition

• Investor presentations

• Customer presentations

• Videos

• Marketing materials

• Open jobs

• Technical presentations & white papers

• All documents: .pdf; .ppt; mp3, etc.

• Recruit Board of Advisors

– 3 to 8 people, informal

– Don’t need a group meeting; no contract

– 1 x-Founder, 1 Tech pro, 1 marketing type

– Coffee/lunch once a month

• CoFounders

– 1 or 2 people

– Passionate, but with different skills

Appendix