THE BEHAVIOURS OF PASSIONATE
ENTREPRENEURS
?
?
?
The first sale
WHAT PREDICTS SUCCESS?
1 Planning doesn’t predict
Source: Lange, Mollov, Pearlmutter, Singh and Bygrave (2007)
“new ventures launched with formal written business plans do not outperform ones
launched without them.”
Business Plan?
Source: Bhide (2000)
21%
79%
Yes!No!
No!
No!
No!No!
No!
Doh!?!
1 Opportunity Predicts
Source: Shane (2009)
Industry Number of Inc 500
firms
Firm starts Percent of Starts
Pulp mills 6 33 18.182
Computer and office equipment 99 2359 4.197
Guided missiles, space vehicles, parts 2 60 3.333
Nonferrous rolling and drawing 14 581 2.410
Railroad car rental 3 136 2.206
Measuring and controlling devices 49 2482 1.974
Paper mills 3 125 2.400
Search and navigation devices 6 310 1.935
General industrial machinery 26 2173 1.197
Photographic equipment and supplies 7 646 1.084
Manifold business forms 3 281 1.068
Household appliances 4 390 1.026
Electrical industrial apparatus 11 1080 1.019
Legal services 10 129207 0.008
Eating and drinking places 34 494731 0.007
Carpentry and floor work contractors 4 66383 0.006
Real estate operators 5 90042 0.006
Hotels and motels 2 39177 0.005
Painting and paper contractors 2 43987 0.005
Retail bakeries 1 22165 0.005
Grocery stores 5 112473 0.004
Used merchandise stores 1 24442 0.004
Automotive repair shops 5 124725 0.004
Beauty shops 3 79081 0.004
Residential care 1 27710 0.004
Videotape rental 1 27793 0.004
INDUSTRY CHOICE VS. INC 500
Computer and Office Equipment
(1/25)
Eating and Drinking Places
(1/14,550)
Source: Shane (2009)
Computer and office
equipment
582 succeed
Eating and
drinking places
1 succeeds
Source: Shane (2009)
Correlation between number of
startups in an industry and failure rate
0.77
Source: Shane (2009)
2 Team Predicts
13.1%
54.2.%
Source: Bruderl, et al. (1992)
+
>
5-YEAR FAILURE RATE?
90%
10%
1 founder
2 or more founders
Source: FinScope (2010)
TEAM SIZE SOUTH AFRICA
3 Advice seeking predicts
45%
80%
No advice
Source: Watson (2007)
Advice from
accountants 3+/yr
3-YEAR SURVIVAL RATE
Source: Pretorius & Le Roux (2011)
SUCCESSIVE ENTREPRENEURSHIP AND NO LEARNING
Source: Pretorius & Le Roux (2011)
4 Industry Experience
75%
25%
Source: Fresser and Willard (1990)
INC 100 ENTREPRENEURS WITH INDUSTRY EXPERIENCE
Source: Bruderl, et al. (1992)
25.5 %Industry
Experience
No Industry
Experience54.5 %
5-YEAR SURVIVAL AND INDUSTRY EXPERIENCE
Strong Team
(1) 3 + members
(2) 50% joint experience
(3) 3 year industry experience
(19%)
(73%)
Source: Eisenhardt & Schoovenhoven (1990)
5 Traction
“I'd just go sell it. I don't believe in market research. Somebody once told me the only thing you need is a
customer."
Source: Sarasvathy (2007)
Source: Reynolds (1987)
Source: Bhide (2000)
82%
8%
10%Somewhat Involved
Main Salesperson
Heavily Involved
FOUNDERS INVOLVEMENT IN SELLING
6 Avoid Pre-mature Scaling
Avoid
Pre-mature Scaling
AMAR BHIDE
Idea BuildNo
Facts
DON’T SKIP THE ASSUMPTION TESTING
paulshawsmithscientific business strategy
paulshawsmithscientific business strategy
of high growth internet start upsfail due to premature scaling.
Source: Start Up Genome Report(2011)
times faster than startups that scale prematurely
Startups that scale properly grow about
Source: Start Up Genome Report(2011)
8 Community
OBSERVATIONAL LEARNING
Mayans
Hutu
Greeks
Romans
Egyptians
Vikings
Khoisan
Persians
TRIBES
YPO
MBAs
Gamers
Sports centers
The Sharks
KIPPRhodes Rowing
Music Scools
TRIBES
7000 inc 500 companies assessed
9 best performers chosen for a study
4 belonged to YPO
THE BREAKTHROUGH COMPANY
THE OLD BOYS CLUB
“While some attribute YC dominate to Paul Graham’s excellent selection of founders, or his ability to coach founder to raise every-higher valuations,
ort he branding for YC alumni, and their willingness to support, mentor and fund each other to success. In my humble opinion, this is what is really valuable about YC, and why it’s
difficult for other to copy.”- Dave McClure, 500startups founder
9 Values Predict
WHAT ARE VALUES?
How importance or precious
something is to a person
VALUES DEFINITION
Time:
How does a person spend their time?
Show
Energy:
What activities gets the person excited?
Show
Money:
How do they spend their money?
Show
DETERMINING VALUES
6:00 – Wake up
6:30 – Arrived at office
7:30 – Make up and did 2 shows
11:30 – Snack and phone calls
12:35 – Did another show with Barbra Streisand
14:00 – Money issues and meeting plan next week’s shows
19:50 – Tread mill
20:50 – Made dinner for Steadman
(almost never happens)
22:00 – Reviewed books for book club
23:10 – Lights out
HOW DOES OPRAH SPEND HER TIME?
WHAT GIVE OPRAH ENERGY?
You know you are no the road to success if you would do your
job, and not be paid for it.
HOW DOES OPRAH SPEND HER MONEY?
Time:
How does a person spend their time?
Business
Energy:
What activities gets the person excited?
Business
Money:
How do they spend their money?
Business
ELON MUSK VALUES
8:00: Heads to SpaceX’soffice in his Model S.
How does Elon Musk spend his time?
8:00: Morning phone calls. Marketing VP, journalists, job candidates or conference calls
10:45: Week status review on the Falcon 9
HOW DOES ELON MUSK SPEND HIS TIME?
12:30: Propulsion schedule meeting
12:30: Building operations meeting
HOW DOES ELON MUSK SPEND HIS TIME?
16:30 Visits the rocket factory
HOW DOES ELON MUSK SPEND HIS TIME?
19:00 Interviewed by Sarah Lacy from Pando Daily
Attends premier of a film he has produced
HOW DOES ELON MUSK SPEND HIS TIME?
WHAT GIVE ELON MUSK ENERGY?
HOW DOES ELON MUSK SPEND HIS MONEY?
Time:
How does a person spend their time?
Business
Energy:
What activities gets the person excited?
Business
Money:
How do they spend their money?
Business
RICHARD BRANSON VALUES
AMAR BHIDE
“A business has to be involving, it has to be fun”
“My general attitude to life is to enjoy every minute of every
day. I never do anything without a feeling of, ‘Oh God,
I’ve got to do this today”
WHAT GIVES RICHARD BRANSON ENERGY?
WHAT DOES RICHARD BRANSON SPEND HIS MONEY ON?
Time:
How does a person spend their time?
Business
Energy:
What activities gets the person excited?
Business
Money:
How do they spend their money?
Business
RICHARD BRANSON VALUES
AMAR BHIDE
Values predict your future!
AMAR BHIDE
Becoming a great investor
Business and investing
Family and friends
Baseball
AMAR BHIDE
Eating
Movies
Partying?
Outcome 1
Outcome 2
Outcome 3
AMAR BHIDE
Business
Career
Investing?
Outcome 1
Outcome 2
Outcome 3
10 Vision Predicts
Source: Barringer et al. (2005)
54%
80%
FAST
GROWTH
SLOW
GROWTH
GROWTH COMMITMENT?
• Your workload
• Extend to which preferred tasks would dominate
• Your employee well being
• Ability to control operations
• Independence from customers, suppliers, etc.
• Ability to survive a crisis
• Ability to keep up quality products and services
IF YOU SALES DOUBLED HOW WOULD IT IMPACT ON YOUR:
“We will create products that become
pervasive around the world… We will be
the first Japanese company to go into the
US market and distribute directly.. Fifty
years from now, our brand will be as well
know as any in the world.”
“I will build a motor car for the great
multitude… It will be so low in price
that no man making a good salary will
be unable to own one. The horse will
have disappeared from our highways,
the automobile will be taken for
granted.”
ACTION LIST
• Validate you have a real opportunity
• Find co-founders
• Get an advisory board and listen
• Don’t scale until P/M fit
• Get traction
• Join a community
• Value your business
• Have a vision
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