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SMMC_G5_ENT‐2 Introduction to Entrepreneurship, G5 (IBS4 Elaine, IBS3…

- - - - myth2: Gender and Race
        
        Entrepreneurs are all white men :red_cross:
        
        In the United States, about 38% of businesses are founded by women, and 36% are founded by minorities
        
        According to the research, there was no significant difference in entrepreneurial outcomes among companies after obtaining funding and resources
      - myth3: Personality
        
        Entrepreneurs have certain personality, such as overconfidence :red_cross:
        
        Overconfidence influences whether people start a business, but not whether they succeed
        
        "Passion" and having a "locus of control" personality are associated with entrepreneurial success
      - myth 1: Age
        
        Young entrepreneurs without family burdens are most likely to succeed :red_cross:
        
        Most successful entrepreneurs reach their peak between the ages of 45 and 52
    - - Young, college dropouts, white men, and technical geniuses
        
        These may influence investors' judgments and find these types of young entrepreneurs
      - e.g. Bill Gates, Mark Zuckerberg and Steve Jobs
  - - - first-year failure rate: 21.5%
      - Ten-year survival rate: 33.5%
    - - Of the 499 ventures, more than 350 had a "zero" return
      - The average return is about 2.2 times
        
        Most companies fail, only a few offer extremely high returns (hundreds of times)
    - - e.g. Invent new devices to address unmet medical needs: 5%-10%
      - e.g. A proven successful franchise business: 80%-90%
  - - - Goal-oriented entrepreneurship
        
        e.g. Laura Overdeck founded "Bedtime Math"
        (education improvement)
        
        e.g. Nate Hodge founded "Raaka Chocolate"
        (personal passion)
        
        e.g. Carl Dietrich founded "Terrafugia" (vision: bring flying cars to consumers)
      - To make a living
        
        e.g. roadside vendors(small scale)
  - - - Long-term positive cash flow
    - - LTV>CAC
        
        LTV: lifetime value
        
        Service fees, usage time, and retention rate
        
        CAC: customer acquisition cost
        
        Selling and marketing expense
      - Improve retention rate (reduce churn rate) or reduce customer acquisition cost
    - - Q(p−c)>f
        
        p: price
        
        c: cost
        
        f: fixed costs
        
        Q: quantity
      - increase quantity, increase gross profit or control fixed costs
- - - - Existing technological trajectory
      - Making incremental improvements for the existing customer base
      - Primary revenue stream:star:
    - - Discontinuous technology
      - Entirely new geographic or niche markets
      - Sustaining through long-term technological shifts
  - - - Google：20% time
    - - Tech giants like Microsoft, Intel, or Alphabet’s X focus on disruptive "Moonshot" technologies
    - - LinkedIn offers "sabbaticals" to allow employees to pursue new ideas
  - - - Established companies continuously improve product performance to meet the demands of high-end customers
    - - Entering the market from the low end, these innovations initially underperform but improve rapidly, eventually displacing the established leaders
  - - - Sharing technology or market access with other companies
        
        Partnerships between Tesla and Toyota, or with Airbnb
    - - A dedicated subsidiary makes equity investments in startups, serving as a bridge to acquire future technologies
    - - Acquiring startups to gain talent and technology or to eliminate potential competitors
        
        Facebook’s acquisition of Instagram
- - - - Average return on investment: 2.2 times
    - - generates 86% of the total value
    - - Most frequent outcome return of 0%.
  - - - for example
        
        Employees of Fairchild Semiconductors left due to the inertia of large corporations and founded Intel
  - - - Small businesses startups create 67% of private sector jobs in the US.
    - - High-tech startups account for 37% of job creation
  - - - Valuation>US1billion
        
        Less than 0.2% of companies can be unicorns
    - - consumer orientation (B2C)
        
        for example
        
        Uber or Blue Apron
    - - 65% of these valuations on paper
    - - IPO
      - Acquired by a large corporation
- - - - Tackles hardest problems (remote/poor)
        
        hard to scale
      - Social goals add real costs (underserved populations)
      - Strategies
        
        Franchising/licensing to expand geographically
        
        Partner with last-mile orgs (Red Cross, YMCA)
        
        Policy advocacy (e.g., Teamlease labor law reform)
    - - Traditional VC: 5-7yr exits don't match slow social growth
      - Need patient capital sources
        
        Foundations (Gates, Ford)
        
        Government grants
        
        Impact funds (Omidyar, Khosla Impact, Acumen)
      - Traditional VC possible if: large market + fast scaling
      - Align business maturity timeline with investor expectations
  - - - Consumer priority: Design > Price > Quality > Mission
      - Brand personality + recruitment/retention tool
    - - Lead with product, mission second
      - Mission must be authentic/believable
      - Simple implementation("buy one, give one")
        
        e.g. Warby Parker: Buy-one-give-one glasses (>1M donated)
        
        e.g. TOMS: Buy-one-give-one shoes
- - - - be the next Google, Uber, Facebook, or be bought by them
    - - Around 2% receive venture capital
  - - - in home
        
        outside of work
        
        outside of school
  - - - Be your own boss
        
        Long-term stable operation
    - - :<3: Open one dry cleaner
      - :red_cross: Open seven dry cleaners
  - - - :silhouette: Personal risk is relatively low
  - - - charity
        
        political
        
        lobbying
        
        artistic
        
        cultural
    - - Building something sustainable for the long-term
- - - - Upset Market Equilibrium
        
        Examples
        
        Genentech—Biotechnology
        
        Google & Facebook—Internet
    - - Beyond Tech: Success Drivers
        
        Integration of Business Model Choices
        
        Effective Resource Mobilization
        
        Sound Entry & Scaling
  - - - Geographic clustering of technology
        
        Venture Capital Flow Statistics
        (1/3 of US VC to Silicon Valley & Boston)
    - - Labor & Capital Markets
        
        Access to specialized talent and funding
      - Knowledge Spillovers
        
        Informal information exchange in social settings
      - Pre-existing locations of Star Scientists
        
        Critical for early Biotech
    - - Angel Investor Networks
        
        recycling wealth and expertise
      - Formation of Entrepreneurial Mafias
        
        Example
        
        PayPal Mafia—Thiel, Musk, Hoffman
  - - - Stakeholders/Allocators of Value
        
        • IInventorm • itator/Follower
        • Customers • Suppliers
    - - Bargaining Power/ Market Power
        
        The Two Key Drivers (Pillars)
        
        Appropriability
        IP, Trade Secrets, Speed
        
        Can the knowledge be controlled/protected?
        
        Complementary Assets
        Mfg, Sales Channels, Brand
        
        Control over essential assets needed to exploit the knowledge.
    - - Maturity
        
        Takeoff
        
        Ferment
        
        1
        
        1
- - - - Low