Entrepreneurship

Andreas Antonopoulos, PhD, MBA

Rector, UNYP
Partner, Working Knowledge
Partner, Venture Growth Partners

May 2022
Course Syllabus
 It will serve as your guide to this course
 Recommended readings
– Don’t have to read every word, but understand what you read
– Recommend that you purchase the Timmons book
– Do visit the web sites..
 Start reading the economist (I am not a sales agent..)
 Plan ahead - this course will be demanding
Professor Info - Andreas Antonopoulos
Education
MBA, 2001, Weatherhead School of Management, Case Western Reserve, USA
Ph.D., 1997, Electrical & Electronic Engineering, University College London, UK.
M.Eng , 1994, Electrical & Electronic Engineering, University of Patras, Greece.

Background
- Combination of Industry, Entrepreneurial & Academic background
- Have started/invested in 11 ventures, 3 failures, 1.5 exits, Partner in Angel fund
- Industry: RHK, Bell Labs/Lucent Technologies, Nortel Networks and British Telecom
- Academia: UNYP, CEU Business School, University College London
- Consultancy work background with 30+ companies
- Worked and/or lived in Argentina, Brazil, Germany, Greece, Hungary, the Philippines,
Romania, Singapore, Spain, Thailand, UK and the US
- Have taught/guest lectured Entrepreneurship in 9 Universities

Currently
University of New York in Prague, Rector and Professor of Entrepreneurship
Venture Growth Partners, Partner
Working Knowledge, Partner
 Course Description
 The Entrepreneurship course will cover:
– Definitions & principles of entrepreneurship & intrapreneurship

– Idea generation & new business opportunities assessment

– Venture creation and growth (marketing)

– Business Model Canvas and Business Creation

– Social entrepreneurship, Corporate entrepreneurship

– Financing new ventures

– Disruptive technologies & most active areas of entrepeneurship

– The course focuses on High Growth Entrepreneurship

 Types of Ventures

 What is a Lifestyle, or Mom and Pop venture?

 What is a High Potential Venture?
 This course is about creating the High Potential
Venture — lifestyle and Mom and Pop ventures
are important too, but require somewhat different
methods in some aspects. A lot of the theory
covers both though!
 Course Objectives for Participants
 Familiarize with basic concepts of entre/intrapreneurship
 Insight into the management challenges facing startups: team issues,
equity & compensation, access to finance, manage growth, valuations etc
 Understand how innovation helps new venture creation and growth
 Enhance skills to develop financial models and business plans
 Develop soft skills to “package” and present/position new opportunities
 Familiarize with the challenges entrepreneurs are facing in the region and
with the hottest areas of Entrepreneurship today
 Startup something or grow the company you have already started
 Help you decide if entrepreneurship or intrapreneurship are right for you
 Have fun..
Grading

Individual Assignment 90%

Class Participation 10%
Questions?

 Don’t be shy.
– Shy doesn’t help you start a business
– What you don’t know CAN hurt you
– Participation is graded…
 Principles of
Entre/Intrapreneurship
 What is Entrepreneurship?
Who is an Entrepreneur?
“Creating and building something of value from practically nothing.”

“The pursuit of opportunity without regard to resources controlled.”

“A way of thinking and acting that is opportunity obsessed, holistic in

approach, and leadership balanced—for the purpose of wealth creation.”

“Any attempt at new business or new venture creation, such as self-

employment, a new business organization, or the expansion of an existing
business, by an individual, a team, or an established business.”

An entrepreneur is a person who has possession of a new

enterprise, venture or idea, and assumes significant accountability
for the inherent risks and the outcome.

An Entrepreneur is someone who stops thinking about a good idea

he/she has and starts to actually do something about it

Entrepreneurship is turning an idea to an invoice…

Can Entrepreneurship be Taught?
 Yes — Skills and knowledge transfer
– Doing vs. Teaching
• Messi and Ronaldo each had a coach.
– Mental Framework to Carry Into Entrepreneurial Situations:
• “You CAN do it, too”
• Confidence not arrogance
– Mistakes to be Avoided:
• e.g. Viability of opportunity, assessment of viability, business
planning, finances, team dynamics
 No — Personality, and risk tolerance (leadership?)
– Some things are just the way they are.
– It’s like going to war. You never know what you or anyone else is
capable of until the shit hits the fan — then you know.
The “Revolution”

 What factors have driven the “Silent Revolution”

– In the US?
– In Europe?
– In other parts of the World?

 Entrepreneurship is now taught in more than 2,000 HEIs

in the US

 Best tool for social mobility

What Skills are Important?

 Creativity and opportunity recognition/evaluation skills

 Comfort with ambiguity and risk
 Understanding of start-up basics and accounting
 Teamwork
 Evangelism, selling, negotiating, motivation through
influence and persuasion; communications skills
 Ability to pursue a venture able to exploit a skill you
seem to be particularly strong at
Attitudes and Behaviors

 What are the six dominant themes of

somewhat acquirable and desirable attitudes
and behaviors in successful entrepreneurship
 What are other not so acquirable attitudes and
behaviors?
 What is a “non-entrepreneurial mind”?
The Six dominant Themes

 Commitment & Determination

 Leadership
 Opportunity Obsession
 Tolerance of Risk, Ambiguity, and Uncertainty
 Creativity, Self-reliance, and Ability to Adapt
 Motivation to Excel
Non Acquirable Attitudes & Behaviors
- Energy, health, emotional stability

- Creativity and innovativeness

- Intelligence

- Capacity to inspire

- Values
Non Entrepreneurial Mind..

Invulnerability
Being macho
Being anti-authoritarian
Impulsivity
Outer control
Perfectionist
Know it all
 Traditional vs.
Entrepreneurial Career Paths
High School
High School
University

University
Practical Experience

Big Company (or Companies) Management Training

Well Managed, High Growth Firm

Startup Venture

Another Startup?

Retire Venture Capital or Angel Investor

Never really retire

 Window of Apprenticeship

 Why is it important?
 If you want the odds in your favor, get the experience first..
 For how long?
 On average, success stories had 5-10 years work experience
& some savings when starting. Most will go through false starts
 Beyond popular stories and some well known exceptions,
corporate experience, an MBA and some start-up experience
will dramatically improve your odds as a founder
Intrapreneurship
 First introduced in 1976 by the Economist!
 Intrapreneurship is the act of behaving like an entrepreneur
except within a larger organization.
 "A person within a large corporation who takes direct
responsibility for turning an idea into a profitable finished product
through assertive risk-taking and innovation".
 “An entrepreneur takes substantial risk in being the owner and
operator of a business with expectations of financial profit and
other rewards that the business may generate. On the contrary,
an intrapreneur is an individual employed by an organization for
remuneration, which is based on the financial success of the unit
he is responsible for. Intrapreneurs share the same traits as
entrepreneurs such as conviction, zeal and insight”
Intrapreneurial Managers
 What are the differences in skill sets and
characteristics that intrapreneurial managers
need to learn vs. traditional managers?
 Pro-activeness
 Creativity
 Strong drive for results
 Good corporate understanding
 Good market understanding
 Opportunity identification skills
 Analytical and business casing skills
 Sales skills
Entrepreneurship Paradoxes
 To make money you have to first loose money (time to profit)
 To create wealth you will relinquish wealth (dilution)
 To succeed you most often have to first fail (humility and rite of
passage)
 For creativity and innovativeness to prosper, rigor and discipline
must be there (commercialization)
 Long term equity value is at odds with short term profitability
(aiming high)
 Time is the ultimate ally and enemy of an entrepreneur (fine
balancing)
Opportunity
Recognition
 Opportunity Recognition – The Very
Heart of the Entrepreneurial Process

 What’s the difference between and idea and

an opportunity?

– Opportunities are created, or built, using ideas and

entrepreneurial creativity

– An opportunity has the qualities of being attractive,

durable, and timely and is anchored in a product or
service, which creates or adds value for its buyer or
end user
Short Exercise

 Give me, in 5 mins:

i) Ideas which could become opportunities
ii) Ideas which could not
 Where are Opportunities Identified?

 Technology changes (Moore’s law, Metcalf’s law, disruption)

 Societal changes (changes in ways we live, work, learn etc)
Market changes (maturity/obsolence/vulnerability, deregulation);
Uncertainty for revenue growth and/or Brontosaurus factor
 Reconstruction of value chain and distribution channels
 Efficiency drives. Undervalued assets
Different applications of “new products” (i.e. glue and post-it from
3M, polarized lights for cars: Polaroid, angina drug from Pfizer..)
 Customer obsessed or customer blind. “Henry Ford” question
 Chaos and Change

 Friends of the entrepreneur?

Opportunity Window,
Opportunity Screening
& Assessment
Opportunity Aspects

 Concept of complementary assets

– Some opportunities rely on other things to be in
place: Cars & Gas stations, On-line services & the
Internet, Applications & Smart phones
 Timing
– Is first-mover always a good thing?
– Was Microsoft a first-mover?
– How can complementary assets be a competitive
advantage for second-movers?
– How can second movers help first movers?
Imperatives for New
Opportunities

 Think BIG
 Big opportunities with little capital
 Skills to assess opportunities early to avoid
wasting time and effort (experience counts..)
 People and Team
Opportunity Screening Criteria

 Viability and unit economics

 Timing
 Market size
 In house skills
 Competition & unfair advantage
 Criteria/Metrics for Assessing the
Value of the Opportunity
 Market:
 Characteristics, Structure, Size, Growth Rate, Cost structure,
Attainable market share

 Economics
 B/E/ROI/CF characteristics/IRR potential/Capital requirements

 Competitive advantage issues:

 Fixed/variable costs, control over costs/distribution, barriers to entry

 Harvest Issues:
 Value added, valuation potential, exit strategy

 Strategic differentiation
Business Model Canvas
9 Building Blocks of a Business

Harvard Business Report on Entrepreneurship – May 2013

 Focus on the Product
What pain do you relieve? - and the value proposition
to the customers
How will it work exactly?
What is innovative about the product? How near is it
being unique? How will you protect this uniqueness?
Start with the problem and stay with it (Fisher Space Pen
case) – Simplicity!!
What is a fatal-flaw issue?
Customer Benefit
How to Communicate an Opportunity

 What is the customer benefit; or, what

problem does the idea solve?

 What is the market?

 How will it make money?

 3 Ways to Present an Opportunity
Example 1: the sales approach
“I have a great idea for a new, customer-friendly payment system with
enormous potential. This is what you have always wanted, and it will
make you a lot of money”. The investor thinks “All hot air. I've heard
hundreds of “great ideas” - boring”.

Example 2: the technological approach

“I have an idea for a computerized machine control system. The key
to it is a fully integrated SSP chip with 12 GByte RAM and direct
governing of the control unit via asymmetric XXP technology; it's taken
two years to develop”. The investor thinks “Computer nerd; in love with
the technology. He is his own market”.

Example 3: the entrepreneurial approach

“I have an idea that offers a business with up to 100 staff cost savings
of 3-5%. Initial cost/price analyses have convinced me that there is a
potential margin of 40-60%. With the Small Businesses Association
and ABC magazine, I have access to a focused publicity channel.
Distribution would be via direct sales”. The investor thinks “Ah; she
knows what the customer benefit is, and has even quantified it. She's
also thought about the market and the potential profit, and she knows
how she intends to get the product to the customer.
Venture Creation
 The Process

 How did each of the following companies start?

– Intel
– Apple
– Hewlett-Packard
– Federal Express
– Microsoft
– Amazon
– Yahoo
– Google
– Nike
What are Some Common Factors?

 Strong core founding Team

 Strong opportunity recognition Skills
 Competitive product/service
 Access to Capital and experienced people
 Execution
 Timing and Luck
The Creation Process/Cycle
 The Founders and Team
 Opportunity Recognition and Screening
 Resource Requirements and Evaluation
 Startup, proof of concept
 Securing/Confirming Financing
 Sales and Marketing — Crossing the Chasm
 Managing Growth
 Good Times and Bad Times
 Exit, Cashing out, Crash and Burn, Dot-Gone
 Just Do It… Again.
How Many People Actually Startup..
Some Tips.. Don’t StartUp if you do not:
 Have some experience first. Corp experience, MBA,
exposure to startups or a specific market
 Have a reasonably good understanding of finance
 Feel that you are surrounded by a good team
 Possess a high level of determination and commitment
& feel ready for a rocky, often frustrating ride
 Understand that Execution matters more than the Idea
Failure
What About Failures?

 More businesses fail than succeed

– In the US, 2 in 3 small businesses failed in the last 30 years
– In high growth technology start ups ratio can higher (80%+)
– Harvard BS Research showed that 75% of all tech start-ups fail

 Fear of failure can obstruct entrepreneurs

 Most entrepreneurs fail before succeeding
 What About Failures? The US Story
 In the US, failure is viewed as a learning experience
– Culture of Independence and willingness to take risks
– Embracing failure is a rite of passage on the way to success. "The
faster you fail, the faster you'll get to success,"
– Investors favour individuals who experienced defeat (experience,
unlike to repeat mistakes, better at decision making, in risk
management and in responding to customer & market needs)
– “Rocky” Entrepreneurship. "It ain't about how hard you hit. It's about
how hard you can get hit and keep moving forward“. Detemination

 What about this region?

FAILURE IS AN OPTION!

AND SO IS SUCCESS…
Be Willing to Fail!

“Life is either a
daring adventure,
or nothing.”

- Helen Keller

Great rewards come with great risk

 Be Willing to Fail!
“I can accept failure, everyone fails at “Many of life’s failures are people who did
something. But I can’t accept not trying not realize how close they were to success
- Michael Jordan when they gave up”
- Thomas A. Edison

“If you are not failing every now and “Failure is an event not a person”
again, it’s a sign you are not doing - Zig Ziglar
anything very innovative”
- Woody Allen

“Failure is simply the opportunity to begin “Nothing wrong with failing. Pick yourself up
again, this time more intelligently” and try it again. You’ll never know how good
- Henry Ford you really are until you face failure”
- Henry Kravis
Venture Creation –
The Team
The New Venture Team – Attitudes
of Individuals
 Integrity & Fairness
 Grit
 Coachability
 Teamwork
 Harvest Mind-set (not big car, big office, support) &
commitment to the long haul
 How are entrepreneurial teams typically formed?
– Lead entrepreneur has the idea, recruits additional associates
– Teams form based on shared ideas, friendships, experiences, timing
Characteristics of an Effective Team
 Complementary skills and strengths

 Flexible approach to problems

 Tech co-founder (no third party development..)

 Equal inequality - No democracy, leadership & role sharing

 How big of a team?

 At least 2 people, most often 3 people, seldom more than 5

Teams outperform individuals, especially when performance
requires multiple skills, judgments, and experiences
Common Team Pitfalls

 Democracy and committee. Companies need leaders

 Too many chiefs and no Indians; Overlap of roles

 Focus on the wrong things (instead of the “beachhead”)

 Know your limitations and fill the gaps--fast

 The “Cap” Table
 Definition?
 The "Capitalization Table", is a table showing the total
amount of the various securities issued by a firm. This
includes the amount of investment obtained from each
source and the securities distributed
 Basically shows who owes what in a company
 Important for calculating dilution and understanding its
effects
Founders Equity
 Idea ownership & Business plan development
 Prior work towards the MVP
 Money/time/value contribution. Timing
 “There is no right way to split equity. But research shows
that founders who had the original idea for the company get
5-10 more percentage points of equity than co-founders.
Founders who have led other startups generally get extra
points, as well as the one who becomes CEO” Prof.
Wassermann (HBS)
 Equity classes:
– Common versus Preferred Share
– Restricted stock; Options
Compensation Structures
 Founders’ economics: Compensation
– Equal inequality. People must get compensated for what they
bring to the table.
– Expectations: It really doesn’t matter what you think you
deserve, it matters what others think you deserve.
– Salaries for founders should be next to nothing but better be
something
– Why you need to think about it for your business plan
 Negotiating

 All team members need to feel reasonable satisfaction in their

upside & participation. Founders have to be realistic & honest
with each other.
 Dissatisfaction just postpones a blowup. 100% of nothing is
nothing
 The cap table is not something that should be revisited often.
If you are doing so, there is something wrong
 Be careful to separate a founders role as a shareholder in a
company with a founders operating role.
 ESOP

 Why is it important?
 What is “vesting” what is a “cliff”?
 What is common?
Where to be Very Careful..

 Lawyers
 Accountants
 Sales & Marketing -
Crossing The Chasm
Lifecycle of technologies & markets

Adopters
# of New
Lead Early Early Late Laggards
Users Adopters Majority Majority

Time

Physical limits

Effort
Putting a Face to a Name

 Innovators: Technology Enthusiasts

 Early Adopters: Visionaries
 Early Majority: Pragmatists
 Late Majority: The Conservatives
 Laggards
Adopters
# of New
Technology Adoption Life Cycle

Lead Early Early Late Laggards

Users Adopters Majority Majority

Time

Where is the “chasm” according to Moore?

Technology Adoption Life Cycle
 Customer Needs –
Pre-Chasm and Post-Chasm

The Chasm

Innovators Early Adopters Early Majority Late Majority Laggards

Your first sales Your vehicle to liquidity

 Characteristics... Characteristics...
– Technology, interests them • Practical, pragmatic
– Visionaries • Need proof
– Gatekeepers, endorsers • Conservative…

 Questions... Questions...
– Who and where are they? How many are there? • Who and where are they? How many are there
– Why will they buy your product? • Why will they buy your product?

© Tech Coast Angels 65

The Chasm: The Marketing Challenge
 Who do you pursue?
– “Trying to cross the chasm without taking a niche
marketing approach is like trying to light a fire
without kindling”
 Execution is crucial:
– Reference Marketing
– Distribution and Pricing
– Channel Strategy
 Why is reference marketing so crucial to
crossing the chasm?
“Growth Hacking”
Facebook tags
Paypal referral cash rewards
Airbnb gift incentive
Dropbox referral free space
Gmail brand capitalizing (Clubhouse copying now)
Hotmail single liner
OKCupid engaging posts
Microsoft “Not Verified” option
De Beers…
Social media sharing incentives & Viral marketing
Viral Ads Value
DollarShaveClub, founded 2012

Upselling grooming products

Seriously challenged Gillette which started its own

Gillette Shave Club in 2015

July 2016: $1B exit to Unilever, $200M Revenue, 4M

customers

Growth through viral add:

https://www.youtube.com/watch?v=ZUG9qYTJMsI

https://www.cnbc.com/video/2019/03/23/viral-video-
dollar-shave-club-michael-dubin-unilever-billion-
dollars.html
 Pricing - High correlation between startup
success and good pricing strategy
- Unit economics must make sense
- Understand if and how much customers will value the product
- Have some feedback/testing early in the innovation process
- Identify psychological thresholds to pricing
- Price lowering is not an answer to demand slack. Better add value
- How you charge is often way more important than how much you
charge. Create perceived value
- Proven monetization models:
- Subscription
- Dynamic pricing
- Pay as you go
- Fremium (careful with Pareto’s principle trap)