branson centre - passion to profits - part 2
DESCRIPTION
A presentation given by Paul Smith at the Branson Centre of Entrepreneurship on the 19 November 2014.TRANSCRIPT
![Page 1: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/1.jpg)
THE BEHAVIOURS OF PASSIONATE
ENTREPRENEURS
![Page 2: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/2.jpg)
![Page 3: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/3.jpg)
?
?
?
The first sale
WHAT PREDICTS SUCCESS?
![Page 4: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/4.jpg)
1 Planning doesn’t predict
![Page 5: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/5.jpg)
Source: Lange, Mollov, Pearlmutter, Singh and Bygrave (2007)
“new ventures launched with formal written business plans do not outperform ones
launched without them.”
![Page 6: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/6.jpg)
Business Plan?
Source: Bhide (2000)
21%
79%
Yes!No!
![Page 7: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/7.jpg)
No!
![Page 8: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/8.jpg)
No!
![Page 9: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/9.jpg)
No!No!
No!
![Page 10: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/10.jpg)
Doh!?!
![Page 11: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/11.jpg)
![Page 12: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/12.jpg)
1 Opportunity Predicts
![Page 13: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/13.jpg)
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
![Page 14: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/14.jpg)
Computer and Office Equipment
(1/25)
Eating and Drinking Places
(1/14,550)
Source: Shane (2009)
![Page 15: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/15.jpg)
Computer and office
equipment
582 succeed
Eating and
drinking places
1 succeeds
Source: Shane (2009)
![Page 16: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/16.jpg)
Correlation between number of
startups in an industry and failure rate
0.77
Source: Shane (2009)
![Page 17: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/17.jpg)
2 Team Predicts
![Page 18: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/18.jpg)
![Page 19: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/19.jpg)
![Page 20: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/20.jpg)
13.1%
54.2.%
Source: Bruderl, et al. (1992)
+
>
5-YEAR FAILURE RATE?
![Page 21: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/21.jpg)
90%
10%
1 founder
2 or more founders
Source: FinScope (2010)
TEAM SIZE SOUTH AFRICA
![Page 22: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/22.jpg)
3 Advice seeking predicts
![Page 23: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/23.jpg)
45%
80%
No advice
Source: Watson (2007)
Advice from
accountants 3+/yr
3-YEAR SURVIVAL RATE
![Page 24: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/24.jpg)
Source: Pretorius & Le Roux (2011)
SUCCESSIVE ENTREPRENEURSHIP AND NO LEARNING
![Page 25: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/25.jpg)
Source: Pretorius & Le Roux (2011)
![Page 26: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/26.jpg)
4 Industry Experience
![Page 27: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/27.jpg)
75%
25%
Source: Fresser and Willard (1990)
INC 100 ENTREPRENEURS WITH INDUSTRY EXPERIENCE
![Page 28: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/28.jpg)
Source: Bruderl, et al. (1992)
25.5 %Industry
Experience
No Industry
Experience54.5 %
5-YEAR SURVIVAL AND INDUSTRY EXPERIENCE
![Page 29: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/29.jpg)
Strong Team
(1) 3 + members
(2) 50% joint experience
(3) 3 year industry experience
(19%)
(73%)
Source: Eisenhardt & Schoovenhoven (1990)
![Page 30: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/30.jpg)
5 Traction
![Page 31: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/31.jpg)
“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)
![Page 32: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/32.jpg)
Source: Reynolds (1987)
![Page 33: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/33.jpg)
Source: Bhide (2000)
82%
8%
10%Somewhat Involved
Main Salesperson
Heavily Involved
FOUNDERS INVOLVEMENT IN SELLING
![Page 34: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/34.jpg)
6 Avoid Pre-mature Scaling
![Page 35: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/35.jpg)
Avoid
Pre-mature Scaling
![Page 36: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/36.jpg)
AMAR BHIDE
Idea BuildNo
Facts
DON’T SKIP THE ASSUMPTION TESTING
![Page 37: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/37.jpg)
paulshawsmithscientific business strategy
![Page 38: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/38.jpg)
paulshawsmithscientific business strategy
![Page 39: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/39.jpg)
of high growth internet start upsfail due to premature scaling.
Source: Start Up Genome Report(2011)
![Page 40: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/40.jpg)
times faster than startups that scale prematurely
Startups that scale properly grow about
Source: Start Up Genome Report(2011)
![Page 41: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/41.jpg)
8 Community
![Page 42: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/42.jpg)
OBSERVATIONAL LEARNING
![Page 43: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/43.jpg)
Mayans
Hutu
Greeks
Romans
Egyptians
Vikings
Khoisan
Persians
TRIBES
![Page 44: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/44.jpg)
YPO
MBAs
Gamers
Sports centers
The Sharks
KIPPRhodes Rowing
Music Scools
TRIBES
![Page 45: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/45.jpg)
7000 inc 500 companies assessed
9 best performers chosen for a study
4 belonged to YPO
THE BREAKTHROUGH COMPANY
![Page 46: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/46.jpg)
THE OLD BOYS CLUB
![Page 47: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/47.jpg)
“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
![Page 48: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/48.jpg)
9 Values Predict
![Page 49: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/49.jpg)
WHAT ARE VALUES?
![Page 50: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/50.jpg)
How importance or precious
something is to a person
VALUES DEFINITION
![Page 51: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/51.jpg)
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
![Page 52: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/52.jpg)
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?
![Page 53: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/53.jpg)
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.
![Page 54: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/54.jpg)
HOW DOES OPRAH SPEND HER MONEY?
![Page 55: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/55.jpg)
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
![Page 56: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/56.jpg)
8:00: Heads to SpaceX’soffice in his Model S.
How does Elon Musk spend his time?
![Page 57: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/57.jpg)
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?
![Page 58: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/58.jpg)
12:30: Propulsion schedule meeting
12:30: Building operations meeting
HOW DOES ELON MUSK SPEND HIS TIME?
![Page 59: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/59.jpg)
16:30 Visits the rocket factory
HOW DOES ELON MUSK SPEND HIS TIME?
![Page 60: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/60.jpg)
19:00 Interviewed by Sarah Lacy from Pando Daily
Attends premier of a film he has produced
HOW DOES ELON MUSK SPEND HIS TIME?
![Page 61: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/61.jpg)
WHAT GIVE ELON MUSK ENERGY?
![Page 62: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/62.jpg)
HOW DOES ELON MUSK SPEND HIS MONEY?
![Page 63: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/63.jpg)
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
![Page 64: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/64.jpg)
AMAR BHIDE
![Page 65: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/65.jpg)
“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?
![Page 66: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/66.jpg)
WHAT DOES RICHARD BRANSON SPEND HIS MONEY ON?
![Page 67: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/67.jpg)
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
![Page 68: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/68.jpg)
AMAR BHIDE
Values predict your future!
![Page 69: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/69.jpg)
AMAR BHIDE
Becoming a great investor
Business and investing
Family and friends
Baseball
![Page 70: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/70.jpg)
AMAR BHIDE
Eating
Movies
Partying?
Outcome 1
Outcome 2
Outcome 3
![Page 71: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/71.jpg)
AMAR BHIDE
Business
Career
Investing?
Outcome 1
Outcome 2
Outcome 3
![Page 72: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/72.jpg)
10 Vision Predicts
![Page 73: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/73.jpg)
Source: Barringer et al. (2005)
54%
80%
FAST
GROWTH
SLOW
GROWTH
GROWTH COMMITMENT?
![Page 74: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/74.jpg)
• 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:
![Page 75: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/75.jpg)
“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.”
![Page 76: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/76.jpg)
“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.”
![Page 77: Branson Centre - Passion to profits - Part 2](https://reader033.vdocuments.mx/reader033/viewer/2022042816/55967c671a28abd3368b4662/html5/thumbnails/77.jpg)
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