session #1: introduction to new business venturesfaculty.insead.edu/vissa/nbv/marchapril 2006...

New Business Ventures

© 2006 by Bala Vissa

These slides are intended to support class discussions. They should not be considered a comprehensive set of issues to be dealt with.

Session #1: Introduction toNew Business Ventures

Course Websitehttp://faculty.insead.edu/vissa/nbv


Welcome!My background

Bala VissaRoom 445

INSEAD – Singapore campus(O) (65) 67995382

(H/P) (65) 94244573Email: [email protected]

• PhD in Management from London Business School

• Research examines how entrepreneurs – within and outside established firms - build effective networks

• Worked for 6 years in corporate entrepreneurship & functional management

• Passionate about Entrepreneurship – Advisor / Investor in several start-ups


A Macro-Perspectiveon New Venture Creation

Nascententrepreneur

Establishedfirm

Fledglingnew firm

CONCEPTION GESTATION INFANCY ADOLESCENCE

Adultpopulation

Focus of NBVFocus of traditional

MBA courses

Challenge: How to transition from an idea to a viable business?Source: Based on Reynolds (1994)


Venture Creation: A Planned Or Accidental Process?

Reactions to: “Our venture idea came

from an accidental process that just

happened to uncover the concept” 6%

19%

6%

27%

42%

0% 10% 20% 30% 40% 50%

Strongly agree

Partialy agree

Neutral

Partialy disagree

Strongly disagree

Source: Hills and Shrader, “Successful Entrepreneurs’ lnsights into Opportunity Recognition”, 1998


Common Problem: How To Start?Fact: > 40% of you will start and manage your own business at some point after

graduation

« I always wanted to create a company... I wanted to start something, I wanted to be an entrepreneur, but I didn’t know how to do it. It’s easy to say it…, everybody wants to be an entrepreneur...

The question is, how do you go about it? »Entrepreneurial INSEAD Alumnus


Goals of New Business Ventures

• Provide insights into process of creating a new venture – Bring discipline and organizing frameworks to what can seem at

first an accidental or mysterious process

• Learn from Practice:– by meeting and interviewing founders, learning their experiences– by designing your own venture or doing a founding story project

with existing ventures

~10% of NBV participants go on to start their business. ~15% others will try to do it in 1 to 5 years


What you can expect from NBV?• How to build a great venture team• How to build a viable organization where nothing

existed before • How to create and dominate a new market space• How to avoid common pitfalls in venturing (there is no

guaranteed recipe for success but there are guaranteed recipes for failure…)

• Opportunity to devote time to your own entrepreneurial project


What you should NOT expect from NBV• Tools to evaluate entrepreneurial opportunities (that is the focus

of P3 VOBM – we devote only 1 session to this topic)

• How to write a business plan (you can take the Business Plan Workshop in P5 as a logical follow-up to NBV)

• Details on the Private equity industry (you should take Private Equityin P4 by Prof Steve Haslett)

• Details on acquiring an existing business (you should take Realizing Entrepreneurial Potential in P4 by Prof Patrick Turner)

• Legal and administrative details on how to set-up a business (this will vary from country to country)


Instructional Method• Course is designed to place you in the shoes of

entrepreneurs trying to create and establish a new business venture

• People learn better when they learn in multiple ways – Readings and cases– Exercises (VETE experiment)– Guest speakers – Individual project (Start-up Simulation & Entrepreneur Interview)– Term project (Venture Design or Analysis of existing start-up)– Personal Reflections (“Letter to myself” assignment)


Three Recommended BooksKaplan, J. (1995). Startup: A Silicon Valley Adventure. Penguin

Riveting tale of GO Corporation, failed venture that was precursor of the handheld computing market. It illustrates many of the challenges and pitfalls of starting a new venture to address a nascent market space

Komisar, R. (2000). The Monk and the Riddle. HBS

This fable goes to the heart of what it means to be an entrepreneur and how entrepreneurs can best balance their personal lives and entrepreneurial careers (you should try to read this book before the last module of the course)

Christensen, C. and Raynor, M. (2003). The Innovator’s Solution. HBS

A very insightful books on how entrepreneurs can succeed in facing up to well-established and powerful competitors by focusing on what they won’t do (as opposed to what they can’t do).


Guest speakersSuccessful entrepreneurs (incl. some alum) will discuss the challenges they face in the start-up process.

• V Krishnan, MBA 97D; Co-founder Asia Paper Markets (S’pore based B2B paper exchange)

• Chris Perrine, MBA 03J; Co-Founder Springboard Research (S’pore based MR concept)

• Jose Zaide, MBA 03J; Co-founder CineNow (S’pore based DVD retailing concept)

• Vikram Aggarwal, Founder eat2eat.com (S’pore based restaurant software concept)

• Ivan Lee, Founder Thai Express (S’pore based restaurant concept)

• Madan Padaki, Co-founder MeritTrac (Bangalore based skills assessment venture)

• Tom Peters, Entrepreneur turned Angel investor


Start-up simulationDevelops intuition about entrepreneurial challenges and is a safe environment in which to make mistakes and learn

• You are the founder of a high-tech venture and are faced with many decisions typical of the venture creation process

• You play the simulation outside class and discuss your experiential learning in the individual assignment

• 2 page individual assignment by Monday 3rd April (15% of grade)


Entrepreneur InterviewThe goal of the assignment is to understand the experiences, motivation, and lessons learned by someone who has founded a business before.

• Choose anyone (except INSEAD colleague or invited speakers) who has founded a venture before

• Use this opportunity to establish a connection with an entrepreneur in an industry/area that you are interested to pursue

• 3 to 4 page individual assignment due on Saturday 15th April (20% of grade)


Virtual Entrepreneurial Team Exercise (VETE)

The goal of this assignment is to have a “live” experience of team dynamics in an entrepreneurial setting and reflect on that experience

• 450 students from 11 schools in 9 countries divided into 100 virtual teams of about 5 members each

• Team task: Prepare a written pitch to a VC for funding a regional business

• Your assignment will focus on your experiential learning of team dynamics

• Assignment due on Tuesday 11th April (20% of grade)


Venture ProjectPromote first-hand insight and experience into

entrepreneurial process.Two options:

1. New venture design

2. Analyze existing start-up

• The output will be a final report - 35% of grade• Teams (3-5 members) to be formed by Friday, 24th March


New Venture Design• Explain source of opportunity and why it is attractive

• Clarify the specific market that will be addressed and why

• Indicate composition of founding team and how it will be assembled

• Indicate which organizing models will be adopted

• Explain elements that will inform the design of the product/service

• Suggest a business model and explain why it creates value

• Explain which activities will be done inside vs. outside and why

• Explain how partners may be attracted to support the venture

• Identify potential competitors and explain how they may be dealt with

• Identify key bottlenecks for growth and how they may be addressed

• Identify the amount of funding needed and the central assumptions made in the venture plan (and how they will be verified)


The 12th

Roland Berger – INSEAD

Business Venture Competition

June 2006


Continuous feedback and mentoring• Office hours: Mondays/Wednesdays – 1pm to 5 pm

• Other Entrepreneurship Area ResourcesEntrepreneurship Faculty

Entrepreneurs in Residence

• Phil Anderson• Steve Haslett• Patrick Turner • Mike Pich

• Mahboob Mahmood (software / IT venturing)• KC Kung (Private Equity) • Reto Callegari (Business Angel)


Course Content – 4 ModulesI Thinking and acting entrepreneurially (3 sessions)

– Introduce the venturing process and get you up and running with your team and the venture opportunity

II Frameworks for Venture Launch (5 sessions)– Key analytical frameworks required for venture launch

III Key “soft” skills for Venture Launch (3 sessions)– Tools that sensitize you to the softer skills that are essential for venturing

IV Planning your entrepreneurial career (5 sessions)– Managing entrepreneurial careers and learning from experience


I Thinking & Acting Entrepreneurially

1. Introduction to NBV

2. How INSEAD MBA’s can do it: FrogPubs

3. How to go from idea to viable opportunity

Deliverable: Description of venture idea and team formation


II Frameworks for Venture Launch4. How do you design your venture team?5. How to plan for a new venture?6. How to design business models that create value?7. How to replicate an existing business concept?8. How to create a new market space?

Deliverable: Start-up Simulation Assignment


III Soft Skills for Venture Launch

9. Effective selling skills for winning early customers

10. Managing dependence with key external partners

11. Managing dynamics in entrepreneurial teams

Deliverables: VETE Learning Assignment &Entrepreneur Interview Assignment


IV Entrepreneurial Careers12. How to deal productively with failure13. Workshop on venture design14. Workshop on venture design15. Learning from the lessons of experience16. Structuring your career for entrepreneurship

Deliverables: New Venture Project Reports & “Letter to Myself” assignment


Deadline for signing up for the course

• You will need to decide on your participation in this elective by 10 AM on Monday 20th March

• As you can see, the work load is fairly high

• Auditing the course is not an option


Any questions about the course?


« From the beginning, we had known that the New Ventures course would require a great deal of work. So we had decided to select a project which was potentially feasible, although at the time that didn’t necessarily mean we were going to go through with it. We worked hard on the project, and by the end of the course, after we had tested the idea with many people, seen the success of others… and got a better knowledge of the business, we became convinced that it was a real opportunity. »

Ideal Course Outcome

-Paul Chantler and Thor Gudmundsson, MBA ’92Founders of The Frog & Rosbif

Focus of Session #2: How do INSEAD graduates launch a new venture?


Five Best Qualities of Successful Entrepreneurs (according to J. Kaplan)

1. Belief that they can make a difference.

2. Passion for making things happen. They don't just sit around discussing, they go out there are make it happen!

3. Unjustifiable optimism. You have to believe that you can succeed in the face of evidence proving the contrary. You need a kind of recklessness.

4. Tolerance for uncertainty.

5. Genuine concern for other people.


Five Biggest Mistakes that Entrepreneurs Make (according to J. Kaplan)

1. Having unclear goals and an unclear vision2. Trying to prove that they are smart - very common in young

entrepreneurs3. Greed - doing it for money, not raising enough money and not

distributing the equity widely4. Hiring people that they like rather than people that they need - "A

company is not a social club“5. Not knowing when to let go. "If you are a great start-up CEO, it does

not mean that you are a good CEO of $1B dollar company!" Have a realistic self assessment to know when to step aside.

session #1: introduction to new business venturesfaculty.insead.edu/vissa/nbv/marchapril 2006...

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