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Session 2 Part One: Agenda Review Venture Validation Process Market Validation Process Pound Pavement Exercise: An explanation Session 2 Part Two: Agenda Discussion:Rewriting The Book, Rob Adams. Discussion: Rewriting The Book… other topics
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Session 2Part One: Agenda • Review • Venture Validation Process • Market Validation Process • Pound Pavement Exercise: An explanation
Session 2Part Two: Agenda • Discussion:Rewriting The Book, Rob Adams. • Discussion: Rewriting The Book… other topics • Board of advisors/directors • EF and dilution • EM and word of mouth • Basic resource choice: bootstrap or critical mass • Team issues and others • Summary: Entrepreneurial Success Principles
Review of Session One • Of “Dead Horses” And Spurious Facts
REMEMBER….Old Dakota tribal wisdom says that when you discover you are riding a dead horse, • the best strategy is to dismount.
Problem is… in business, education, and government, we often try other strategies with dead horses, including the following:
Dead Horse Strategies • Changing riders. • Increasing the standards for riding dead horses. • Creating computerized training sessions to increase our ability to ride dead horses. • Hiring consultants to determine better ways to ride dead horses. • Hiring contractors to ride dead horses.
Plus… • Harnessing several dead horses together for increased speed. • Forming a quality circle to find better uses for dead horses. • Promoting dead horses to supervisory positions. • Creating a Committee to determine ways to improve dead horse riding. • Improving the “job description” for riders of dead horses.
Our Dead Horses … • Astronomically high venture failure rates are the norm. • Great success or outright failure are the norms.
Instead… • “Near Failure” is the norm during the pre-startup and startup phases.
Let’s pin down two definitions: • Prestartup Phase… from idea to when you officially open the doors for sales. • Startup Phase… from “first sales” to when you achieve positive operating cash flows.
The best empirical evidence suggests that the overarching principle of entrepreneurship is the Near Failure Syndrome • The first principle of life is to survive… the first principle of entrepreneurial life is also to survive. • Most ventures, for reasons of lack of resources, knowledge, tested capabilities, a sustainable strategy, etc. experience a “near death” experience
Three other concepts can help avoid/limit Near Failure • Corridor Principle • Sufficiency Cash Flow • Venture Enhancement
To avoid/limit near failure… • Don’t do a business plan first. • Do a venture validation exercise first.