epse module 3 session 1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
EPSE Module 3—Session 1 PowerPoint Presentation
Download Presentation
EPSE Module 3—Session 1

Loading in 2 Seconds...

play fullscreen
1 / 74

EPSE Module 3—Session 1 - PowerPoint PPT Presentation


  • 144 Views
  • Uploaded on

EPSE Module 3—Session 1. Ken Liu March 12, 2011. Setting the Stage. Who Am I?. 8 startups as principal since 1989 HNC Software, Holographix, Virage, IPivot, InfoGation, AIRSIS, SciVee, ThreatSTOP CEO, CMO, do whatever needed 5 M&As worth $1.3 billion Wide-ranging experience

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'EPSE Module 3—Session 1' - belle


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
epse module 3 session 1

EPSE Module 3—Session 1

Ken Liu

March 12, 2011

who am i
Who Am I?
  • 8 startups as principal since 1989
    • HNC Software, Holographix, Virage, IPivot, InfoGation, AIRSIS, SciVee, ThreatSTOP
  • CEO, CMO, do whatever needed
  • 5 M&As worth $1.3 billion
  • Wide-ranging experience
    • Technologies/products
    • Business models
    • Stages & cultures
  • Early career: Motorola, BCG, Booz Allen
  • Real-world approach
objectives of module 3
Objectives of Module 3
  • Basics of innovation & startups
    • Business plan
    • Financing
    • The Investor Pitch
  • Improving the odds of success
    • Funding & evaluating your projects at work
    • Your own startup
    • Think like a CEO/founder
    • Group project: The Investor Pitch of new business
startup creation
Startup Creation

Source, Startups 1977-2005, Business Dynamics Statistics (BDS) series

compiled by the U.S. Census Bureau.

job growth engine
Job-Growth Engine

Source: State of Entrepreneurship Address,

Kauffman Foundation, 2011

4 innovation types
4 Innovation Types

Business Model

Product/Service

Technology

Process

economic basis of innovation
Economic Basis of Innovation

Innovation

Differentiation

Changing value proposition

Customers buy more and pay more

Otherwise market naturally drives towards commodity and lowest price.

Do you want to duke out with the Chinese on cost?

operating margin growth in excess of competitive peers
Operating Margin Growth in Excess of Competitive Peers

[Source: IBM, CEOs are expanding the innovation horizon: important implications for CIOs]

anatomy of disruption
Anatomy Of Disruption
  • Entrant introduces a product/service at a lower price with “good enough” attributes
  • Begins to win customers
  • Incumbent ignores the situation
  • Entrant keeps improving & growing
  • Entrant moves toward high-end or your core market
  • “Oh %$$&* #$!”
it s a cultural problem
It’s a Cultural Problem

Development times too long 32%

Lack of coordination 28%

Limited customer insight 26%

Risk-adverse culture 25%

Difficulty selecting right ideas 21%

No good way to measure 20%

A shortage of ideas 18% Not the problem

Ineffective marketing 17%

Culture &

Implementation

djia 1979
DJIA 1979

Allied Chemical Alcoa American Can

AT&T American Tobacco Bethlehem Steel DupontExxonMobil Eastman Kodak

General Foods GE GM

Goodyear IBMInco

Int’l Harvester Int’l Paper Johns Manville

3M MerckOwens-Illinois Glass

P & G Sears Roebuck Socal

Texaco Union Carbide US Steel

United Technologies Westinghouse Woolworth

Not in 2012 (20) Still in 2012 (10)

the odds
The Odds

3,000

100

10

2

1

Exploratory

Projects

Full development

Projects

Product

Launch

Success

Ideas

Source: Stevens, G A. and Burley, J. “3,000 Raw Ideas = 1Commercial Success

the odds1
The Odds

Source: SBA; Ctr. For Venture Research, Univ. of NH

the business plan
The Business Plan
  • The pain
  • Value proposition
  • Market
  • Who’s the customer?
  • Barriers to adoption
  • Competition
  • Business model
  • Market entry plan
  • IP & entry barriers
  • Management
  • Financing
  • Exit strategy
that was just the plan
That Was Just the Plan…

We haven’t even begun to deal with execution yet!

Or the economy

Or the people

Or regulations

Success is 90% execution & adaptation, 10% planning.

business plan
Business Plan

Inspiration

Needs

Pain

Value Proposition

our focus
Our Focus

Focus

Valuation

$M

50

10

1

.1

Hobby

Personal

Angel

VC

Corporate >>>>>>>>>>

it s not rocket science
It’s Not Rocket Science

Are there enough customers who are willing to pay you a price that gives you enough profit to build a business and yield a return for investors that’s worthwhile to invest in you?

the idea where from
The Idea—Where from?

Your work

Your hobby

Why not?

Observe trend

Needs gap

Customer IPivot

Technology map

market research
Market Research

Primary

  • Customers
  • Resellers
  • “Experts”

Listen for complaints:

  • Why is it…?
  • Why can’t I…?
  • Can you do this…?
  • What if?
  • I hate this…
  • This shouldn’t be so hard

Secondary

  • Associations
  • Analysts
  • Government

Good for general info &

background

  • Often outdated
  • Not specific
  • Backward looking
needs analysis
Needs Analysis
  • What is the problem?
  • Who are the customers?
  • What is driving the need?
  • Under what circumstances does the need arise?
  • When does it arise? How often? Where?
  • How much does the customer care?
  • How satisfied is the customer with his current solutions?
  • How many customers have this same need & circumstances?
pain ssl decryption with general purpose computers
Pain—SSL Decryption with General-purpose Computers

Customer: Payroll/benefits outsourcing firm

Pain: 1. Every pay period >> peak demand

2. Servers strain/crash doing SSL transactions >> customers complain

3. “Sun rep wants me to buy $1M SPARC servers”

value proposition
Value Proposition
  • Attributes of product that customers care about and willing to pay for at given price, place and time
  • Different for each demographic segment
  • Can change over time
    • Price
    • Competition
    • Product expectation
    • Etc.

“A horse! My kingdom

for a horse!”

value propositions
Value Propositions
  • Feature/

performance

  • Cult
  • Convenience
  • Faster
  • Vanity
  • Saves money
  • Productivity
  • Financing
business plan1
Business Plan

Market

Customers

market
Market
  • Primary, secondary, etc.
  • Size not as important as correct segmentation
  • Total vs. Served Available Market (TAM vs. SAM)
  • Retail vs. wholesale $$
  • Bottom-up projection best
  • If new market, use best proxy
  • If all fails, use gut, “feel of market”, ROMA
watch out reject
Watch Out/Reject:
  • Excel magic—garbage in, hockey stick out
  • “30% CAGR from $100M to $2 billion from 2010-2015”
  • “conservative goal of 1% of Chinese consumers”
market segment
Market Segment

A subgroup of consumers sharing characteristics that cause them to have similar product needs and values.

  • Respond similarly to market stimuli
  • Can be reached by market intervention
  • Different from other segments
  • Change over time
    • expectations
    • price
    • capabilities
segmentation
Segmentation

Financial

Services

  • Money center
  • National
  • Superregional
  • Regional
  • Local
  • “Non-bank” banks
  • Credit unions

Commercial

Banks

segmentation purpose
Segmentation Purpose
  • Who are our most profitable customers?
  • Where can we find more of them?
  • How can we more effectively reach them?
  • How can we tailor our message to each segment?
  • What segments need our services most, at what cost?
  • How can we better allocate our sales/ marketing resources?
  • Who’s our competition?
segmentation criteria
Segmentation Criteria

Geographic

Nations, states,

regions or cities

Demographic

Age, gender, family size and life cycle, or income

Psychographic

Social class, lifestyle, or personality

Behavioral

Occasions, benefits, uses, or responses

levels of segmentation

Mass Marketing

Same product to all consumers

(no segmentation)

Segment Marketing

Different products to one or more segments

(some segmentation)

Levels of Segmentation

Niche Marketing

Different products to subgroups within segments

( more segmentation)

Micromarketing

Products to suit the tastes of individuals or locations

(complete segmentation)

what s wrong with this
What’s Wrong with This?

Product

Photo management product designed to assist Brand Marketers, Event organizers, and Sponsorship owners to take advantage of the power of event photos to assist in quantifying ROI for a given event or sponsorship.

Market

  • Alternative advertising is a $26 billion business.
  • Branded entertainment spending increased to $52 billion annually.
who s customer
Who’s Customer?

YES

  • Male college student
  • Bank teller in credit union
  • Owner/sales mgr. of independent clothing stores
  • ER nurses

NO

  • 15-40 yr. males
  • Financial services worker
  • Sales mgr. of retail stores
  • Medical/health workers
who s customer1
Who’s Customer?

Time

$$$

Effort

Sales Cycle

User

Manager

IT

VP/Corporate

CFO

CEO

BOD

ipivot exercise
IPivot Exercise

Customer: Payroll/benefits outsourcing firm

Pain: 1. Every pay period >> peak demand

2. Servers strain/crash doing SSL transactions >> customers complain

3. Sun rep wants me to buy $1M SPARC servers

Solution: SSL accelerator appliances (3-10x faster)

$25-45K

New product category

Questions:

1. Customer/Market 2. Value Proposition 3. ROI

business plan2
Business Plan

Market Timing

Barriers to Adoption

barriers to adoption
Barriers to Adoption

Macro

  • Is market ready? Too early?
  • Need adoption ecosystem to exist first?
  • Crossing the chasm?

Micro

  • Too complicated
  • Doesn’t work or solve problem
  • Price
  • Cultural misfit
  • Changing habits
catch the wave
Catch the Wave

There is a tide in the affairs of men which,

Taken at the flood, leads on to fortune;

Omitted, all the voyage of their life

Is bound in shallows and miseries.

On such a full sea are we now afloat,

We must take the current when it serves

Or lose our ventures.

--Julius Caesar

Shakespeare

market incubation period
Market Incubation Period

Idea/Prototype Adoption

Telematics mid-1960s 2010s

Faxes early 1960s 1980s

Video on demand mid 1990s 2011+

Internet late 1960s 1995+

PDAs early 1990s mid 2000s

Poker on cable 1980s early 2000s

Renewable energy 1970s ??

switching cost
Switching Cost
  • “Superior” product loses to ingrained

habits & workflow

  • Need “10X” gain to switch

Vs.

slide58

You can have the greatest idea,

but if you can’t convince enough people,

it doesn’t matter.

levels of message
Levels of Message

Engineering

Tech Expert

Analyst

Trade Press

Economic

Buyer

Investor

Public

Startup

1 line 1 para. 5’ 15’ white paper

elevator pitch 5w 2h
Elevator Pitch—5W 2H
  • What?
  • Who?
  • When?
  • Where?
  • Why?
  • How?
  • How big?
objective
Objective

Get the follow-on meeting!

the story
The Story

It’s the message, not the facts!

  • Great product
  • Customer stories
  • Big market
  • Unique value
  • Great team
  • You can make $$$

Don’t confuse message with facts!

slide65

Retention

BIRD

10%

65%

slide66

Give Context to Numbers

5GB

or

“You can put 1,000

songs in your pocket.”

slide68

Body Language

Vocal Tone

63%

what are they looking for
What Are They Looking For?
  • Integrity
  • Passion
  • Commitment
  • Vision
  • Reality
  • Leadership
  • Experience
  • Knowledge
  • Skills
  • Coachable/likable
what it comes down to
What It Comes Down To
  • Can I trust this person?
  • Can I work with you?
  • Do you have a chance of making $$
  • for me?
  • Would I want to have beer with you?
  • Are you worth my effort & risk?
why they invest in you
Why They Invest in You?

“VCs do not invest with their brains.

They invest with companies that they fall in love with.

Then they use their brains to rationalize their decision.

Reality Distortion Field!

“Some managers are uncomfortable with expressing emotion about their dreams, but it’s the passion and emotion that will attract and motivate others.”

– Jim Collins, Built to Last

top 10 lies told to vcs
Top 10 Lies Told to VCs
  • Our projections are conservative
  • Our target market is $56 billion
  • We have a world class team
  • Our average sales cycle is 90 days
  • We have no direct competitor
  • No one else can do what we do
  • All we need is 2% of the market
  • We’ll be cash positive in 12 months
  • Our contract with [Big Company] will be signed in two weeks
  • I’ll be happy to hand over the reins to a new CEO
discussions
Discussions

CONNECT Springboard Ideas

Your ideas

Ken Liu 858-722-0912

caranome@gmail.com