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E140A Session #3 Agenda

E140A Session #3 Agenda. I. Stanford and Entrepreneurship (Tom). II. MFP Culture (Tina). Stanford’s Legacy. Stanford’s Role. Interaction with industry (via legacy just discussed) Research funding and creativity Silicon Valley as a nearby planting ground for ideas

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E140A Session #3 Agenda

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  1. E140A Session #3 Agenda I. Stanford and Entrepreneurship(Tom) II. MFP Culture(Tina)

  2. Stanford’s Legacy

  3. Stanford’s Role • Interaction with industry (via legacy just discussed) • Research funding and creativity • Silicon Valley as a nearby planting ground for ideas • Role of students as inventors, as disseminators, and as part of the workforce • Encouraging entrepreneurship …

  4. Silicon Valley is a Great (But Not Perfect) Market for Ideas, Talent, and Capital -- Implications for the Future?

  5. Our Primary Framework for Understanding the Success of an HP, Sun, Cisco, or Yahoo! IDEAS: Product and Market Strategy Managing Growth And Change TALENT: Team and Culture CAPITAL: Cash Flow and Venture Finance First Things First: Assess the Venture’s Vision, Internal and External Characteristics Reference: Collins and Lazier

  6. Tornado Main Street Laggards LateMajority Bowling Alley Early Majority EarlyAdopters Innovators Source: Moore (1995), Inside the Tornado Another Key Framework:Crossing The Chasm Model

  7. PEOPLE & RESOURCES Experiences, Skill, Contacts, Attitude, Knowledge Favorable Sociological Factors CONTEXT Macroeconomy, Tax, Regulatory, Socio-political Opportunity-Appropriate Knowing and Being Known Appropriate Risk / Reward Allocation and Incentives Investor Value Added Favorable Technology Macroeconomy Favorable Rules of the Game OPPORTUNITY Entry Barriers, Customers, Suppliers, Substitutes, Rivalry, Economics DEAL Allocation of Risk and Reward, Incentives, Signals, Sorting, Consequences Project-Appropriate Financing Option Preservation And Another (from E145):Sahlman’s Concept of Fit Reference: Sahlman in E-ship ’02/’03

  8. (1) Founding: An entrepreneur begins with a vision and shares of stock in the new venture. Value has been successfully created. Entrepreneur trades stock for ideas, money, and people • (2) Seed Stage: • Venture capitalists provide money in return for stock • Employees join via friends & associates in return for cash salary and stock options • Ideas become intellectual property which represents the initial value in the company • (4) Exit Stage: • Company files for IPO • Entrepreneur, investors, and employees can cash in stock for money • A viable public company has been created • Each party continues to build the company, retires, or starts the game again Further growth is delayed until milestones are reached and risk of failure is reduced Company balances earning cash, taking investment, and spending cash to create value (3) Growth Stage: More money, ideas, and people are obtained, but for much less stock than in the earlier stage due to lower risk From Today’s Reading:The Dynamics of the Start-Up Game The Startup Game: A race against time to create value and reduce risk Reference: Start-Up by Jerry Kaplan

  9. 21st Century Silicon Valley: “Built-to-Last” or “Built-to-Flip”? Source: Fast Company, Jim Collins

  10. MFP 2002’s Culture • What learning environment do we want to create? For example, how much formal professor/student versus student/student interaction? What can we do to support the culture we want to create? • What innovative approaches can we use to get to know each other quickly? How important is this in achieving our goals? • How will we measure our success in December, 2002? What must we achieve to make all the effort worthwhile? How, and how often, should we see if we are on track in meeting our goals?

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