Introductions & Program Outline

1. Introductions & Program Outline Class 1 July 12, 2017

2. Agenda Program Overview Student Introductions Problem Ideation Competitive Strategies

3. Instructors - Entrepreneurship April Baker Masters, Business Administration Sandhya Bhagwandin Masters, Business Administration

4. Instructors - Tech Dalitso Banda Masters, Computer Science Alexa Jan Bachelors, Computer Science

5. Course Guidelines • Laptop rules: • Laptops are only permitted during lectures, and with special permission during activities • You may use your laptops to only take notes (no extracurriculars!) • Raise your hand if you have a question • Late policy: If you are more than five minutes late to class, you will be asked to do an impromptu elevator pitch

6. Mark Kaigwa (Kenya 2007) Named one of 2013 Forbes “30 Under 30” Marketing, creative director, 2 startups 14 countries in 15 years Clarisse Iribagiza (Rwanda 2011) Founded Rwanda mobile development company “Quickly becoming one of East Africa’s leading mobile development companies” - Hilary Clinton

7. Program Goals • Cultivate entrepreneurial thinking • Get from idea to a viable product • Learn by doing

8. Program Structure Idea + Six Themes Generate an Idea Who is your customer? What can you do for your customer? How does your customer acquire your product? How do you make money off your product? How do you design and build your product? How do you scale your business?

9. Program Milestones Week 4: Product & Prototype Development, Go-to-Market Strategy • Start Business Plan Document • Business Models • Refined Prototype • Pricing, Sales Strategy Week 5: Minimum Viable Business Product • Design MVP • Minimum Viable Prototype • Product Design Principles Week 6: Demo Day Prep, Demo Day • Refined Business Plan Document • Refined Pitch Week 1: Ideation, Teaming • Brainstorming & Idea Generation • Competitive Strategies • Team Building Week 2: Market Analysis, Customer Development, PMR • Market Segmentation and Sizing • Customer Profiling • Customer Interviews Week 3: Product & Prototype Development • High Level Product Specification • Initial Prototype • User Interface Design/Mockups • Quantify Value Proposition • Product Brochure

10. Homework – Three Business Ideas • What ideas did you come up with?

11. Outline • 6 Myths about Entrepreneurship • Myths about Starting a Company • Why start your own company?

12. Myth #1: Entrepreneurs are the smartest and most high-achieving people around • Not necessary the valedictorian • Focus important and ignore rest

13. Myth #2 Entrepreneurs work alone • Teams are more likely to succeed - (Research from Ed Roberts) • Find people with various skills to join team!

14. Myth #3 Entrepreneurs are born, not made No entrepreneurial gene! • Bill Gates - parents wanted him to be a lawyer • Mark Zuckerberg - parents dentist and pyschiatrist

15. Myth #4: Entrepreneurs love risk • Entrepreneurs are not gamblers! • “De-risk” risk • Take calculated risk • Use asymmetric information to gain advantage

16. Myth #5: Entrepreneurs are successful because they are charismatic • Entrepreneurs effect change = leadership! • Vision • Sensemaking • Relationships • Innovation Engineering • Personal Signature • Quiet Leadership - David Rock

17. Myth #6: Entrepreneurs are undisciplined • Attacker against incumbent • Need to accurately execute with very little resources and time • Self discipline to achieve success

18. Myths about starting a company • You will be extremely rich - 9/10 startups fail! • You will have flexible hours and free time • You want to be your own boss • You want to become famous • It’s cool/trendy

19. The right reasons to start a company • Passion and conviction! • Being an entrepreneur is very rewarding • Know your product and customers • Change the world!

20. References and Further Reading “Bill Aulet: 6 myths of entrepreneurship” https://www.youtube.com/watch?v=_zWgGX71Iws “Disciplined Entrepreneurship”, Bill Aulet

21. Ice Breakers - Introduction • Each person will stand up and introduce themselves to the class. • Please state the following: • Your name • Your school/major • A fun fact

22. Ice Breakers – Taboo Words • Find someone you don’t know, and tell them about yourself. • You each have one minute. • You may not use the following words in your introduction: • School • Enjoy • Travel • Lima • Favorite • If you use any of these words, you must give your partner one piece of candy.

23. Ice Breakers – Group Trivia • I will name a category (example: countries, songs). • In 90 seconds, you must brainstorm as a group and write down as many as you can think of. • You may not use your phones to research. • The group with the most points at the end will be the winner. • The game will last five rounds.

24. Break (15 Minutes)

25. “Yes and…” https://www.youtube.com/watch?v=MUO-pWJ0riQ

26. Lab Exercise: Idea Creation Rules: • Nothing illegal! • Withhold judgment of ideas • Encourage wild and exaggerated ideas • Quantity counts, NOT quality • Build on the ideas of others • Every person and every idea has equal worth

27. Lab Exercise: Idea Creation • Individual solutions for 5 minutes • Class divides into groups of 6 • Group discussion for 25 minutes – everyone gets a chance to say their #1 problem idea • Group chooses 1 • Starts to brainstorm in the positive “yes and…” mode • Questions to answer: • Do you really understand what the problem is? • Why is the problem important to solve? • How many ways can you come up with to solve it? Diversity is good. List top 10.

28. Discussion Topic How do you solve the traffic problem in Lima?

29. Class Debrief • What was your understanding of the problem? • What were some of the ideas you came up with? • What did we learn from this exercise?

30. Lunch (1 Hour)

31. Competitive Strategies

32. Porter’s Competitive Advantage • Lower Cost • Differentiated (Innovation) • Focus

33. Cost Leadership Strategy • Focus on cost-conscious or price-sensitive customers • Need to have lowest price or price to value ratio • Must operate at lower cost than others • Beware of competitive response and price war • Product may become commoditized - hard to make profit

34. Cost Leadership Strategy B Willingness to Pay (WTP) P Product Price to Buyer PROFIT Product Cost to Seller C Increase P or Decrease C

35. Cost Leadership Strategy In order to succeed: • High asset turnover - need large volume • economies of scale • learning curve advantage • Lower operating costs • product standardization - no customization • fewer components • Strict control over value chain • financing • suppliers

36. Differentiation Strategy • Product differentiation from competitors - unique resources or capabilities • Pick market segments who are not price sensitive in markets that are highly competitive or large number of players • Can command premium

37. Innovation S-curve

38. Focus Strategy (niche) • “Focus” on narrow market segment with specialized needs • May be combined with • cost leadership • Southwest Airlines • Family Dollar • or differentiation • Apple Macintosh

39. Analyzing Competition: Porter’s Five Forces

40. Supplier Power - High • Fewer supplier than buyers • Buyer switching cost high • Buyer not price sensitive • Supplier can forward integerate • Supplier owns customer

41. Buyer Power - High • Fewer buyers than suppliers • Supplier switching cost high • Customer price sensitive • Buyer can backwards integerate • Buyer owns customer

42. Threat of New Entrants - High • Low entry barrier • Profitability does not require economies of scale • Products are undifferentiated • Brand names are not well-known • Initial capital investment is low • Consumer switching costs are low • Accessing distribution channels is easy

43. Threat of New Entrants - High • Location is not an issue • Proprietary technology is not an issue • Proprietary materials is not an issue • Government policy is not an issue • Expected retaliation of existing firms is not an issue

44. Threat of Substitutes - High • Consumer switching costs are low • Substitute product is cheaper than industry product • Substitute product quality is equal or superior to industry product quality • Substitute performance is equal or superior to industry product performance

45. Threat of Rivalry - High • Competitors are numerous • Competitors have equal size • Competitors have equal market share • Industry growth is slow • Fixed costs are high • Products are undifferentiated

46. Threat of Rivalry - High • Brand loyalty is insignificant • Consumer switching costs are low • Competitors are strategically diverse • There is excess production capacity • Exit barriers are high

47. Example: Amazon - Supplier Power • Supplier power is low • Amazon pays suppliers NET35 after item is purchased • Suppliers want to be on Amazon • Suppliers are fragmented • Amazon owns customer

48. Example: Amazon - Buyer Power • Buyer power is low • Customer are sticky • ease of use - 1 click • convenience • switching cost

49. Example: Amazon - New Entrants • A threat of new entrants is medium. • While e-commerce sites can be easily setup, logistic and supply chain is not.

50. Example: Amazon - Substitutes • A threat of substitutes is medium • Brick & Mortor stores (Target, Walmart) • sell at higher price • less convenient - have to go to store • Online retailers (Target, Walmart) • Switching Cost