Duening / Hisrich / Lechter Technology Entrepreneurship

Taking Innovation to the Marketplace
2. Auflage 2014
ISBN: 978-0-12-420234-4
Verlag: Elsevier Science & Techn.
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, 395 Seiten

The focus of this book is on technology ventures - how they start, operate, and sometimes exit profitably. In short, it covers all the elements required to launch a successful technology company, including discussion of cutting-edge trends such as 'entrepreneurial method' and 'lean startup,' emphasis on the ideation process and development of an effective business plan, coverage of product and market development, intellectual property, structuring your venture, raising capital, sales and marketing, people management, and even strategies for exiting your venture. This is not another armchair book about entrepreneurship. It's a working guide for engineers and scientists who want to actually be entrepreneurs.
An intense focus on product design and development, with customers and markets in mindExtensive discussion of intellectual property development, management, and protectionPotent insights into marketing and selling technology products to the global marketplaceTechniques for forecasting financials, raising funds, and establishing venture valuationBest practices in venture leadership and managing growthOverview of various exit strategies and how to prepare the venture for exit

Autoren/Hrsg.

Duening, Thomas N.

Hisrich, Robert A.

Lechter, Michael A.

Inhaltsverzeichnis

1;Front Cover ;1
2;Technology Entrepreneurship: Taking Innovation to the Marketplace ;4
3;Copyright ;5
4;Dedication ;6
5;Contents ;8
6;Acknowledgments ;18
7;About the Authors ;20
8;Preface ;24
9;Part 1: You Are Here: X ;26
9.1;Chapter 1: Technology Entrepreneurship Today: Trends, Opportunities, Challenges ;28
9.1.1;1.1. Introduction;29
9.1.2;1.2. Trends and Opportunities in Technology Entrepreneurship;31
9.1.3;1.3. A Word About Global Markets;36
9.1.4;1.4. Foundations of This Book;37
9.1.5;1.5. Chapter Summary;38
9.1.6;Keyterms ;40
9.1.7;Additional Reading;40
9.1.8;Web Resources ;41
9.1.9;Endnotes ;41
9.2;Chapter 2: Five Pillars of Technology Entrepreneurship ;42
9.2.1;2.1. Introduction;42
9.2.2;2.2. Pillar #1: Value Creation;43
9.2.3;2.3. Pillar #2: the Lean Startup;45
9.2.4;2.4. Pillar #3: Customer Discovery and Validation;48
9.2.5;2.5. Pillar #4: the Business Model Canvas;51
9.2.6;Value Proposition ;53
9.2.7;Customer Relationships ;53
9.2.8;Customer Segments ;53
9.2.9;Channels ;53
9.2.10;Revenue Streams ;53
9.2.11;Cost Structure ;53
9.2.12;Key Partners ;54
9.2.13;Key Activities ;54
9.2.14;Key Resources ;54
9.2.15;2.6. Pillar #5: the Entrepreneurial Method;54
9.2.15.1;2.6.1. Principle #1: Expert Technology Entrepreneurs Believe Value Creation Is the Primary Purpose of Their Business;55
9.2.15.2;2.6.2. Principle #2: Expert Technology Entrepreneurs Rebound Personally and Professionally from Failure;55
9.2.15.3;2.6.3. Principle #3: Expert Technology Entrepreneurs Respect Private Property and Uphold Contractual Obligations;56
9.2.15.4;2.6.4. Principle #4: Expert Technology Entrepreneurs Respect the Judgment of the Marketplace;56
9.2.16;2.7. Deliberate Practice;57
9.2.16.1;2.7.1. When to Start Practicing;59
9.2.17;2.8. Chapter Summary;60
9.2.18;Keyterms ;61
9.2.19;Additional Reading;62
9.2.20;Web Resources ;62
9.2.21;Endnotes ;62
9.3;Chapter 3: Technology Venture Idea Generation ;64
9.3.1;3.1. Introduction;64
9.3.2;3.2. Fundamental Venture Types;66
9.3.2.1;3.2.1. Business-to-business;68
9.3.2.2;3.2.2. Business to Consumer;69
9.3.2.3;3.2.3. Business to Government;71
9.3.3;3.3. The Idea Generation Process;72
9.3.3.1;3.3.1. Step 1: Identify a Point of Pain;72
9.3.3.2;3.3.2. Step 2: Innovate a Product or Service;74
9.3.3.3;3.3.3. Step 3: Test Business Models;76
9.3.3.4;3.3.4. Step 4: Explore How to Acquire Customers;78
9.3.4;3.4. The Opportunity Register;79
9.3.5;3.5. Nontraditional Idea Sources;81
9.3.5.1;3.5.1. Read Alternative Literature;82
9.3.5.2;3.5.2. Visit New Places and Experience New Things;83
9.3.5.3;3.5.3. Meet Thought Leaders;83
9.3.5.4;3.5.4. Team Up;84
9.3.6;3.6. Chapter Summary;84
9.3.7;Keyterms ;85
9.3.8;Additional Reading ;86
9.3.9;Web Resources;86
9.3.10;Endnotes ;86
10;Part 2: Countdown to Launch;88
10.1;Chapter 4: Markets and Product or Service Development ;90
10.1.1;4.1. Introduction;91
10.1.2;4.2. Product Planning and Development;91
10.1.3;4.3. The Idea Development Process;93
10.1.3.1;4.3.1. Describe the Idea and Competition;93
10.1.3.2;4.3.2. Determine the Need;94
10.1.3.3;4.3.3. Modify and Validate;94
10.1.3.4;4.3.4. Develop a Marketing Plan;95
10.1.3.5;4.3.5. Develop the Final Product or Service;95
10.1.3.6;4.3.6. Launch the Idea;95
10.1.4;4.4. The Concept of Newness;95
10.1.4.1;4.4.1. Newness to the Consumer;96
10.1.4.2;4.4.2. Newness to the Organization;97
10.1.4.3;4.4.3. Newness to the Distribution System;97
10.1.5;4.5. Opportunity Assessment Plan;98
10.1.6;4.6. Disruptive Technology;100
10.1.7;4.7. The Market;100
10.1.7.1;4.7.1. Market Segmentation;102
10.1.7.2;4.7.2. Target Market and Positioning;104
10.1.8;4.8. Chapter Summary;105
10.1.9;Keyterms ;105
10.1.10;Additional Readings;105
10.1.11;Web Resources;106
10.1.12;Endnotes ;106
10.2;Chapter 5: Protecting Your Intellectual Property ;108
10.2.1;5.1. Introduction;109
10.2.2;5.2. IP and Technology Ventures;109
10.2.2.1;5.2.1. IP Protection;112
10.2.3;5.3. Recognizing IP;114
10.2.4;5.4. Record Keeping;115
10.2.4.1;5.4.1. Record Keeping Procedures;116
10.2.4.2;5.4.2. Guidelines for Record Keeping;117
10.2.5;5.5. Trade Secrets;120
10.2.5.1;5.5.1. Procedures for Trade Secret Protection;120
10.2.6;5.6. Patents;122
10.2.6.1;5.6.1. The Patent Application;124
10.2.6.2;5.6.2. Written Description;125
10.2.6.3;5.6.3. Claims;127
10.2.6.4;5.6.4. Exclusive Right;127
10.2.6.5;5.6.5. Patentability;128
10.2.6.5.1;5.6.5.1. Patent-eligibility;129
10.2.6.5.2;5.6.5.2. Novelty and Nonobviousness;130
10.2.6.6;5.6.6. The Patent Examination Process;131
10.2.6.7;5.6.7. Patent Pending;131
10.2.6.8;5.6.8. Patent Ownership;132
10.2.6.9;5.6.9. International Patents;132
10.2.7;5.7. Copyrights;133
10.2.7.1;5.7.1. Considerations with Respect to Software;134
10.2.7.2;5.7.2. Copyrights and the Internet;135
10.2.7.3;5.7.3. Notice;136
10.2.7.4;5.7.4. Copyright Registration;136
10.2.7.5;5.7.5. Copyright Ownership;136
10.2.8;5.8. Mask Works;137
10.2.9;5.9. Trademarks;137
10.2.9.1;5.9.1. Acquiring Trademark Rights;138
10.2.9.1.1;5.9.1.1. Use-based Common-law and Combination Use-based Registration Systems;138
10.2.9.1.2;5.9.1.2. Pure Registration Systems;138
10.2.9.2;5.9.2. Registering a Trademark;139
10.2.9.3;5.9.3. Trademark Notice Symbols;141
10.2.9.4;5.9.4. International Protection of Trademarks;141
10.2.9.5;5.9.5. The Strength of a Mark;141
10.2.9.6;5.9.6. Choosing a Mark;144
10.2.10;5.10. Chapter Summary;144
10.2.11;Keyterms ;145
10.2.12;Additional Reading;147
10.2.13;Web Resources ;148
10.2.14;Endnotes ;148
10.3;Chapter 6: Legal Structure and Equity Distribution ;152
10.3.1;6.1. Introduction;153
10.3.2;6.2. Ownership and Liability Issues;154
10.3.2.1;6.2.1. Limited Versus Unlimited Liability;154
10.3.2.2;6.2.2. The Extent of Limited Liability;156
10.3.3;6.3. Choice of Legal Structure;159
10.3.3.1;6.3.1. Sole Proprietorship;160
10.3.3.2;6.3.2. General Partnership;162
10.3.3.3;6.3.3. Limited Partnership;164
10.3.3.4;6.3.4. Corporation;166
10.3.3.4.1;6.3.4.1. Structure of a Corporation;166
10.3.3.4.2;6.3.4.2. U.s. Tax Laws and Corporation Types;167
10.3.3.4.3;6.3.4.3. Maintaining Corporate Status;170
10.3.3.5;6.3.5. Limited Liability Company;171
10.3.3.5.1;6.3.5.1. LlC Characteristics;171
10.3.3.6;6.3.6. Limited Liability Entities—a Comparison;173
10.3.3.6.1;6.3.6.1. Expense;173
10.3.3.6.2;6.3.6.2. Shareholder Options;174
10.3.3.6.3;6.3.6.3. Taxation;174
10.3.3.6.4;6.3.6.4. Distribution of Profits and Losses;175
10.3.3.6.5;6.3.6.5. Formalities;175
10.3.4;6.4. Equity and Equity Types;176
10.3.4.1;6.4.1. Corporate Stocks;176
10.3.4.2;6.4.2. Common Stock;177
10.3.4.3;6.4.3. Preferred Stock;177
10.3.4.3.1;6.4.3.1. Preferred Stock Distributions;178
10.3.4.3.2;6.4.3.2. Convertibility;178
10.3.4.3.3;6.4.3.3. Participating Preferred;179
10.3.4.3.4;6.4.3.4. Voting Rights;179
10.3.4.3.5;6.4.3.5. Founder's Stock;179
10.3.5;6.5. Raising Capital;180
10.3.6;6.6. Equity Distribution in the Start-up Venture;182
10.3.6.1;6.6.1. Employee Stock Options;184
10.3.6.2;6.6.2. Vesting;185
10.3.6.3;6.6.3. Restrictive Clauses;185
10.3.6.4;6.6.4. Tax Issues;186
10.3.7;6.7. Chapter Summary;186
10.3.8;Keyterms ;187
10.3.9;Additional Reading;189
10.3.10;Web Resources;190
10.3.11;Endnotes ;190
10.4;Chapter 7: Developing and Implementing the Technology Business Plan ;192
10.4.1;7.1. Introduction;193
10.4.2;7.2. Writing the Business Plan;193
10.4.2.1;7.2.1. Purpose of the Plan;194
10.4.3;7.3. Elements of a Business Plan;196
10.4.3.1;7.3.1. Section 1;196
10.4.3.2;7.3.2. Section 2;199
10.4.3.2.1;7.3.2.1. Description of the Business;199
10.4.3.2.2;7.3.2.2. Description of Industry;199
10.4.3.2.3;7.3.2.3. The Technology Plan;199
10.4.3.2.4;7.3.2.4. The Marketing Plan;200
10.4.3.2.5;7.3.2.5. The Financial Plan;201
10.4.3.2.6;7.3.2.6. The Production Plan;202
10.4.3.2.7;7.3.2.7. The Organizational Plan;202
10.4.3.2.8;7.3.2.8. The Operational Plan;203
10.4.3.3;7.3.3. Section 3;204
10.4.3.3.1;7.3.3.1. Estimating (forecasting) Revenues and Expenses;204
10.4.3.3.2;7.3.3.2. Estimating Sales (revenue);204
10.4.3.3.3;7.3.3.3. Estimating Expenses;205
10.4.3.4;7.3.4. Business Plan Development and Update;205
10.4.4;7.4. Chapter Summary;206
10.4.5;Keyterms ;206
10.4.6;Additional Readings;207
10.4.7;Web Resources ;207
10.4.8;Endnotes ;208
11;Part 3: Into the Breach;210
11.1;Chapter 8: Capital and Capital Sources ;212
11.1.1;8.1. Introduction;212
11.1.2;8.2. The Capital Management Plan;213
11.1.3;8.3. Regulation of Financing Activities;217
11.1.3.1;8.3.1. Costs of Equity Financing;221
11.1.3.2;8.3.2. Sources of Equity Financing;222
11.1.3.3;8.3.3. Angel Financing;223
11.1.3.4;8.3.4. Venture Capital;224
11.1.3.5;8.3.5. What Do Venture Capital Firms Look For?;226
11.1.4;8.4. Debt Financing;227
11.1.4.1;8.4.1. Institutional Lender Requirements;228
11.1.4.2;8.4.2. Loan Rates, Payment Methods, and Lender Types;228
11.1.4.3;8.4.3. Small Business Administration (sba) Loans;230
11.1.5;8.5. Fundraising Tools and Techniques;230
11.1.5.1;8.5.1. Private Placement Memorandum;231
11.1.5.2;8.5.2. Subscription Agreement;231
11.1.5.3;8.5.3. Elevator Pitch;232
11.1.6;8.6. Alternatives to Debt and Equity Financing;232
11.1.6.1;8.6.1. Small Business Innovation Research (sbir);232
11.1.6.2;8.6.2. Small Business Technology Transfer (sttr);233
11.1.6.3;8.6.3. Bootstrap Financing;235
11.1.6.4;8.6.4. Licensing;235
11.1.7;8.7. Chapter Summary;235
11.1.8;Keyterms ;236
11.1.9;Additional Reading ;238
11.1.10;Web Resources ;238
11.1.11;Endnotes ;238
11.2;Chapter 9: Launching the Venture ;240
11.2.1;9.1. Introduction;241
11.2.2;9.2. Market Entry Positioning;242
11.2.3;9.3. Market Penetration Strategy;244
11.2.3.1;9.3.1. First Mover Advantage;245
11.2.4;9.4. Value Chain Analysis;246
11.2.5;9.5. Developing a Contingency Plan;247
11.2.6;9.6. Growing Beyond the Startup;247
11.2.6.1;9.6.1. Innovation;248
11.2.6.2;9.6.2. Ownership;249
11.2.6.3;9.6.3. Creativity;249
11.2.6.4;9.6.4. Change;251
11.2.7;9.7. Chapter Summary;252
11.2.8;Keyterms ;252
11.2.9;Additional Reading ;253
11.2.10;Web Resources ;253
11.2.11;Endnotes ;253
11.3;Chapter 10: Marketing and Selling Your Products ;256
11.3.1;10.1. Introduction;257
11.3.2;10.2. Target Market Selection;257
11.3.3;10.3. Purchasing the Product Service;258
11.3.4;10.4. Marketing;259
11.3.4.1;10.4.1. The Marketing Mix;260
11.3.4.2;10.4.2. Product Mix;260
11.3.4.3;10.4.3. Pricing;264
11.3.4.4;10.4.4. Placement (distribution);265
11.3.4.5;10.4.5. Promotion;267
11.3.4.6;10.4.6. The Promotion Budget;270
11.3.5;10.5. Chapter Summary;272
11.3.6;Keyterms ;272
11.3.7;Additional Reading;272
11.3.8;Web Resources ;273
11.3.9;Endnotes ;273
11.4;Chapter 11: Contracts ;276
11.4.1;11.1. Introduction;277
11.4.2;11.2. Sources of Contract Law;277
11.4.3;11.3. Contract Formation;279
11.4.3.1;11.3.1. The Offer;279
11.4.3.2;11.3.2. The Counteroffer;280
11.4.3.3;11.3.3. Acceptance;282
11.4.3.4;11.3.4. Revocation of Offer or Acceptance;283
11.4.3.5;11.3.5. Consideration;284
11.4.4;11.4. Defenses Against Contract Enforcement;284
11.4.5;11.5. Performance and Breach;286
11.4.5.1;11.5.1. Conditions;287
11.4.5.2;11.5.2. Excusing Less Than Complete Performance;287
11.4.5.3;11.5.3. Damages;288
11.4.5.3.1;11.5.3.1. Rescission and Restitution;289
11.4.5.3.2;11.5.3.2. Specific Performance;289
11.4.5.3.3;11.5.3.3. Quasi-contract;290
11.4.5.3.4;11.5.3.4. Reformation;290
11.4.6;11.6. Anatomy of a Contract;290
11.4.6.1;11.6.1. Preamble;290
11.4.6.2;11.6.2. Recitals;290
11.4.6.3;11.6.3. Definitions;291
11.4.6.4;11.6.4. Performance;291
11.4.6.5;11.6.5. Intellectual Property;292
11.4.6.6;11.6.6. Consideration;293
11.4.6.7;11.6.7. Representations and Warranties;294
11.4.6.8;11.6.8. Indemnity;295
11.4.6.9;11.6.9. Term and Termination;296
11.4.6.10;11.6.10. Miscellaneous Provisions;296
11.4.7;11.7. Types of Agreements Encountered;297
11.4.7.1;11.7.1. Operating Agreements;297
11.4.7.2;11.7.2. Employment Agreements;298
11.4.7.3;11.7.3. Noncompete Agreements;298
11.4.7.4;11.7.4. Confidentiality Agreements;299
11.4.7.5;11.7.5. Consulting and Development Agreements;300
11.4.7.6;11.7.6. Maintenance and Support Agreements;300
11.4.7.7;11.7.7. Manufacturing Agreements;300
11.4.7.8;11.7.8. Assignment Agreements;301
11.4.7.9;11.7.9. License Agreements;301
11.4.7.9.1;11.7.9.1. Patent Licenses;302
11.4.7.9.2;11.7.9.2. Know-how Licenses;302
11.4.7.9.3;11.7.9.3. Trademark Licenses;303
11.4.7.9.4;11.7.9.4. Franchise Agreements;303
11.4.7.9.5;11.7.9.5. Technical Services Agreements;304
11.4.7.9.6;11.7.9.6. Distribution Agreements;304
11.4.7.9.7;11.7.9.7. Value-added Reseller and Original Equipment Manufacturer Agreements;304
11.4.7.9.8;11.7.9.8. Purchase Agreements;305
11.4.8;11.8. Chapter Summary;305
11.4.9;Keyterms ;307
11.4.10;Additional Reading;309
11.4.11;Web Resources;309
11.4.12;Endnotes ;310
12;Part 4: Growth and Exit;312
12.1;Chapter 12: Venture Management and Leadership ;314
12.1.1;12.1. Introduction;315
12.1.2;12.2. Entrepreneurial Leadership;315
12.1.2.1;12.2.1. Influence;317
12.1.3;12.3. Leadership Skills;318
12.1.3.1;12.3.1. Analytical Skills;319
12.1.3.2;12.3.2. Decision-making Skills;320
12.1.3.3;12.3.3. Communication Skills;321
12.1.3.4;12.3.4. Conceptual Skills;322
12.1.3.5;12.3.5. Resilience Skills;323
12.1.3.6;12.3.6. Team-building Skills;324
12.1.3.7;12.3.7. Self-awareness Skills;325
12.1.3.8;12.3.8. Personality;326
12.1.3.9;12.3.9. Values;326
12.1.3.10;12.3.10. Attitudes;327
12.1.4;12.4. Entrepreneurial Leadership and Ethics;328
12.1.5;12.5. Chapter Summary;330
12.1.6;Keyterms ;331
12.1.7;Additional Reading;332
12.1.8;Web Resources ;332
12.1.9;Endnotes ;332
12.2;Chapter 13: Valuing and Exiting Your Venture ;334
12.2.1;13.1. Introduction;334
12.2.2;13.2. Due Diligence;336
12.2.2.1;13.2.1. Finances;337
12.2.2.2;13.2.2. Product/service Line;337
12.2.2.3;13.2.3. Synergy;337
12.2.2.4;13.2.4. Markets and Customers;338
12.2.2.5;13.2.5. Research and Development and Intellectual Property;338
12.2.2.6;13.2.6. Operations;339
12.2.2.7;13.2.7. Management and Key Personnel;339
12.2.3;13.3. Valuation;340
12.2.3.1;13.3.1. Valuation Techniques;340
12.2.3.2;13.3.2. Multiples Technique;340
12.2.3.3;13.3.3. Discounted Cash Flow Technique;341
12.2.4;13.4. Exit Via Succession;343
12.2.4.1;13.4.1. Advantages of Exit Via Succession;345
12.2.4.2;13.4.2. Disadvantages of Exit Via Succession;345
12.2.5;13.5. Exit Via Acquisition;346
12.2.5.1;13.5.1. The Acquisition Deal;348
12.2.5.2;13.5.2. Advantages of Exit Via Acquisition;348
12.2.5.3;13.5.3. Disadvantages of Exit Via Acquisition;349
12.2.6;13.6. Exit Via Merger;350
12.2.6.1;13.6.1. Advantages of Exit Via Merger;351
12.2.6.2;13.6.2. Disadvantages of Exit Via Merger;352
12.2.7;13.7. Exit Via Initial Public Offering;353
12.2.7.1;13.7.1. Timing;353
12.2.7.2;13.7.2. Selecting an Investment Bank;354
12.2.8;13.8. Registration Statement and Timetable;356
12.2.8.1;13.8.1. The Prospectus;356
12.2.8.2;13.8.2. The Red Herring;357
12.2.8.3;13.8.3. Reporting Requirements;357
12.2.8.4;13.8.4. Advantages of Exit Via Ipo;358
12.2.8.5;13.8.5. Disadvantages of Exit Via Ipo;359
12.2.9;13.9. Chapter Summary;360
12.2.10;Keyterms ;361
12.2.11;Additional Reading;362
12.2.12;Web Resources ;362
12.2.13;Endnotes ;363
13;Appendix I: Example of a Generic Confidentiality Agreement;364
13.1;Agreement Regarding Confidential Information and Technology;364
14;Appendix II: Example Executive Summary;368
14.1;Mission Statement ;368
14.2;Problem Being Solved ;368
14.3;The Solution ;369
14.3.1;Unique Sales Proposition ;369
14.4;Competition ;369
14.5;Market ;369
14.6;Market Segment ;370
14.7;Marketing Plan ;370
14.8;Price ;370
15;Appendix III : Sample Development Agreement ;372
15.1;Development Agreement ;372
15.1.1;Preamble ;372
15.1.2;Recitals ;372
15.1.3;Schedule 1 Deliverables ;377
15.1.4;Schedule 2 Performance Schedule ;377
16;Appendix IV: Example of an Employment Agreement ;378
16.1;Agreement Regarding Technology and Confidential Information ;378
17;Index ;384

Leseproben

Chapter 2 Five Pillars of Technology Entrepreneurship
Abstract
This chapter highlights what we refer to as the “Five Pillars of Technology Entrepreneurship.” These “pillars” are the fundamental tools and techniques that technology entrepreneurs should use and enact to improve the chance of success. The five pillars are: 1) Value Creation; 2) The Lean Startup; 3) Customer Discovery and Validation; 4) The Business Model Canvas; and 5) The Entrepreneurial Method. Each of these is discussed in detail in this chapter, providing readers with a thorough understanding of how to use these pillars for venture success. Keywords Deliberate practice Entrepreneurial expertise Expert technology entrepreneurs Value proposition, Value creation Lean startup Customer validation Business model canvas Entrepreneurial method iWanamaker Explores Its Market Opportunity iWanamaker is a live-scoring golf app that is designed to allow golfers to keep track of their scores on their smartphones. When founder Doyle Heisler first came up with the idea for the app, he envisioned that golfers and golf clubs would be as excited about the app as he was. When he took the app to clubs for them to use in their tournaments, he learned that club pros were reluctant to purchase it because of the low margins in the golf industry and their general aversion to innovation and change. Doyle next decided to market his product directly to the charities that run golf tournaments as fundraisers. He thought they would be interested in the product as it makes golf more fun for players and offers sponsor opportunities within the app itself. Again, however, he learned that charities are also averse to spending additional money on their golf tournaments and are indifferent to the new technology. As a result of these two initial failures to penetrate the lucrative golf market, Doyle decided to pivot to a new business model. Realizing that the more golfers that use the product the more he can charge for advertising, he decided to experiment with a “freemium” business model where he would virtually give the app to golf clubs and charities, and sell advertising to local and national brands that wanted exposure to golfers. As this book is going to press, iWanamaker 2.0 is about to be released under this revised business model. Time will tell if this is the model that leads to venture growth. The important thing is that Doyle was willing to change his business model based on what the market was telling him about his product and its features. Author Duening was an investor in and board member to iWanamaker at the time this book was going to press. 2.1 Introduction
Chapter 1 examined the focus and purpose of this book and some of the leading trends and challenges for technology entrepreneurs in the modern global economy. We hope that your appetite is now whetted for a lifetime of technology entrepreneurship and that you are ready to begin learning some of the practical tools of entrepreneurial expertise. Before we begin, we must warn those of you who are novices that developing entrepreneurial expertise takes time and practice. In fact, research into what is required to become expert in anything suggests that it can take 10 years or more of what is called deliberate practice to achieve expert-level competence.1 We address the process of deliberate practice in detail later in this chapter and provide you with some suggestions about how you can develop your own entrepreneurial expertise. The central theme of this chapter is that expert technology entrepreneurs have become adept at certain specific skills and ways of thinking about products and new ventures. These skill sets are referred to as the “five pillars of entrepreneurial expertise.” These five pillars are: 1. Value Creation 2. The Lean Startup 3. Customer Discovery and Validation 4. The Business Model Canvas 5. The Entrepreneurial Method Below we discuss each of these pillars in detail, beginning with the fundamental skill that all technology entrepreneurs must possess: The ability to create value for customers. 2.2 Pillar #1: Value Creation
Expert technology entrepreneurs know intuitively that value creation is the purpose of business. In fact, it doesn’t matter if you are a technology entrepreneur or a fast-food entrepreneur (or any other kind of entrepreneur). Your products and services must create value for customers. There are probably as many ways to create value as there are people on the planet. Consider the case of three individuals in Menlo Park, California, who set out to create a new type of Internet company in 2005. Menlo Park is located in the heart of Silicon Valley, which has been the birthplace of some of the most rapidly growing technology companies in history. These three individuals were veterans of technology companies, having previously been principals at PayPal. From their garage in Menlo Park, the entrepreneurs created YouTube, one of the fastest growing companies of all time. By July 2006, YouTube reported that more than 100 million videos were being watched and as many as 50,000 videos were being added to the site each day. In October 2006, a mere 10 months after it was launched, YouTube was acquired by Google for $1.65 billion.2 The concept of “value” has myriad definitions. Value is defined as whatever customers believe it to be. Technology entrepreneurs can develop successful ventures based on widely different value propositions. A value proposition is what a venture tells its customers about the value it intends to provide to them. For example, the value proposition for YouTube is: “Broadcast yourself.” That simple statement, while not necessarily appealing to everyone, is the foundation of the online video-sharing revolution. Creating value requires vision, passion, and an ability to adjust to customer needs and constantly evolving economic, social, and technological trends and conditions. Successful technology entrepreneurs realize that steadily advancing technologies and technological form factors must be taken into consideration in their product development and design processes. For example, Rovio was a developer of games for mobile phones which were sold at retail. It had developed 50 such products, but none of them became a big hit with users. Nearing the end of its cash flow, Rovio realized that the advent of smartphones, touch-screen technologies, and Apple’s new App Store would enable a new breed of games and distribution opportunities. Rovio decided to pivot from its retail-based business model to developing apps for the smart devices that were becoming increasingly ubiquitous. Their breakout product, sold through Apple’s App Store, was the popular game “Angry Birds.” Rovio reported that the game has been downloaded over two billion times.3 Value propositions are important to a venture. They help to communicate the value the venture provides to customers. Value propositions also help guide the venture’s internal decision making. For example, the value proposition for well-known consumer products company Procter & Gamble is “Touching lives, improving life.”4 This value proposition tells P&G scientists and product developers how to structure their investment of research and development resources. P&G introduces hundreds of new products to markets around the world each year. The firm’s value proposition guides internal decision making about which new products to pursue through multiyear development cycles.5 Fundamentally, creating value for customers seems too obvious to mention. Yet, a review of why new ventures fail indicates that the most common reason is because they fail to create appropriate value for customers. Instead, the failed ventures were guided by the founders’ vision of the product and its features, with no guidance from customers. Products were designed, built, and released without regard to what customers really want. Of course you know by now that customers, not entrepreneurs, determine what is valuable. Customers don’t always know what they want, but they always know what they don’t want. Technology entrepreneurs are well-advised always to remember that customers are the ultimate judges of value and determiners of the venture’s success. 2.3 Pillar #2: The Lean Startup
The Lean Startup was conceived and developed by serial entrepreneur Eric Ries.6 After a failed technology venture, Ries and his partners launched another technology venture called IMVU. IMVU is an instant-messaging platform that includes a novel feature that no other platform at the time was offering—3D avatars. The founders of IMVU were all technologically savvy—Ries himself is an expert programmer—so there was no question about whether they could build and deliver a working product. The question that perplexed Ries and that he wanted to solve in this new venture was “How do we get customers to buy our product?” In his previous venture, Ries was convinced that he and his team had built a world-class technology that provided benefits to customers, but not enough...