18. AMAR BHIDE
I'd just go sell it. I don't believe in market research. Somebody
once told me the only thing you need is a customer. Instead of
asking all the questions, I'd try and make some sales. I'd learn
a lot, you know: which people, what were the obstacles, what
were the questions, which prices work better. Even before I
started production. So my market research would actually be
hands-on actual selling."
Source: Sarasavathy (2007)
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scientific business strategy
19. AMAR BHIDE
"Ultimately, the best test of any product is to go to your target
market and pretend like it's a real business. You'll find out soon
enough if it is or not. You have to take some risks. You can sit and
analyze these different markets forever and ever and ever, and
you'd get all these wonderful answers, and they still may be
wrong. The problem with the businessman type is they spend a
lot of time with all their great wisdom and all their spreadsheets
and all their Harvard Business Review people, and they'd either
become convinced that there's no market at all or that they have
the market nailed. And they'd go out there big time, with a lot of
expensive advertising and upfront costs, because they're gonna
overwhelm the market, and the business would go under."
Source: Sarasavathy (2007)
paulshawsmith
scientific business strategy
21. Effectual Thinking
(Imaging a possible new end using a given set of means)
Outcome
Opportunities
Outcome
Resources
Outcome
Knowledge Outcome
Outcome
People
Outcome
paulshawsmith
scientific success strategy
22. Effectual Thinking
Meal 1
Knowledge of
Cooking
Meal 2
Ingredients
on Hand
Meal 3
Equipment
Meal 4
Available
People I Meal 5
Know
Meal 6
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scientific success strategy
23.
24. Effectual Thinking
Course
Match
FaceMash
Partner
Friends
Customer
Students
Harvard
Connection
paulshawsmith
scientific success strategy
25. How much money is need to start the business
& what percentage of the money do you have?
0 10 20 30 40 50 60 70 80 90 100
0% of money 100% of money
Can you do it?
26. What knowledge do you need to start your
business & what percentage of that
knowledge do you have?
0 10 20 30 40 50 60 70 80 90 100
0% of knowledge 100% of knowledge
Can you do it?
27. What physical resources do you need to start
your business & what percentage of those
physical resources do you have?
0 10 20 30 40 50 60 70 80 90 100
0% of physical resources 100% of physical resources
Can you do it?
28. What people and contacts do you need to
start the business & what percentage of those
people & contacts do you have?
0 10 20 30 40 50 60 70 80 90 100
0% of people/contacts 100% of people/contacts
Can you do it?
29. Will I do it?
paulshawsmith
scientific business strategy
30. “I paulshawsmith
was pursuing
my passion.”
scientific business strategy
42. 4 Will pre-order and pay now!
3 Will purchase once released
2 Might purchase but…
1 Will not purchase
Customer interest before launching
43. 4 Purchases and is a raving fan!
3 Purchases
2 Interested but doesn’t purchase because…
1 Not interested and does not purchase
Customer interest after launching
44. 4 Number of level 4 reactions
3 Number of level 3 reactions
2 Number of level 2 reactions
1 Number of level 1 reactions
BM improve when these figures improve
45. W1 W2 W3 W4 W5 W6 W7 W8
4. Purchased
or 0% 0% 5% 7% 10% 15% 20% 25%
pre-paid
3. Purchased
or will 0% 10% 10% 10% 15% 20% 25% 30%
purchase
2. Will
purchase 25% 25% 25% 30% 30% 30% 35% 35%
but…
1. Not
75% 65% 60% 53% 45% 35% 20% 10%
interested
The aim is to increase the no. of level 3 and 4 reactions
46. Customer Loyalty?
4 Will definitely purchase again & only from you
3 Will purchase again from you
2 Will purchase again if…
1 Never purchase again
47. 4 Will definitely purchase again & only from you
3 Will purchase again from you
2 Will purchase again if…
1 Never purchase again
BM improve when these figures improve
48. What percentage of potential customers
marketed or sold to buy the product?
0 10 20 30 40 50 60 70 80 90 100
0% 100%
Will people buy it?
49. What percentage of customers purchase the
product again?
0 10 20 30 40 50 60 70 80 90 100
0% 100%
Will people buy it?
50. Will it make money?
paulshawsmith
scientific business strategy
52. Sales
Less: Costs
What are the expected costs?
53. Sales
Less: Costs
____________
Profit
What is the expected profit?
54. How happy are you with the expected profit
the business will make?
0 10 20 30 40 50 60 70 80 90 100
0% 100%
Not at all happy Extremely happy
Will it make money?
55. Will it grow?
paulshawsmith
scientific business strategy
56. Higher Potential Lower Potential
Problem Solve an important problem Not important to customer
Payback to user Less than 1 year More than 3 years
Performance Significant improvement Small improvement
Value added High value added Limited vale added
Barriers to entry High Low
Uniqueness Unique solution Many competitors
57. Higher Potential Lower Potential
Customer High Limited
acquisition ability
Customer Low High
acquisition cost
Customer retention High Low
Customer lifetime High Low
profit
58. Higher Potential Lower Potential
Market size Large Limited
Market growth Growing Declining/mature
Market structure Fragmented, emerging Highly concentrated,
industry mature/declining industry
Market capacity Under capacity Full or excess capacity
Market share Market leader 20% or more Limited 5% or less
attainable
59. Higher Potential Lower Potential
Revenue type Recurring Once off
Profits Strong profits Weak profits
Predictability Predictable revenues Unpredictable revenues
No. revenue streams Multiple Single
Timing Collect than spend Spend than collect
60. Higher Potential Lower Potential
Channel access Accessible Inaccessible
Control High control No. control
Visibility Visible to prospects Limited visibility
Reach Whole target market Limited reach
Customer match Good customer fit Poor customer fit
61. Higher Potential Lower Potential
Entrepreneurial Balanced team Individual or missing skills
team
Industry knowledge Excellent track record Limited
Key people A team B or C team
Ease to replicate Difficult to replicate Easy to replicate
Intellectual property Competitive advantage Limited advantage
62. Higher Potential Lower Potential
Scalability Highly scalable Limited
Ease of replication Difficult to copy Can be easily copied
Operations Highly efficient Limited efficiency
63. Higher Potential Lower Potential
Contact & networks Well developed Limited
Partnerships Work with partners if need to Avoids partnerships
Relationship Win-win Win-lose
64. Higher Potential Lower Potential
Capital Low; fundable Very high; difficult to fund
requirements
Asset intensity Low/sales High/sales
Costs Cost advantage No cost advantage
Capital expenditure Low/incremental High requirements
requirements
65. Is it based on fact ?
paulshawsmith
scientific business strategy
66. What is aBHIDE
AMAR business plan?
WAGs
paulshawsmith
scientific business strategy
73. of high growth internet start ups
fail due to premature scaling.
paulshawsmith
scientific business strategy
Source: Start Up Genome Report(2011)
74. Startups that scale properly
grow about
times faster than startups that
scale prematurely
paulshawsmith
scientific business strategy
Source: Start Up Genome Report(2011)
76. 7.1 Doable? 4.1 How?
3. Product/ How will you acquire
Can you perform the
Market fit? customers?
8.1 Terms? Key activities?
1. Customer?
What terms will the 7.2 Costs? Will the customers Who is the
buy the product?
4.2 Costs?
partners require? customer?
Costs to perform Cost to acquire a
Key activities?
customer?
8.2 Costs? Profitable?
2. Market
How much will they Will the business 5.1 Terms? Size?
charge? 6.1 Acquirable? What are the channel
Make money? What is the
Can you acquire terms? Market size?
The key resources?
6.2 Costs? 5.2 Costs?
Cost of key resources? Cost of distribution?
9. Costs? 5. Pricing?
What are your fixed and variable costs? How will you charge? How much will you charge?
What percentage of these questions can you answer?
78. I’ll start cheap make sure I… cover my cost don’t have to
take huge risks…. uhm… one thing I’m sure about my
experience… never take any risk if you can help it… it is
just the opposite of what most people think about….
Entrepreneurs [E5]
paulshawsmith
scientific business strategy
79.
80. “When we started the airline 25 years age this year. I went to Boeing. I
AMAR BHIDE
remember the telephone call.
“Hello this is Richard Branson, wonder whether you could sell me a
second hand 747?”
“What is the name of your business?”
“Virgin.”
“What do you do?”
“We have a record company and have great bands like the sex pistols the
rolling Stones.“
And then there was a long pause, and instead of putting the phone down.
He said, “We will send a salesman over and as long as your airline goes
further than your name suggests we will let you have a plane.”
The key point there is we said to Boeing we don’t know if this is going to
work. We realise that this is risky, and we want to be able to hand the
plane back after 12 months if it doesn’t work out. And that is the element
of protecting the downside and that is the critical thing.
paulshawsmith
scientific business strategy
Source: Wall Street Journal Video, 2009-10-15
82. AMAR BHIDE
“Back when I launched eBay on Labour Day 1995, eBay wasn’t
my business – it was my hobby. I had to build a system that
was self-sustaining… …because I had a real job to go to every
morning. I was working as a software engineer from 10 to
7, and I wanted to have a life on the weekends. So I built a
system that could keep working – catching complaints and
capturing feedback – even when Pam and I were out
mountain-biking, and the only one home was our cat.
Source: Omidyar (2002)
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scientific business strategy
84. Size
R50 million - ‘01
R30 million – ‘98
100 employee – ‘97
‘92 – Gotcha, Wrangler Agencies
& Biotribe factory Time
Source: Saravathy (1998)
85.
86.
87. Size
R50 million
Chinese Imports - ‘01
R6 to R13 to dollar
R30 million – ‘98
100 employee – ‘97
‘92 – Gotcha, Wrangler Agencies
& Biotribe factory Time
Source: Saravathy (1998)
88. Having lost my business so suddenly, I was now setting up a
licensing base and succeeding in spreading my risk across a
number of products, licensees and manufacturers. We have
the brands, they have the factories. With this licensing
model, we find the best manufacturers and negotiate a
win/win partnership with them – I provide the product
ideas and brand knowledge and they produce products they
are already successful at making, but under our brand.
Together we have a thriving business.
paulshawsmith
scientific business strategy
89. R160 million – ‘09
Size
R50 million
Chinese Imports - ‘01
R6 to R13 to dollar
R30 million – ‘98 2 employees – ‘05
100 employee – ‘97
’04 – 20 Licenses
‘92 – Gotcha, Wrangler Agencies ‘01 – Licensing model
& Biotribe factory Time
Source: Saravathy (1998)
90. With the benefit of hindsight, I know now that back in
2001 the business I had built was hugely exposed to
external risks. Today, I would not employ that many
people. I would not make and distribute so many diverse
products from just one facility. It makes far more sense to
outsource production to manufacturing and distribution
experts who have all the expertise and channels in place. I
would, and do, take forward cover on any international
forex importing and exporting we do. I keep overheads to
an absolute minimum and maintain tight control over all
financial aspects of the business.
paulshawsmith
scientific business strategy
91. How affordable are your businesses
losses if you fail?
0 10 20 30 40 50 60 70 80 90 100
0% 100%
I cannot afford to lose I can afford to lose
anything I put into the everything I put into
business the business
Affordable loss
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
For example, read Steven Covey’s – bestseller the 7 habits of highly effective people. One of the lessons I picked up from there was “begin with the end in mind”.
I then read and listened to many of Brain Tracy’s
What they suggest you want to achieve great things in business you should begin with a vision. You than go and find the people, resources, and knowledge needed to turn that vision into a reality.
If we used an example of a chef…
I am going to convince you that epically in the early stages of starting a business these ideas are wrong. Yes, new research on entrepreneurship shows that these guys have gotten it wrong. But before I show you the research for those of you who don’t know lets introduce a little bit about these concepts in detail and how they think.
Started with R300,000 and turned it into R2 billion. Bruce Flohr, founder of RailTex.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
“I was pursuing my passion.” – PierrieOmyar
And as a result most successful entrepreneurs will probably recommend that you let passion be your guiding force, like Richard Branson says “start your business around something that is a passion of yours”
I then read and listened to many of Brain Tracy’s
“I was pursuing my passion.” – PierrieOmyar
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
Take for example this large scale study done by Reynolds (1987) they showed that business which started with large sales in the first year were far more likely to grow then business which didn’t.
Mark Zuckerberg when he started facebook had spent month building the site, and before building the site he had built similar site called facemash.com. Were he hacked university network downloaded all the girls photo’s and created a site that would bring up two photos that would allow user to choose what was prettier and then create a list of hottest girls downwards. As you can imagine the feminist at Harvard did not take kindly and he was almost expelled. But the moral is that he spent a number of months preparing.
I then read and listened to many of Brain Tracy’s
I then read and listened to many of Brain Tracy’s
I then read and listened to many of Brain Tracy’s
I then read and listened to many of Brain Tracy’s
I then read and listened to many of Brain Tracy’s
I then read and listened to many of Brain Tracy’s
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
Exactly how to make intelligent guess or create a workable business model.
What is pre-mature scaling. No it is not scaling the fish before it’s dead, or getting on the bathroom scale before it is ready for you.
What is pre-mature scaling. No it is not scaling the fish before it’s dead, or getting on the bathroom scale before it is ready for you.
It is when you start growing a business before you have found product-market fit.
One of the best examples of pre-mature scaling was webvan.
A recent study done last year by a group of researchers in silicon valley 3,200 internet start ups found that a full 74% of internet start ups failed because they tried to grow the business. Before they had found product market fit.
They also found that business that found product-market fit grow at about 20 times faster than startups that scale to early. The bottom line is you don’t want to start making moves on that girl until you know she is very interested and will be willing to stick around.
Exactly how to make intelligent guess or create a workable business model.
There is the big idea that very successful entrepreneurs are wild crazy risk takers. In fact,
There is the big idea that very successful entrepreneurs are wild crazy risk takers. In fact,
There is the big idea that very successful entrepreneurs are wild crazy risk takers. In fact,
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.