5. Capitalised with great fanfare
as a disruptive start-up aimed
at overturning traditional
grocers, Webvan positioned
itself as an integrated
substitute for supermarkets
With a much smaller
capitalisation, and focusing
on online grocery delivery
using existing chains,
Peapod positioned itself as a
complement to traditional
supermarkets
6. Two entrepreneurial companies…
both having access to significant resources…
seeking to exploit the same opportunity….
at the same time….
With fundamentally different strategies
7. Webvan ultimately burned
through ~ $1 billion and went
bankrupt less than two years
after its IPO…
Peapod established a
partnership with Ahold
(Stop&Shop), who ultimately
acquired majority ownership.
Highly profitable niche business,
with Parkinson brothers still in
direct operational control of the
company…
8. Why do some start-up firms earn extraordinary
returns while others struggle to even survive?
What are the key strategic trade-offs facing
innovation-driven entrepreneurs, and what factors should
guide strategy development and implementation?
How can I make informed choices that allow me to
establish and sustain a long-term competitive
advantage?
9. Is Entrepreneurial Strategy Simply
Coming up With a Great Idea?
“If a man can make a better mousetrap
than his neighbour, though he lives in
the woods the world will make a beaten
path to his door”
Ralph Waldo Emerson
10. Is Entrepreneurial Strategy Simply
Coming up With a Great Idea?
“If a man has good corn, or wood, or
boards, or pigs, to sell, or can make
better chairs or knives, crucibles, or
church organs, than anybody else, you
will find a broad, hard-beaten road to his
house, though it be in the woods.”
-Ralph Waldo Emerson
14. Paradox of Entrepreneurship
Coming to market requires:
1. Market Knowledge - the process of gathering knowledge
2. Market Experimentation - inherently limits the scope of
competitive advantage
15. Paradox of Entrepreneurship
Coming to market requires:
1. Market Knowledge - the process of gathering knowledge
2. Market Experimentation - inherently limits the scope of
competitive advantage
16. Entrepreneurial Strategy is the plan a founder (and their
team) undertakes to identify a system for value creation
and value capture before the opportunity for value capture
is dissipated.
• Combines systematic experimentation and learning
with escalating strategic commitments
• Not a passive process, but the active choices that
allow a firm to establish priorities, achieve internal
coherence, time irreversible commitments, and
ensure value capture
• A plan for choosing what NOT to do
24. Lytro Light Field Camera
• launched in 2011
• large VC interest
• Jobs approach
• $90m funding
Chose to build own
product rather than
license with a partner.
25. “I am thrilled to finally draw back the curtain and
introduce our new light field camera company,
one that will forever change how everyone takes
and experiences pictures. Lytro’s company
launch is truly the start of a picture revolution.”
-Ren Ng, Lytro Product Launch, 2011
26. Review: Lytro still in early-adopter
territory
Alice Truong, 2013
“The first time I came across Lytro last
spring, a member of the product team
explained to me that this revolutionary
camera — purported to let you shoot now
and focus later — isn't just for early
adopters….
“In recalling this moment almost a year later,
I decided to pack Lytro into my bag as I was
heading on holiday…not to say I don't see
Lytro's lure, but the experience proved to me
that this is still very much in early-adopter
territory…..
31. If you work at Chipotle, or Panera, or McDonald’s you might think we’re crazy
At Clover we do a lot of things unlike other fast food companies. Why? For taste of
course.
It’s hard to overstate how radically different we operate vs. our competitors. The
way we operate is unheard of in our industry. I mean unheard of to the point that
others don’t believe me until I show them around. No, really, there is no back-of-
house, everything we do is visible to our customers. At Clover we:
• Have no freezers. In the entire company. Not one.
• Change our menu day-to-day to stay in sync with the best tasting seasonal
ingredients.
• Cut food as close as we can to when you’re going to eat (e.g., tomatoes are cut
when you order)
• Keep your money in your region. (40-85% of our ingredients are from the Northeast)
• Use an unheard of amount of organic ingredients (typically 30-60% depending on
time of year)
• Don’t EVER use any preservatives, “natural flavors,” “flavor enhancers,” “artificial
flavors”*
• Make food that will improve your health (no need to tell the kids, but that food is
good for them)
• Allow you to see us making your food. We have no “back of house” anywhere in our
company.
• 100% of what we hand you is compostable. OK, nothing to do with taste. But it’s
the right thing to do.
35. Hipstamatic was launched in
2010 as a $1.99 iPhone app
with over a million users paying
for the app and enhancements.
Instagram was launched in
2010 as a free iPhone app
with an emphasis on sharing
with over two million users.
36. In 2011, Hipstamatic refused
acquisition offers from Twitter and
changed to focus on sharing.
Instagram was acquired by
Facebook in 2012 for around
$700 million.
38. -
-
()- )
()-)
Maximum Consumer
Is “Willing to Pay”
for the Product
Price the Consumer
Ultimately Pays
for the Product
Production Cost
Spent by the Firm
on the Product
Number of Consumers who
Purchase the Firm’s Product
“Traditional” Value Creation and Capture
39. But, this assumes we know the B
and the C …
For a start-up innovator, the first task
is figuring out how much value is
being created (and for whom)…
40. The Challenge of Entrepreneurial Strategy
TRADITIONAL STRATEGY ENTREPRENEURIAL STRATEGY
Clear understanding of customers and
willingness-to-pay
Clear relationship between value delivery
(“B”) and cost structure (“C”)
Static Industry Structure
Sufficient resources and time to achieve
operational effectiveness
Potential opportunities to establish a
position that can then be made immune
to competition
Diffuse understanding of customer
needs and potential willingness-to-
pay
Significant uncertainty about how
investments and other costs shape
value delivered
Highly dynamic and uncertain industry
structure
Limited (and uneven) resources,
unstructured organization, and
limited time
The Paradox of Entrepreneurship
41. Your individual challenge …
Find a recently established venture (2011 or later)
Describe what they are doing
Identify their core idea
Identify their business model in terms of the 4 choices
