Becoming an Entrepreneur edX

Entrepreneurship   Entrepreneurship is the pursuit of opportunity beyond resources controlled   Pursuit: the actions of an individual entrepreneur — drive, resiliency, focus, discipline, and balance Opportunity: the type of venture — a better, cheaper, or more efficient offering for the customer Beyond resources controlled: managing the risks of external constraints Entrepreneurial Myths Here's a bit more on the perceived hurdles:   Innovation/Idea: most ideas have been thought of before, and all will have competition. Success comes down to executing on your idea well and finding the right customers where you can solve their needs better. Think of all your favorite companies, and chances are, there was already someone doing a startup very similar when they founded. Time: starting a company does take time, and this just comes down to managing your time well. Focus on the things that matter most, and remember that perfect is the enemy of done. Recall also that many great ventures start as side projects, which is why companies like Google allow their employees 20% of their time to work on projects they think will benefit the company. Check out this article for more on when to go all-in with your startup, and this one for why the overnight success myth isn't real. Team: you can do a lot on your own, though when you do go to find teammates, understand the gravity of this decision and what is most important in choosing a great team. Check out this post for more. Funding: the average amount to start a company is only about $10,000 - $30,000 (depending on the source — Kauffman Foundation estimates $30,000, while the Small Business Association quotes smaller numbers). Most entrepreneurs fund their company either on their own, or with a small loan from friends and family. Media skews what is needed to start something with the few outliers who raise millions of dollars, but the truth is, it usually requires much less. Plus, check out this post for more debunking of some common myths of entrepreneurship. Product Development Outline — Start with a simple sketching or outline, ensuring alignment and getting feedback. MVP — Then, setup a "looks like" test — the offering with some manual workarounds but that still feels the same to the customer. Prototype — Finally, develop the full prototype after you have gotten feedback from these early tests. You may ask why there is such a long gap between the First MVP and the Prototype - the reason is that there are multiple iterations on the MVP until a more formalized prototype. The first MVP is rarely the correct version. There will be a lot of learning from it to iterate upon and integrate into multiple more versions before being ready for the prototype. Keep iterating until you feel confident that you have answers to most of the questions about customer behavior that you had at the outset.  

Creativity Exercise - Two Words Our first creativity exercise is called Two Words. Open a book or website, and point to a word at random. Now point to another word. These two words now make up the name of your fake company. What does your fake company sell? Who are your customers? And how do you go about selling it? You don't need to take the words literally. Creativity Exercise - Mindmapping write a word or phrase of something you're interested in, like technology, travel, or entertainment. Spend the next several minutes reading the first few things that come to mind around that word, and then a few things that come to mind around each of those and so on. Try to go at least three to four layers out. When you're done, highlight a few of the words in the outside layer, and piece them together into a potential company. Creativity Exercise - The Brick Test Take a brick. If you don't have a brick, think about a brick. Now come up with as many alternative uses for the brick is possible in one minute. You can do this with a friend and compare ideas after.   Brainstorming and Filtering Finding Opportunities Look for ways that current customers of the market aren't fully satisfied with the solutions available, plus look for potential customers who do not have access or skills for current offerings. List your own underserved needs or frustrations Listen to customers in this market about their frustrations Watch your competitors — both top companies and newly hyped companies in the industry, assessing their strengths and weaknesses. Read online customer reviews of current offerings and identify their biggest unmet needs. Assess barriers to being a customer to see if there are certain skills, access, awareness, etc. that makes the offering accessible to these customers, but prevent it from being desirable or accessible to others. Some Reminders for the Process As you brainstorm, there are NO BAD PROBLEMS TO SOLVE Build on concepts — ask “how might this work?” versus “why wouldn’t it work?” Write down ALL problems — no matter how silly – they can build to something great! Go for quantity — this isn’t the time to be filtering yet — that comes later. Avoid: Thinking that it's already been done. Waiting only for "quality" ideas. Focusing on the solution instead of the problem. Filtering Our tool for filtering is to check the items roughly against “fit” and “potential”. Fit — be a founding team that others believe in Roughly assess each problem based on how excited you would be to work on it, and whether or not it plays to your strengths. Potential — give confidence that you would be creating value that you can capture Roughly assess each problem based on whether there is a real need with customers who are desperate for a solution. Determine which problems score high on both dimensions. Narrow to a few problems through this process, then review these a bit further. Do some research, plus get some outside input. If you find yourself leaning towards one even if it not being the highest ranked, that's fine! Trust your gut over the numbers — this was just a helpful first pass to narrow the list. There’s no magical formula for the perfect idea, but it’s important to be passionate about what you are working on, have the ability to execute on it, and feel confident in the potential. Teaming Teaming Relationships are hard, and this is especially true in startups, when the ups and downs of the process cause emotions and tensions to run high. Startups are much more likely to fail due to issues within the founding team than any other problem. Sixty-five percent of startup failures result from “people problems,” compared with only thirty-five percent failing for any other reason—including funding, customer acquisition, and product development. You can minimize interpersonal challenges by finding the right co-founders and setting up expectations for how you’ll work together. The success of a team can be broken down...

Research Methods Market research is the process of gathering information about your customer’s needs and preferences. There are lots of ways to get input from customers. Some include: Interviews or observations—bring depth to the customer frustrations to help you uncover important opportunities, and refine the target customer in order to make surveys and internet research more directed and valuable Internet research—most suited towards covering specific topics such as researching competition or learning more about the market size. Surveys—most suited towards gathering quantitative data or rankings, such as determining the most important purchasing criteria for a specific group of customers. There are advantages to each of the different research methods, though the advantages of interviews, in particular, makes them most suited to this early stage. Interviews allow you to get actionable insights on customer needs to build an offering of value. Surveys work best after an initial need is uncovered and verified, so that actionable and pointed questions to your target customers can help you design your product. This will be covered in a later section of the course.   How to Interview What NOT To Do Don’t come into a customer interview feeling you have the answers. If your idea doesn't adjust at least some based on these conversations, you're not listening. Don’t expect customers to have the answer. They'll know their frustrations and needs, but not necessarily how to solve it. Do not sell! This is the time to learn, so do NOT mention your specific ideas for how to solve the problem. Do not include friends and family in your interviews - you will not get as realistic perspective on the problems. What To Do Focus on the need, not the solution! Beware of confirmation bias — you are NOT there to validate what you think, you are there to uncover a need. Do it in person, one at a time — this will allow you to pick up on cues from gestures and facial expressions. Ask open-ended questions — this makes it a conversation and allows you to get to more depth of the need you may not have thought about before. Get subjects to tell a story. Listen much more than you talk! Follow your nose and drill down (Why? Why?...). Understand their priorities..   Dropwise Example Interview results / insights Renters tend not to have to pay for water usage, so are less likely to implement a solution Homeowners would prefer to use less water due to: Monthly costs Environmental impact Water shortages Homeowners who have the biggest concern of the above are in locations like California, where there has been a drought Target customer: eco-friendly homeowners in California who install energy- saving products, such as the Nest thermostat.    

In this section, we will cover: Using surveys to determine the most important dimension to your customer Competitive positioning Developing your value proposition, including your customer, industry, your promise of value, and how you will achieve it         Customer v. End User Often, your customer will be different from the end user, and many early startups make the mistake of optimizing a solution for the end user. Keep in mind that your customer is whoever is paying for the offering, though the person who obtains value from what you develop may be different. Here are a few examples: Educational products — the school is the customer while students are often the end users Public transportation — governments pay for the solution while commuters are the most common end user Corporate products — the business buyer will be the customer while it is usually another person in the organization is the end user In all of these scenarios, you need to appeal to both the customer and the end user, though optimizing to the needs of the customer is most important. Brainstorming Solutions Refer to your list of the top priorities of your target customer, the person with the biggest burning need in this area. Spend some time coming up with lots of potential ways to provide a solution that optimizes against just those top priorities. This is where it is important to really consider the full breadth of options, and to not just continue with your pre-conceived notion of how the problem may be solved. Consider the following to prompt the breadth of potential solutions: What products do this? Why aspects are helpful to my customers and which are unnecessary? What is missing from these that my customer cares more about than the customers of this product? What services support customers with this problem? Are there forums, blogs, softwares, trainings, platforms, apps, consultants, etc. who provide solutions? What are the pros and cons of each? Where are the gaps for the customers I have identified as lacking a solution? Remember - the existence of competition does NOT mean that there is not an opportunity! In fact, competition shows that there is a real need. Your job is to find a way to better meet the needs of your customers, while seeing what opportunities that your competitors have not learned to meet - including specific customers, marketing channels, scaling challenges, and more. Value Proposition What to do: Clearly identify your specific customer Use numbers in the benefit, such as "30% less water usage" Under promise, over deliver Keep it short and simple (just one sentence) What NOT to do: Try to have everyone as your customer Framing your industry narrowly as your specific product type Having a vague benefit like "better quality" Listing too many features that muddles the confidence in your ability to deliver Outline for writing a value proposition statement: For (target audience), our company is the brand of (industry or other frame of reference or type of product/service) that delivers (quantified primary benefit / promise) through (key attributes / strategy).

In this section, we will cover: MVP — Minimum Viable Product — and how to develop it Customer acquisition — the channels and methods for selling Elevator pitches Important: you will iterate a LOT during this phase of your startup. Your solution will need to change as you get feedback from customers - that's a good thing! If you aren't changing, you aren't learning.    Customer Acquisition Let's calculate some of the standard customer acquisition costs across different types of channels: Google Ads have an average cost per website click of $1.50 and average % conversion rate of those website clicks of 2.2%. Facebook Ads have an average cost per website click of $0.27 and an average % conversion rate of 1%. Let’s assume that mailing flyers will cost 3 minutes of time charged out at $10 per hour, and that flyers have a 1% conversion rate. Let’s assume that personal selling through warm introductions and targeted customer outreach requires 10 minutes of time per customer and has a 20% conversion rate.     An MVP is a minimum viable product, so a simple proof of the basic functionality is all that is needed. A wireframe or pilot can be an MVP, though a manufacturing-ready prototype or an app with all of the features is more than is needed at an early stage to test the hypotheses

In this section, we will cover: Operations High level financials