1、Entrepreneurial Ventures: How do you do them? Gordon Bell 29 February 2000,High Tech Ventures: A Guide to Entrepreneurial Success C G Bell & J McNamara, Addison Wesley, 1991 http:/ Bell-Mason Diagnostic,A system based on a company development model for measuring risk, predicting the course, tracking
2、 the progress, and improving high tech, high growth, early stage ventures aka startupshttp:/ Bell-Mason Diagnostic Founding Premise,“You dont have to understand the technology to ask the right business questions“ The BMD provides the critical technology, product, marketing, and people expertise,The
3、Bell-Mason Diagnostic Background,A rule-based system to assess new ventures Developed by Gordon Bell, and Heidi Mason, with Coopers & Lybrand over a 5 year period Based on experience with 100s of ventures Shows “health & risk“ of a new venture by: asking a series of questions in 12 categories, at ea
4、ch stage of 4 stages of growth Licensed to Coopers & Lybrand (1990) for startups Licensed to Digital (1991) for corporate ventures Licensed to Australian Ventures (1997) Licensed to Diamond Technology Partners (1999) for IntraVentures,Using the Bell-Mason Diagnostic a versatile tool to answer questi
5、ons about:,Readiness - Are we (i.e. the venture) ready to start up? Are we ready to go to the next stage? Initial Screening - Should we look closer at investing? Due Diligence - Should we invest now? Ongoing tracking & planning - Is the venture on track? External review - What is the health of the v
6、enture?,The Bell-Mason Diagnostic,Space: Twelve standard dimensions characterize a venture (a chapter of High Tech Ventures) Time: Four, well-defined stages of company development with 7 sub-stages of product and market development Quantification: Clear, yes/no questions (i.e. rules) incapsulate kno
7、wledge for evaluating a company Visualization: a relational graph shows company position,12 Dimensions of Analysis,Four Stages of Growth,Time: Four Stages of Growth,IPO,Overview,Outcomes of stage-to-stage transition,Move to the next stage Loop within a stage by receiving more funds License technolog
8、y or product for funds to complete the stage Return to an earlier stag, finish requirements (e.g. redesign product or address a different market) Acquisition by or merger with a stronger company Cease operations,Stage,Stages and sub-stages of a Venture,Concept I 0-? Months II Seed (Plan the Company)
9、 3 - (6) -12 III Product Development 6- (23) - 37 Hire and Plan, IIIa 0 - (3) - 6 Design and Build, IIIb 4 - (14) - 24 Alpha (internal) Test, IIIc 1 - (3) - 5 Beta (external) Test, IIId 1 - (3)- 5 IV Market Development 2 - (3) - 4 yearsCalibrate Market, IVa 3 - (6) - 9 Market Expansion, IVb (mkt. be
10、ta) 6 - (9) - 12 Steady-State Operation, IVc 12 - 18 Steady-state Company .,BMD Checklist Questions: Scoring the “Ideal“,Heuristic - It has been determined (and verified by numerous experiments in software engineering) that by using a method of inspection whereby one or more persons “walk through“ a
11、nother persons programs, fewer errors occur in the resulting product. Rule - Engineering must have a design review process which includes code inspection or code walk-throughs. BMD Question - Does engineering have a design review process which includes code inspection or code walk-throughs?,BMD Stag
12、ed Evolution of Questions,Concept - “Does the company have evidence of product possibilities, given the technology, that customers are likely to buy?“ Seed - “Does a simple product specification exist with features and functions that can be presented to potential users?“ Product Development - “Are a
13、n appropriate number of beta systems (3 for large systems, 20 for mass marketed software) operating in real user environments with users satisfied and testifying that the product exhibits unique capabilities and/or significant performance and/or performance/price benefits?“,Evolution of the “Ideal“
14、State at Each Stage,Business Plan at Concept & Seed,I. CONCEPT 6-10 page plan for technology, product, market and development of formal business plan completed plan successful in raising Seed Stage financing II. SEED 20 - 30 page formal business plan produced, with 8 key components Verifies and refi
15、nes assumptions from beginning of stage Funding requirements and milestones based on product development schedule All key risks identified, evaluated and rationalized for current plan,Examples: A Market Failure A Product Failure,Ovation: At Product Introduction,An Example, Ovation, Founded: 1982 Fun
16、ding: $6.8 million Product: Ovation, to be sold for $ 495. Next generation integrated software with word processing spreadsheet, database management, and communications. Target Market: Fortune 1000 volume corporate purchase Outcome: Chapter 11, October 1984 - having won product of the year as “vapor
17、ware“,Analytica: Market Development,An Example: Analytica, Founded 1982 Funding: $8 million Product: Reflex, to be sold for $495 Next generation microprocessor software - relational database with integrated, easy to use analytical tools Target Market: Fortune 1000, volume corporatepurchase, departme
18、ntal orientation (eg. sales) Outcome: Distress acquisition by Borland 10/85,Venture Life Cycle for e-Ventures,Ventures,Stimulating New Companies,Encouraging New Ventures,Understand the critical factors (people) that create wealth - not just those that store it or move it around Reduce and eliminate
19、bureaucracy Some examples: SJ Center for Software Innovation Boulder Tech Incubator , The Corporate Incubator: copiers to consultants Teknikron Singapore Industrial Development Japans MITI Informationalization ala Davis & Davidsons 2020 Vision,Exogenous Effectors for Each Dimension,Eng, sci., tech,
20、tech svcs, univs, other co.s, consultants,Tech workforce, sub-contractors, components,Cash & financing experience, “patience“,BOD with Industry, market, product, engineering, financial experience,Trained pool of gen. mgrs successful “role models“,Customers, sales personnel, channels to international
21、 mkt.,Market, infrastructure for “complete“ product, partners, strategic alliances, PR, etc.,Reasonable expectations, patience,Trained personnel to hire, area-specific consultants,Acctng, legal, financing infra- structure,Market,Competitive Products, co-components,MITI Role in Establishing Industrie
22、s,I. Development of a domestic Japanese industry. a. Market control. Imports limited essentially to zero. b.Borrowed technology c.Vertical integration of most manufacturing d. Major investments. Establishing an export market base. a. The establishment of world-wide sales organizations. b. Researchin
23、g and understanding of the foreign markets. c. Establishment of a reputation for quality and reasonable prices. d. A limited focus, especially in those markets less attractive to domestic manufacturers. III. Major market penetration. a. Cooperation among the Japanese companies with respect to models
24、, prices, and markets. b. Focus at the mainstream of the foreign market. c. High inventories because of poor markets in Japan, i.e., an export push at any cost is necessary and expedient. d.Extremely low prices to the mass market to gain market share IV. Market exploitation. A period marked by highe
25、r prices (e.g. TV sets),Does it work?,0,10,20,30,40,50,60,70,80,90,100,0,5,10,15,20,25,30,35,Company,Averaged Diagnostic Score,Companies that scored 75 or over had a business success rate of 95%,Source: Nanyang Mgmt PLC Ltd,What do you need to do? What are some common flaws?,Business Plan Flaws,Unre
26、alistic Plans Doing Research and Calling It Product Development Losing Touch with Reality Lack of a Sustaining Technology or Product Questionable Motivation (Chronic Entrepreneur, Getting Even, Getting Rich, Lacking a Sustaining Product) Skipping the Seed Stage Multiple Agendas Two or More Start-ups
27、 in One . doing too much Writing a plan while part of another organization is immoral and potentially illegal!,Business Plan Seed Questions,4.1 Has the five-year business plan (about 20-30 pages sans financial appendices) been updated, expanded, and confirmed as a result of the seed stage? The busin
28、ess plan has a five-year strategy and direction, but primary emphasis in planning should be for the next 24 to 36 months, with: executive summary with vision, mission and business statement technology uniqueness for a sustaining company product concept (what) with critical areas to explore and compe
29、titive scene rationale (why) in terms of customers and applications gross estimates of target market (who)using a simple “market map“ to identify the channels of distribution (how sold), including some consideration to international key milestones in product development for the various functions yea
30、r financial plan, including product cost with first two years in detail by quarter resources estimates in $s, time and people (including their biographies),Business Plan Seed Questions -2,4.2 Does the plan indicate a sustainable company and initially verify the assumptions explored in seed? (e.g. is
31、 technology implementable, is the engineering plan valid, why will customers buy?) 4.3 Does plan refer to a detailed plan for Product Development Stage III (objectives, schedule with milestones, $ and people resources)? 4.4 Are the product development times, product cost and performance, and externa
32、l risks (e.g. component or process) clearly identified and are they accounted for in the funding of the plan?,CEO Seed Questions,7.1 Has the CEO led the team to successful and timely completion of the principle objectives of the Seed stage: proof of technology uniqueness, clear translation of that u
33、niqueness to the development plan for the product and a successful financing? 7.2 Has the CEO been successful in attracting/recruiting key employees and Directors for the Board? 7.3 Is the CEO a leader and team builder across departments and can he/she lead and manage the team? 7.4 Has the CEO under
34、stood and resolved the content, scheduling and management interdependencies of engineering and marketing in the early phases, and manufacturing and sales in the later stages? 7.5 Can the CEO function actively as company missionary in pre-selling, negotiating strategic alliances, and co-development p
35、artners during Product Development?,CEO Flaws,Low Energy, Low Intelligence, and/or Low Integrity Inadequate Hiring Skills (and Inability to Attract an A team) Poor Managerial and Team Building Skills Inability to Build a Team or Keep a Team Together Inability to Sell the Company to the Financial Com
36、munity (Failing the Short Socks Test),Team Seed Questions,8.1 Are the key people on board (core leaders who form technology and product development, manufacturing if critical processes are required, and marketing) functioning as an integrated team (6-8 people)? 8.2 If innovative manufacturing proces
37、ses are required such as in semiconductor or disk manufacturing, is an experienced manufacturing leader with a core team of functional specialists on board? 8.3 Is the team orientation a balance of “do“ and “manage“ , i.e. can each of the members “play“ several positions on their teams, versus just
38、being able to manage players? 8.4 Have criteria been established for hiring and is there a systematic method in place for recruitment? 8.5 Is everyone informed about the company via effective staff meetings where review, direction setting, and problem identification/resolution takes place? 8.6 Has t
39、he team explicitly described their desired corporate culture and is it compatible with recruiting and the reward structure? A corporate culture statement should exist, and the benefits and compensation plan should be in line with the statement.,Team and Board Flaws,A Mercenary Team Conflicting Egos
40、Lack of Respect -Incompetence in one or more groups. Love of each other is not a criterion for team members. The team falls apart at Concept or Seed because of their inability to get along while preparing the Business Plan. Board of Directors An Investor Heavy Board with No Industry Experience A Boa
41、rd That Runs the Company No External Product/Market Review with a TAB or CAB,The End,Who Are the Users?, entrepreneurs intrapreneurs management employees board investors bankers equipment lessors government infrastructure,How A Diagnostic Is Performed,1. Review Business Plan and Historical Material
42、(1/2 day) 2. Select appropriate stage BMD questionnaires, and re-read questions prior to the interview (1 hour) 3. Arrange and perform diagnostic interview session with CEO and top-level team (1/2 day) 4. Analyze and summarize interviews using the BMD software for comments, scoring and graphing. Pro
43、duce results package and recommendations for company (1/2 day) 5. Present results of diagnostic to company (2 hours),Goals of the Bell-Mason Diagnostic,1. Understand new ventures, particularly start-ups - demystify, turn art into science 2. Provide common “ground-rules“ or “checklist“ for analysis,
44、diagnosis and implied prescription for: a. Entrepreneurs and Intrapreneurs b. Engineers and marketeers c. Financial community, including venture capital d. General business community and academe 3. Encapsulate traditional and venture capital wisdom in order to improve the start-up process 4. Alterna
45、tive to cases and statistical factor analysis (Approach is similar to medical training),Goals of the Bell-Mason Diagnostic -2,To make “new venturing“ a science-based, factory-like process. To provide a method of “new venturing“ that is as widely acclaimed and reliable as software engineering managem
46、ent methodology is in creating and evolving new software. An entrepreneurial or intrapreneurial venture can be started up and run with a very high ( 50%) likelihood of success.,BMD Functions and Benefits-1,Readiness Initial screening of business plan,Self-diagnosis to aid the entrepreneur or intrapr
47、eneur Quick and accurate means of categorizing and sifting business opportunities; aids in making initial decisions; expands the number of opportunities to review,BMD Functions and Benefits-2,In-depth tool for “due diligence“,Speeds and improves accuracy and thoroughness of due diligence; yields ris
48、k profiles in a day; improves the odds of making good investments,BMD Functions and Benefits-3,On-going tracking system at key stages in company development,Insures position with efficient “early warning system“ for on-going assessment of companies; continued health and risk profiles aid in mid-cour
49、se correction and assessment of additional funding,BMD Functions and Benefits-4,Standard system for measuring, tracking, and reporting among management, directors, and investors,“Short hand“ reporting system to measure business effectiveness, manage expectations, and bring responsible investors into high technology,
