1st 5

Entrepreneurship
Background / Introduction
Quiz (16 Letter Word)
ENT___ ‐ RE__ ‐ PRE___ ‐
NEUR____ ‐____SHIP
Entrepreneurship
Words & Meanings
Entrepreneurship
Cambridge English Dictionary:
“Entrepreneurship: Skill in starting new businesses, especially
when this involves seeing new opportunities”
Entrepreneurship
Wikipedia:
“Entrepreneurship is the process of designing, launching and
running a new business, which is often initially a small
business.
The people who create these businesses are called

entrepreneurs.”
Entrepreneurship
Harvard Business School:
“Entrepreneurship is the pursuit of opportunity beyond resources
controlled.”
– “Pursuit” implies a singular, relentless focus.
– “Opportunity” implies an offering that is novel in one or more of
four ways. The opportunity may entail:
1) pioneering a truly innovative product;
2) devising a new business model;
3) creating a better or cheaper version of an existing product; or 4)
targeting an existing product to new sets of customers.
– “Beyond resources controlled” implies resource constraints.

Which Entrepreneurship?
• Cambridge English Dictionary
• Wikipedia
• Harvard Business School

Entrepreneurship at MIT
• MIT (Massachusetts Institute of Technology) alumni have
launched more than 30,000 active companies, employing well
over 4 million people, and generating nearly $2 trillion in
annual revenues — a figure greater than the gross domestic
product (GDP) of the world’s 10th‐largest economy.
• Responsible for Entrepreneurship Education at MIT: Martin

Trust Center for MIT Entrepreneurship / MIT Sloan School of
Management
Why is MIT so successful at turning out entrepreneurs?
The first response people often have is that the students at MIT are extremely
intelligent.
• MIT’s students are no smarter than those at other topflight institutions of

higher learning throughout the world (Caltech, Harvard, and the like), but
none of them, other than Stanford, come close to producing
entrepreneurial alumni like MIT.
Why is MIT so successful at turning out entrepreneurs?
The second response is that this success comes about because MIT students
have access to leading‐edge technologies in the laboratories, and thus it is
easy for them to start companies.
• The Technology Licensing Office (TLO) at MIT have the numbers on how
many companies are started each year with technology out of the labs
because they have to be licensed through this office.
• This number is 20 to 30 companies per year, which is very impressive when

compared to the stats at other universities. Yet this number seems small
when we consider that MIT alumni as a whole start 900 companies per
year.
The real reason why MIT is so successful at creating
new companies is:
“Positive Feedback Loop for Spirit and Skills”

A Tale of Two Entrepreneurs:
Understanding Differences in the Types of
Entrepreneurship in the Economy
Bill Aulet and Fiona Murray

Martin Trust Center for MIT Entrepreneurship
May 2013
DOWNLOAD: https://www.kauffman.org/what‐we‐do/research/2013/05/a‐tale‐of‐two‐entrepreneurs‐understanding‐differences‐in‐the‐types‐of‐entrepreneurship‐in‐the‐economy
Entrepreneurship
Small Medium Enterprise of business that is likely started by
one person to serve a local market
Small and medium enterprise and grows to be a small or
entrepreneurship (SME) is the type
mediumsize business that serves local market. They are looking to
this local market. sell their offering at a global or at
Innovation‐Driven Enterprise least at a regional level.
Innovation‐driven enterprise (IDE)

entrepreneurship is the more risky
and more ambitious. IDE
entrepreneurs are aspiring to serve
markets that go well beyond the
Entrepreneurship
• “Non‐tradable jobs”—jobs generally
Small Medium Enterprise performed locally (e.g., restaurants, dry
cleaners, and service industry).
• Focus on addressing local and regional
markets only. • Most often family businesses or
businesses with very little external
• Innovation is not necessary to SME capital.
establishment and growth, nor is
competitive advantage. • The company typically grows at a linear
rate. When you put money into the
company, the system (revenue, cash • “Tradable jobs”—jobs that do not have
flow, jobs, etc.) will respond quickly in to be performed locally.
a positive manner.
• More diverse ownership base including
Innovation‐Driven Enterprise a wide array of external capital
providers.
• Focus on global/regional markets.
• The company starts by losing money,
• The company is based on some sort of but if successful will have exponential
innovation (tech, business process, growth. Requires investment. When
model) and potential competitive you put money into the company, the
advantage. revenue/cash flow/jobs numbers do
not respond quickly.
Entrepreneurship
Small Medium Enterprise Innovation‐Driven Enterprise
SME – vs – IDE
• A healthy economy consists of both types of
entrepreneurship and both have their strengths and
weaknesses.
• Neither is better than the other.
• But they are substantively different enough that they require

different mindsets and different sets of skills to be successful.
Our Focus
Innovation‐Driven Enterprise
Innovation
Innovation = Invention * Commercialization

Quiz (12 Letter Word)
ENT___ ‐ RE__ ‐
PRE___ ‐NEUR____
Entrepreneur
Entrepreneur
• The invention (an idea, a technology, or some sort of
intellectual property) is important, but the entrepreneur
does not need to create the invention.
• In fact, the inventions that lead to innovation driven

companies often come from elsewhere.
• The capability to commercialize an invention is necessary for

real innovation.
• An entrepreneur, then, serves primarily as the

commercialization agent.
Common Myths
• Individuals start companies. Research tells a different story.
Teams start companies. Importantly, a bigger team actually
adds to the odds of success.
• Entrepreneurs are charismatic and that their charisma is a key

factor in success. Instead, research shows that more
important than being charismatic, entrepreneurs need to be
effective communicators, recruiters, and salespeople.
• There is an entrepreneurship gene. There are real skills that

increase the odds of success, such as people management,
sales skills, product conception and delivery. These skills can
be taught.
Entrepreneur
Have spirit (of a pirate / hacker) ‐ is willing to be
different / uncommon.
Successful Entrepreneurs = Spirit + Skill

Successful Entrepreneur
• Heart (Mindset)
You want to be an entrepreneur and believe you can do it
• Head (Knowledge)
You need to get the wisdom (failure + learning)
• Hands (Capability)
Practice
• Home (Community)
Have other people who are doing it and working together
Lecture Summary
• Entrepreneurship
• Small Medium Enterprise
• Innovation‐Driven Enterprise
• Innovation
• Common Myths
• Successful Entrepreneur
Entrepreneurship
Discussion
Which Entrepreneurship?
• Cambridge English Dictionary
Skill in starting new businesses, especially when this involves seeing new opportunities
• Wikipedia
Process of designing, launching and running a new business, which is often
initially a small business
• Harvard Business School

Pursuit of opportunity beyond resources controlled
1) pioneering a truly innovative product;

2) devising a new business model;
3) creating a better or cheaper version of an existing product; or 4) targeting an existing
product to new sets of customers.
A Tale of Two Entrepreneurs:
Understanding Differences in the Types of
Entrepreneurship in the Economy
Bill Aulet and Fiona Murray
Martin Trust Center for MIT Entrepreneurship
May 2013
DOWNLOAD: https://www.kauffman.org/what‐we‐do/research/2013/05/a‐tale‐of‐two‐entrepreneurs‐understanding‐differences‐in‐the‐types‐of‐entrepreneurship‐in‐the‐economy
Entrepreneurship
Small Medium Enterprise of business that is likely started by
one person to serve a local market
Small and medium enterprise and grows to be a small or
entrepreneurship (SME) is the type
mediumsize business that serves and more ambitious. IDE
this local market. entrepreneurs are aspiring to serve
Innovation‐Driven Enterprise markets that go well beyond the
local market. They are looking to
Innovation‐driven enterprise (IDE) sell their offering at a global or at
entrepreneurship is the more risky least at a regional level.
SME – vs – IDE
• A healthy economy consists of both types of
entrepreneurship and both have their strengths and
weaknesses.
• Neither is better than the other.
• But they are substantively different enough that they require

different mindsets and different sets of skills to be successful.
Our Focus
Small Medium Enterprise • Focus on addressing local and regional
markets only.
• Innovation is not necessary to SME Innovation‐Driven Enterprise
establishment and growth, nor is
competitive advantage. • Focus on global/regional markets.
• “Non‐tradable jobs”—jobs generally • The company is based on some sort of
performed locally (e.g., restaurants, dry innovation (tech, business process,
cleaners, and service industry). model) and potential competitive
advantage.
• Most often family businesses or
• “Tradable jobs”—jobs that do not have
businesses with very little external to be performed locally.
capital.
• More diverse ownership base including a
• The company typically grows at a linear wide array of external capital providers.
rate. When you put money into the
company, the system (revenue, cash • The company starts by losing money, but
flow, jobs, etc.) will respond quickly in a if successful will have exponential
positive manner. growth. Requires investment. When you
put money into the company, the
revenue/cash flow/jobs numbers do not
respond quickly.
Entrepreneurship
Small Medium Enterprise Innovation‐Driven Enterprise
Entrepreneur
• The invention (an idea, a technology, or some sort of

intellectual property) is important, but the entrepreneur
does not need to create the invention. In fact, the inventions
that lead to innovation driven companies often come from
elsewhere.
• Innovation = Invention * Commercialization

• The capability to commercialize an invention is necessary for
real innovation. An entrepreneur, then, serves primarily as
the commercialization agent.
Entrepreneur

Never Forget!
What is the single necessary and sufficient condition for a
business?
• It is not a product, a technology, a customer need, a business

plan, a vision, a strong team, a CEO, money, investors,
competitive advantage, or company values. While all those
are great things for a business to have, none of them is the
right answer.
• The single necessary and sufficient condition for a business is
a paying customer.
Discussion
What could be the process that can
• help you succeed (i.e., you will find paying customer(s)), or
• it can help you fail faster if failure was inevitable for the path
you were on.
Entrepreneurship
Disciplined Entrepreneurship
Recap
• Entrepreneurship
– Small Medium Enterprise
– Innovation‐Driven Enterprise
• Innovation
– Innovation = Invention * Commercialization
• Entrepreneur
– Successful Entrepreneurs = Spirit + Skill
– Serves primarily as the commercialization agent
• The single necessary and sufficient condition for a

business is a paying customer.
DISCIPLINED ENTREPRENEURSHIP
• MIT has created a 24 step process/framework for
entrepreneurs so that they can build Innovation‐Driven
Enterprise.
• It is called “Disciplined Entrepreneurship”
• The process can help you succeed, or it can help you fail
faster if failure was inevitable for the path you were on.
Six Themes of the 24 Steps

• The 24 Steps are discrete and can be grouped into six
themes.
• Each step should be done in numerical order with the

understanding that in each step, you will learn things that will
prompt you to revise the work you have done in earlier
steps.
• These themes present a general outline of how the 24 Steps
will help you create a sustainable, innovation‐based business.
• Successful Entrepreneurs = Spirit + Skill

• Who is your customer?
• What can you do for your customer?
• How does your customer acquire your product?
• How do you make money off your product?
• How do you design and build your product?
• How do you scale your business?
STEP 0: GETTING STARTED
Step 0: Getting Started
Three Ways to Start a New
Venture
Have an Idea:
You have thought of something new that can change the

world— or some small part of it—in a positive way, or
something that can improve an existing process you’re familiar
with and you want to implement it.
• New type of Software Development Company
• New Mobile Game
• New Idea to Buy/Sell “Real Estate” more Securely

Venture
Have a Technology:
You have come up with a technological breakthrough and want

to capitalize on it, or simply expedite its deployment to have a
positive effect on society.
Or, you have learned about a technological breakthrough and

you see great potential for a business.
• Expertise in New Technology for Software Development
• Idea to build IoT based Mobile Game
• AI Algorithm to Securely Buy/Sell “Real Estate”

Venture
Have a Passion:
You are confident and you are comfortable pushing yourself to

develop your skills in the most comprehensive way possible.
You also might believe that being an entrepreneur is the way to

have the biggest impact on the world.
You simply might know that you want to work for yourself and
control your own destiny, but you don’t have an idea or
technology yet.
Worksheets: Passion Checklist & Idea/Technology Brainstorming Notes

Venture
“Passion” Checklist:
• Founding a company will be really, really hard and I still want to do it.
• It will be a lengthy process loaded with humiliating failures along the way, and I must
learn from them and not take them personally.
• I cannot do it alone.
• The path to success is not an algorithm with set rules to follow, but an iterative process
where I can only increase or decrease the odds of success, but I cannot guarantee
anything. Even if I achieve success, it is only temporary.
• The goal is to make an “anti‐fragile” organization—one that gets stronger over time
when faced with problems, failures, uncertainty, and surprises.
• When others provide advice, I will listen, but I will also recognize that it is up to me to
choose which advice to implement, and how to implement it, since only I own the final
results and accountability.
• I will have to leave my comfort zone every day to grow and continue to be successful.
• I am doing this for more than the money. I believe in my cause and my team.

Venture
From “Passion” to “Technology” or “Idea”:
• Knowledge: What was the focus of your education or career?
• Capability: What are you most proficient at?
• Connections: Who do you know that has expertise in different industries? Do you know
other entrepreneurs?
• Financial assets: Do you have access to significant financial capital, or will you be
relying on a meager savings account to start out?
• Name recognition: What are you or your partners well‐known for?
• Past work experience: In previous jobs you’ve held, what inefficiencies or “pain points”
existed?
• Passion for a particular market: Does the idea of improving healthcare excite you?
How about education? Energy? Transportation?
• Commitment: Do you have the time and effort to devote to this endeavor? Are you
ready to make a new venture your primary (or only) focus?
User Entrepreneurship
Often, you will find an idea or technology that improves
something for you personally, then realize that idea or
technology has the potential to help many others.
This phenomenon is called “user entrepreneurship”;

Founding Team
Find a Founding Team:
• No matter how you have become interested in entrepreneurship, you
need to start by first answering the following question: What can I do well
that I would love to do for an extended period of time?
• Your choice of co‐founders is extremely important. The research at MIT

suggests that businesses with multiple founders are more successful
than those founded by an individual.
• Also remember, founding team may not remain intact from “Idea” to
“Business” stage. This is often necessary to create a stronger, more
unified team that is better suited to capture an opportunity on a
longerterm basis. This is an important evolutionary process.
Worksheet: Founding Team
Founding Team
Find a Founding Team:
• Name
• How do we know each other?
• Knowledge
• Skills
• Passions/Interests
• Founding Team Potential

STEP 0: GETTING STARTED
IDEATION
Ideation
Market Pull
An excellent starting point for a new venture is a “market pull” where you
identify an unfilled yet meaningful need to fix some “customer pain,”
something for which there exists some group of people who are willing to pay
money for a solution.
We call it “market pull” because you are being pulled by the customer to
satisfy an already‐defined general market demand. Coming up with a good
market pull is hard—otherwise, everyone would start a company. The most
important thing for now is to be open to the ideation process and come up
with ideas that your team thinks are worth pursuing.
Ideation
Market Pull
• WHAT: What is the general problem we are trying to solve or the
opportunity we are looking to capitalize on?
• URGENCY: Vitamin pill (i.e., nice to have), Pain killer (i.e., solves a critical
problem), Game changer (i.e., opens new market opportunities)
• WHY US: Our team has or would have the following assets that would
make us uniquely qualified to implement this idea.
• PASSION: Summarize why our team cares so much about this idea that
we are willing to embark on this arduous & humbling journey.
Worksheet:
Market Pull Mini‐Canvas
Ideation
Technology Push
Another starting point can be a “technology push” based on some new‐tothe‐
world concept that has the potential to create new market opportunities.
It could be a hardware breakthrough out of a lab with significant intellectual

property around it, or it could be taking a technology‐enabled business
model or process to a new market.
Think of an Uber‐like business model that builds a platform between

underutilized assets and disaggregated demand to create more efficient
markets—such a business is much more viable when every customer has a
smartphone in their pocket.
Worksheet:
Often people refer to this approach as “a solution looking for a problem” or
the metaphor “a hammer looking for a nail,” which is an apt description.
Ideation
Technology Push
• WHAT: Description of the invention/technology
• WHY US: Why we have a significant advantage over anyone else with
regard to this invention
• LEAP FORWARD: Compared with the most relevant current alternative,

why is it so compelling that it will make people and industries change
• PASSION: Summarize why our team cares so much about this idea that
we are willing to embark on this arduous & humbling journey.
Worksheet:
Technology Push Mini‐Canvas
Ideation
Hybrid (Technology Push + Market Pull)
The reality is that most often teams start with market pull, but there is some
technology push, especially from universities and research and development
laboratories.
In some cases, however, teams start somewhere in between the two models
of market pull or technology push.
Ideation
Worksheet:
Hybrid (Technology Push + Market Pull)
• MARKET PULL: This idea is relevant to the _________________ market
because it will produce significant value by _______________________
• TECHNOLOGY PUSH: The enabling technology invention is __________
• WHY US: What makes us especially qualified to pursue this opportunity?
Hybrid Idea Consolidated Mini‐Canvas
Remember
Worksheet:
This step is just the starting point of a long journey.
• Your analysis of the customer and the marketplace will lead

your journey through the 24 Steps,
• not your idea or technology, no matter how amazing you

think it is now.
Worksheet:

Who is your customer?
1. Market Segmentation
2. Select a Beachhead Market
3. Build an End User Profile
4. Calculate the Total Addressable Market (TAM) Size for the Beachhead
Market
5. Profile the Persona for the Beachhead Market

9. Identify Your Next 10 Customers

What can you do for your customer?
6. Full Life Cycle Use Case
7. High‐Level Product Specification
8. Quantify the Value Proposition
10. Define Your Core
11. Chart Your Competitive Position

How does your customer acquire your
product?
12. Determine the Customer’s Decision‐Making Unit (DMU)
13. Map The Process to Acquire a Paying Customer
18. Map the Sales Process to Acquire a Customer

How do you make money off your product?
15. Design a Business Model
16. Set Your Pricing Framework
17. Calculate the Lifetime Value (LTV) of an Acquired Customer
19. Calculate the Cost of Customer Acquisition (COCA)

How do you design and build your product?
20. Identify Key Assumptions
21. Test Key Assumptions
22. Define the Minimum Viable Business Product (MVBP)
23. Show That “The Dogs Will Eat the Dog Food”

How do you scale your business?
14. Calculate the TAM Size for Follow‐on Markets
24. Develop a Product Plan

Worksheets
• Passion Checklist
• Founding Team
• Idea/Technology Brainstorming Notes
• Ideation
– Market Pull Mini‐Canvas
– Technology Push Mini‐Canvas
– Hybrid Idea Consolidated Mini‐Canvas

Entrepreneurship
Market Segmentation
(Disciplined Entrepreneurship: STEP 01)
Recap (Step 0)
• Getting Started ((Idea OR Invention) AND Passion)
– Passion Checklist
– Idea/Technology Brainstorming Notes
• User Entrepreneurship
– Find a Founding Team
• Ideation:
– Market Pull
– Technology Push
– Hybrid (Technology Push + Market Pull)
• Disciplined Entrepreneurship
– Six Themes of the 24 Steps
Getting Started
When getting started, you should have an idea or

technology that answers the question,
“Is this something the world could benefit from, and is it
something I do well and would love to do for an extended
period?”
• Once you have identified an idea or technology as the basis

for your innovation‐driven business, you must rigorously test
and flesh out your proposal through the 24 Steps.
• The process can help you succeed, or it can help you fail
faster if failure was inevitable for the path you were on.
• Each step of “Disciplined Entrepreneurship” framework is

discrete; should be done in it’s numerical order, but will
prompt you to do revise work you have done in earlier steps.

• Your first goal is to assess the needs of potential customers

– Focus on a target customer with the goal of achieving product‐market
fit.
• Product‐Market Fit: a product that matches, what customers in a specific market are
interested in buying).
• The first 5 steps are designed to help you determine your

target customer.
Market
STEP 1: MARKET
SEGMENTATION
Market Segmentation
What is the single necessary and sufficient Condition for a
Business?
• The single necessary and sufficient condition for a business is a
paying customer.
• Now, just because you have a paying customer does not mean you
have a good business.
– In order to have a good, sustainable business, you will need to gain

enough customers paying enough money within a relatively short period
of time so you do not run out of capital, but instead, become profitable.
• Therefore, you will not start by building a product or hiring

developers or recruiting salespeople.
– Instead, you will take a customer‐driven approach by finding an unmet
need and building your business around it.
Market Segmentation
Need to Create a New Market
• Creating an innovative product where no market currently

exists is essential to the success of a startup.
• By creating a new market, you will have a very high, if not

dominant, market share that you can use as a basis for future
expansion.
• Being a “me‐too” company in an existing market is a more

difficult proposition given your limited resources.
Common Pitfalls
While paying customers ultimately determine whether your

product is successful, there are two common pitfalls you may
encounter if you do not focus on creating a new market.
• Selling to Everyone: is the idea that you, can make products
that fit the needs of anyone you run across.
• The China Syndrome: is the idea that rather than to create a
new market, one could choose a huge existing market, get a
fraction of the market share, and reap the rewards.
Need to Identify Target Customer

• To create this company in a newly defined market space, you
will focus on a target customer.
• A target customer is a group of potential customers who

share many characteristics and who would all have similar
reasons to buy a particular product.
Customer
We call “customer” to refer to the entity; such as a household,

organization, or individual; who pays for, acquires, and uses your
product.
• Primary Customers (end user), who ultimately uses your
product.
• Secondary Customers (economic buyer), who makes the final
decision about whether to acquire the product.
The end user and economic buyer can be the same person,
depending on the situation.
Customer
Two cases in which definition of customer gets more

complicated.
• The first is when your business model calls for both primary customers
(end users) and secondary customers (economic buyers) in order to make
money. e.g., Google Search is free to use, but Google sells advertisements
on search results pages to make money.
– Market Segmentation Strategy: Focus on Primary Customer
• The second case is called a two‐sided or multi‐sided market, where you

need multiple target customers for your business to exist. e.g., eBay is a
good example, because it needs both sellers and buyers (supply and
demand) to participate in its auctions to be successful.
– Market Segmentation Strategy: You will need to focus on each side of the market, but
you may find that one of them is more critical for success than the other.
Market Segmentation
• To choose the best market, you’ll do a Market Segmentation

that uses primary market research to pinpoint the best
markets to draw your attention.
– Primary market research: Information gained by talking directly with,
interacting directly with, and directly observing customers and
potential customers.
Market Segmentation
• For instance, an education startup would be poorly served by

targeting the general category “teachers” as their end users,
as it is too general.
• This general description ignores the differences between:
– public and private schools;
– primary, secondary, and postsecondary education;
– rural, suburban, and urban schools; and
– young, inexperienced teachers and older, veteran teachers.

Market Segmentation
Three stages of Market Segmentation:

• Brainstorm a wide array of potential customers and markets
for your business.
• Narrow your list down to your top 6–12 markets.
• Gather Primary Market Research on your top 6–12 markets.
Summary (Step 01 Part 01)
• What is the single necessary and sufficient Condition for a

Business?
• Need to Create a New Market
– Common Pitfalls (Selling to Everyone, The China Syndrome)
• Need to Identify Target Customer

– Primary Customers (end user), Secondary Customers (economic buyer)
– Two cases in which definition of customer gets more complicated
• Market Segmentation
– Brainstorm
– Narrow your list down to your top 6–12 markets.

– Gather Primary Market Research on your top 6–12 markets.
Entrepreneurship
Market Segmentation
(Disciplined Entrepreneurship: STEP 01)
Recap (Step 01 – Part 01)
• What is the single necessary and sufficient Condition

for a Business?
Market Segmentation
• To choose the best market, you’ll do a Market Segmentation

that uses primary market research to pinpoint the best
markets to draw your attention.
– Primary market research: Information gained by talking directly with,
interacting directly with, and directly observing customers and
potential customers.
Market Segmentation
• For instance, an education startup would be poorly served by

targeting the general category “teachers” as their end users,
as it is too general.
• This general description ignores the differences between:
– public and private schools;
– primary, secondary, and postsecondary education;
– rural, suburban, and urban schools; and
– young, inexperienced teachers and older, veteran teachers.

Market Segmentation
Three stages of Market Segmentation:

• Brainstorm a wide array of potential customers and markets
for your business.
• Narrow your list down to your top 6–12 markets.
• Gather Primary Market Research on your top 6–12 markets.
Brainstorming
If you have an idea, you may think you already have a specific
market and a specific application in mind.
• However, you need to determine whether your perceptions are
correct.
– Likely, your defined market is not specific enough;
– you may also find that the market you have in mind is not a good match
for your idea; or
– that other markets are better for starting a business. – Be open‐minded
and creative.
• What industries and end users could my idea or technology apply

to?
Brainstorming
Brainstorming Tips:
1. Get the right people in the conversation: You should discuss with not just
your founders, but also consider other relevant parties such as domain
experts, technologists, creative types, facilitators, and others you deem
appropriate.
2. Be clear on the dual purpose of the brainstorming: You want to get the right
people in the conversation because you’re not just making a comprehensive
list of potential markets. You’re also selecting and refining your initial team
and then creating alignment for that foundational team.
3. Get in the right place with the right tools: Find a place where everyone feels
comfortable because it is important that constraining hierarchical
relationships and distractions are eliminated or at least kept to a minimum.
Brainstorming
Brainstorming Tips:
4. Get the right rules to brainstorm by: The renowned design firm IDEO
have seven little rules that unlock the creative power of a brainstorming
session.
– Defer judgement.
– Encourage wild ideas. – Build on the ideas of others. – Stay focused on the
topic.
– One conversation at a time.
– Be visual.
– Go for quantity.
Brainstorming
Brainstorming Tips:
5. Identify, empower, and develop a facilitator: Find or appoint a facilitator to
enforce the rules you agree to in #4 above, and empower that person to
guide the process. That person should take this responsibility seriously and
prepare for the session.
6. Get everyone in the right mood: The facilitator should help getting people in
the right/positive mindset about brainstorming is incredibly important.
7. Focus on being specific: Make sure everyone understands they are

brainstorming potential end users. Do not worry now about who will pay for
the product; if there is no end user, there will be no economic buyer.
8. First pass to get the ideas out: Don’t critique, combine, reject, or otherwise
discourage ideas. Just get them out and write them down in a
nonjudgmental fashion.
Brainstorming
Tool: What industries and end users could my idea or technology apply to?
Narrow
• Now that you have lots of ideas, it is time to start narrowing

down the field to eliminate from consideration market
segments that would be weak options for your startup.
• The goal is to get to a manageable list so that later you can

do a deeper analysis on a small number of market segments.
• Each time, before you eliminate a market segment, allow

time for the group to discuss to make sure the group has all
the information before making such a decision. This
discussion can be a powerful learning and alignment process.
Narrow
Criteria that you can use to narrow down list of potential markets:
1. Is the target customer well‐funded?
If the customer does not have money, the market is not attractive
because it will not be sustainable and provide positive cash flow
for the new venture to grow.
2. Is the target customer readily accessible to your sales force? You
want to deal directly with customers when starting out, rather
than rely on third parties to market and sell your product, because
your product will go through iterations of improvement very
rapidly, and direct customer feedback is an essential part of that
process. Also, since your product is substantially new and never
seen before (and potentially disruptive), third parties may not
know how to be effective at creating demand for your product.
Narrow
Criteria that you can use to narrow down list of potential

markets:
3. Does the target customer have a compelling reason to buy? Would
the customer buy your product instead of another similar solution? Or,
is the customer content with whatever solution is already being used?
Remember that on many occasions, your primary competition will be
the customer doing nothing.
4. Can you today, with the help of partners, deliver a whole product?
For example: no one wants to buy a new alternator and install it in
their car, even if the alternator is much better than what they
currently have. They want to buy a car. That is, they want to buy a
whole functional solution, not assemble one themselves. You will likely
need to work with other vendors to deliver a solution that
incorporates your product, which means that you will need to
convince other manufacturers and distributors that your product is
worth integrating into their workflows.
Narrow
Criteria that you can use to narrow down list of potential

markets:
5. Is there entrenched competition that could block you?
Rare is the case where no other competitors are vying to convince a
customer to spend their budget on some product to meet the identified
need. How strong are those competitors, from the customer’s viewpoint
(not your viewpoint or from a technical standpoint)? Can the
competition block you from starting a business relationship with a
customer? And how do you stand out from what your customer
perceives as alternatives?
6. If you win this segment, can you leverage it to enter additional

segments?
If you dominate this market opportunity, are there adjacent
opportunities where you can sell your product with only slight
modifications to your product or your sales strategy? Or will you have to
radically revise your product or sales strategy in order to take advantage
of additional market opportunities?
Narrow
Criteria that you can use to narrow down list of potential markets:
7. Is the market consistent with the values, passions, and goals of
the founding team?
You want to make sure that the founders’ personal goals do not
take a back seat to the other criteria presented here.
Tool: Top Target Markets to Consider for My Startup

Primary Market Research
• Primary market research: Information gained by talking

directly with, interacting directly with, and directly observing
customers and potential customers.
• Because you are identifying a new market opportunity for a

product that does not yet exist, you will not be able to rely
on Google searches or on research reports from research
firms.
• If there is already a market research report out there with all

the information you need, it is probably too late for your new
venture. You have missed the window of opportunity
someone else has beaten you to the market.
There are three important caveats (limitations/requirements)

when conducting your primary market research:
1. You do not have “the answer” for your potential customers and their
needs.
2. Your potential customers do not have “the answer” for you.
3. Talk with potential customers in “inquiry” mode, not “advocacy/sales”

mode. Listen to what they have to say, and don’t try to get them to buy
anything.
There are a few key factors that are integral to collecting accurate
information:
• You must have a high level of intellectual curiosity.
• You must be fearless about getting on the phone, in the car, or on a plane to
pursue this information.
• You must have an ability to listen and get people to talk.
• You must be open‐minded and unbiased, and never presuppose a solution

(inquiry, not advocacy).
• You must have the ability to explain what the essence of your proposed
offering might look like while also being flexible.
• You must have time and patience to devote to this important step.
Market Segmentation Matrix Row Definitions:

1. Market Segment Name: Carefully name the market segment so it
appropriately and precisely captures the group you want and no more; it
is okay to be general at first, but you will have to narrow this down in
time to make real progress.
2. End User: This is the person who is actually using the product, not the
economic buyer or the champion (more on this in Step 12)—even if you
are selling to a company or a general organization, you want to list here
the people in that company who will be using your product.
3. Task: What exactly is it that the end users do that you will significantly
affect or allow them to do that they could not do before?

4. Benefit: What is the benefit that you believe the end users will get?
5. Urgency of Need: What is the level of urgency to solve the problem or

capture the new opportunity for the end user?
6. Example End Users: Who are examples of end users that you can, have,
or will talk to, so as to validate your perceptions of this market segment?
7. Lead Customers: Who are the influential customers where, if they buy
the product, others will take note and likely follow?
8. Willingness to Change: How conservative is this market segment? How

open are they to change? Is there something to force change (e.g.,
impending crisis)?

9. Frequency of Buying: How often do they buy new products? What does their
buying cycle look like at a high level?
10. Concentration of Buyers: How many different buyers are there in this
market segment? Is it a monopoly? Oligopoly (a small number of buyers)? Or
many competitive buyers?
11. Other Relevant Market Considerations: This allows for customization of
your segment for relevant considerations such as “high employee turnover,”
“very low margins/commodity,” “high‐growth industry,” “high virality effect”
(i.e., word of mouth), etc.
12. Size of Market (# of End Users): Estimation of the number of end users to a
relevant range (10s, 100s, 1Ks, 10Ks, 100Ks, 1Ms, etc.).

13. Est. Value of End User (Money Amount): A first‐pass estimate of the value of
each end user, again to a relevant order of magnitude so you can make some
relative decisions now (you will do a deep dive into this and other numbers
later).
14. Competition/Alternatives: What will be your competition from the end

users’ perspective? Include the “do nothing” option as well as “who else
would be competitors” if the end users analyzed their options.
15. Other Components Needed for a Full Solution: Since most customers will
only buy a full solution and not an individual component that they have to
assemble into a full solution, what other elements are needed to construct a
full solution to achieve the benefits above? These are the complementary
assets that you do not currently have but would need to build or acquire to
give the end user a full solution.

16. Important Partners: Who are the partners or distributors you will have
to work with to fit into the end user’s workflow (e.g., data must come
out of vendor A’s system and then be picked up at the end by vendor B’s
system) or business processes (e.g., the end user gets all his or her
product via distribution channel C)?
17. Other Relevant Personal Considerations: In many Market Segmentation

analyses, there are additional important factors that should be
considered. These could be things like where the market segment is
geographically centered, whether it matches the values of the founding
team, existing knowledge and contacts in market, etc.
Market Segmentation
• The market segmentation process identifies multiple

potential market opportunities.
• The goal of the research is not to provide a perfect solution,
but to present a wide spectrum of market opportunities as
you start to think about where you will focus your business.
• Tool: Market Segmentation Matrix Starter Template
Team Composition and Dynamics

• Before you move on to Step 2, consider the team you have
assembled.
• Be open and honest about how things are working and if

everyone should continue with the project. It will be much
easier to change team members now than later.
• You know it is crucial to iterate on your product to be

successful, but your team’s composition and cohesion is just
as important, if not more important.
Summary (Step 01)

• What is the single necessary and sufficient Condition for a Business?

– Brainstorm
• Brainstorming Tips (Tool: What industries and end users could my idea or technology apply to?) – Narrow your list down to your
top 6–12 markets.
• Criteria (Tool: Top Target Markets to Consider for My Startup)
– Gather Primary Market Research on your top 6–12 markets.
• Three important caveats when conducting your primary market research
• Key factors that are integral to collecting accurate information
• Market Segmentation (Tool: Market Segmentation Matrix Starter Template)
• Team Composition and Dynamics

Market

1st 5

Uploaded by

Copyright:

Available Formats

1st 5

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

1st 5

Uploaded by

Copyright:

Available Formats

Entrepreneurship

The people who create these businesses are called

– “Beyond resources controlled” implies resource constraints.

• Harvard Business School

• Responsible for Entrepreneurship Education at MIT: Martin

• MIT’s students are no smarter than those at other topflight institutions of

• This number is 20 to 30 companies per year, which is very impressive when

“Positive Feedback Loop for Spirit and Skills”

Bill Aulet and Fiona Murray

Innovation‐driven enterprise (IDE)

• Neither is better than the other.

• But they are substantively different enough that they require

Innovation = Invention * Commercialization

• In fact, the inventions that lead to innovation driven

• The capability to commercialize an invention is necessary for

• An entrepreneur, then, serves primarily as the

• Entrepreneurs are charismatic and that their charisma is a key

• There is an entrepreneurship gene. There are real skills that

Successful Entrepreneurs = Spirit + Skill

• Harvard Business School

1) pioneering a truly innovative product;

• But they are substantively different enough that they require

• The invention (an idea, a technology, or some sort of

• Innovation = Invention * Commercialization

Successful Entrepreneurs = Spirit + Skill

• It is not a product, a technology, a customer need, a business

• The single necessary and sufficient condition for a

Six Themes of the 24 Steps

• Each step should be done in numerical order with the

• Successful Entrepreneurs = Spirit + Skill

You have thought of something new that can change the

• New type of Software Development Company

• New Mobile Game

• New Idea to Buy/Sell “Real Estate” more Securely

Three Ways to Start a New

You have come up with a technological breakthrough and want

Or, you have learned about a technological breakthrough and

• Expertise in New Technology for Software Development

• Idea to build IoT based Mobile Game

• AI Algorithm to Securely Buy/Sell “Real Estate”

You are confident and you are comfortable pushing yourself to

You also might believe that being an entrepreneur is the way to

Three Ways to Start a New

Three Ways to Start a New

This phenomenon is called “user entrepreneurship”;

• Your choice of co‐founders is extremely important. The research at MIT

• How do we know each other?

• Founding Team Potential

It could be a hardware breakthrough out of a lab with significant intellectual

Think of an Uber‐like business model that builds a platform between

• LEAP FORWARD: Compared with the most relevant current alternative,

• TECHNOLOGY PUSH: The enabling technology invention is __________

• WHY US: What makes us especially qualified to pursue this opportunity?

Hybrid Idea Consolidated Mini‐Canvas

• Your analysis of the customer and the marketplace will lead

• not your idea or technology, no matter how amazing you

• What can you do for your customer?

• How does your customer acquire your product?

• How do you make money off your product?

• How do you design and build your product?