ENTREPRENEURSHIP:
IDEAS
Stephen Daze
Dom Herrick Entrepreneur in Residence and
Visiting Professor
Telfer School of Management
Idea Inspiration
Guy Kawasaki on Innovation (4:14):
https://www.youtube.com/watch?v=Mtjatz9r-Vc
Where Ideas Come from (4:30):
http://www.ted.com/playlists/20/where_do_ideas_come_fro
m
Fundamental Premise
Entrepreneurship is neither a science nor an art. It’s a
practice.
Peter Drucker
• Generating business ideas is nothing more than a
practice surrounded by some core principles.
Idea Generation Principles
1. Good Business Ideas make Money.
They have a value proposition for a critical mass of
addressable customers.
- Value Proposition = 1) there is enough pain to pay
for a solution and 2) relative to competition.
- Critical Mass = big enough market that can be
efficiently addressed.
- Addressable = I can reach them with my revenues
greater than expenses.
Idea Generation Principles
2. Ideas evolve over time (eg. Facebook, Blackberry) or
start as mistakes (eg. 3M Sticky Notes.)
IKEA- Ingvar Kamprad founded IKEA in 1943 at his Uncle
Ernst’s kitchen table. IKEA was basically an acronym of his
name Ingvar Kamprad and Elmtaryd, his family farm and
the village Agunnaryd. At first the business was typically
mail-order and included only small household goods such
as picture frames, wallets, nylon stockings, pens and
wallets.
Nintendo: The Nintendo Corporation’s domination of the
gaming industry didn’t start with their first video game
console. They have actually established themselves 70
years before the first video game came to life, in the 19th
century when they brought back the popularity of card
games to Japan. A new card game, Hanafuda, was
invented, by Fusajiro Yamauchi (Nintendo founder) which
used images instead of numbers, making it difficult for
gambling.
Netflix : The genesis of Netflix came in 1997 when I got this
late fee, about $40, for Apollo 13. I remember the fee
because I was embarrassed about it. That was back in the
VHS days, and it got me thinking that there's a big market
out there.
So I started to investigate the idea of how to create a
movie-rental business by mail. I didn't know about DVDs,
and then a friend of mine told me they were coming. I ran
out to Tower Records in Santa Cruz, Calif., and mailed CDs
to myself, just a disc in an envelope. It was a long 24 hours
until the mail arrived back at my house, and I ripped them
open and they were all in great shape. That was the big
excitement point.
Idea Generation Principles
3. Ideas can come from anywhere, most often we see good
business ideas starting with one (or more) of the following:
Personal Pain
• I have a problem that needs solving.
120,000 customers in 80 countries and a $1B valuation.
Market Gap
• A critical mass of customers are looking for solution.
Interest
• I love this so much, I can see myself working on it 24/7.
Insight
• I understand the industry and see where it is going.
Good Business Ideas
Necessary conditions:
 Can make money (or not loose it): value proposition;
critical mass; and addressable customers.
And:
 Evolve over time.
 Usually start with one or a combination of:
• Personal pain (I have a problem that needs solving.)
• Market gap/need (Others will pay for a solution.)
• Interest (I can see myself doing this 24/7.)
• Insight (I understand the industry and the trends.)
The best business ideas satisfy most (or all) conditions
- If your current idea doesn’t, look to evolve it sufficiently such that it does.
Exercise
Part 1
1.
2.
3.
4.
Generate as many
potential business ideas
as you can. They don’t
have to be good.
Look to combine ideas,
eliminate and make
existing ideas as good as
possible.
Pick the best business
idea.
Prepare to discuss why
this is the best idea.
Opportunity Assessment
• http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1
802
Opportunity Assessment Considerations
1. Idea
• What is the pain or gap hypothesis?
• What is the potential solution (v.1)?
• Do you have some advantage?
Opportunity Assessment Considerations
2. Market
• Who is the typical customer?
• What is the size of that market?
• What does the competitive landscape look like?
• Do you have an advantage?
Opportunity Assessment Considerations
3. Any Big Issues
• What are the big costs?
• What key resources are required?
• What are the rules; regulations; risks: economic, political etc?
• Any advantage? Any concerns?
Opportunity Assessment Considerations
4. Revenue Model
• How do you get paid; how do you make money?
• Any advantage?
Exercise
Part 2
1.
2.
Using your “best” idea” consider and record your
thoughts related to the
main Opportunity
Assessment
considerations – likely
guesses at this time.
Prepare your thoughts in
order to present
(informally).
Next steps
• Validate these assumptions.
• Learn about:
• Business Model Canvas
• Customer Validation
12:00pm – 3:00pm: Startup Basics
Location: Desmarais Building, Room 4101
Description:
Starting a new business has always been a hit
or miss proposition. In fact according to
research 75% of all start-up fail. However,
careful consideration of the business strategy
can make the difference between having a
great technology and building a great
company. This hands-on workshop will
introduce you to lean start-up methodology
and help you develop your business model
that can be validated by customer feedback.
Parting Thoughts?