Stanford E 140 - Stanford and Entrepreneurship

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E140A Session #3 AgendaStanford’s LegacyStanford’s Role in Silicon ValleyResearch Priorities at StanfordMore Success FactorsSilicon Valley Has Been a Great (But Not Perfect) Market for Ideas, Talent, and Capital -- Implications for the Future?PowerPoint PresentationAnother Key Framework: Moore’s Crossing The Chasm ModelAnd Another: Sahlman’s Concept of FitSlide 1021st Century Silicon Valley … “Built-to-Last” or “Built-to-Flip”?MFP 2005’s Culture (Tina)E140A 2005, Slide #1E140A Session #3 AgendaE140A Session #3 AgendaI. Stanford and Entrepreneurship(Tom)II. MFP Culture(Tina)E140A 2005, Slide #2Stanford’s LegacyStanford’s LegacyE140A 2005, Slide #3Stanford’s Role in Silicon ValleyStanford’s Role in Silicon ValleyInteraction with industry (via legacy just discussed)Research funding and creativity (see next slide)Silicon Valley as a nearby planting ground for ideasRole of students as … inventors, disseminators, and part of the workforceEncouraging entrepreneurship …E140A 2005, Slide #4Research Priorities at StanfordResearch Priorities at StanfordBioengineeringInformation Technologyand PhotonicsNanotechnologyEnvironment and EnergyE140A 2005, Slide #5More Success FactorsMore Success Factors•Talent poolMost loyalty to the technology itselfHighly skilled, motivated, and multiculturalWell-developed social networks •Support infrastructure with many suppliers & vendors•Venture capital for both financing and team building•Entrepreneurial spiritRole models (who display both confidence and “paranoia”)OK to fail, learn from it, and then try againFlat organizational structures for the most partOK to talk/partner across companies about common issuesE140A 2005, Slide #6Silicon Valley Has Been a Great (But Not Perfect) Silicon Valley Has Been a Great (But Not Perfect) Market for Market for Ideas, Talent, and CapitalIdeas, Talent, and Capital -- -- Implications for the Future?Implications for the Future?  E140A 2005, Slide #7Managing Growth And Change Reference: Collins and LazierIDEAS: Product and Market StrategyTALENT: Team and CultureCAPITAL: Cash Flow and Venture FinanceFirst Things First: Assess the Venture’s Vision, Internal and External CharacteristicsOur Primary Framework for Our Primary Framework for Understanding the Success of an Understanding the Success of an HP, Genentech, Cisco, or Yahoo!HP, Genentech, Cisco, or Yahoo!E140A 2005, Slide #8Another Key Framework:Another Key Framework:Moore’s Crossing The Chasm ModelMoore’s Crossing The Chasm ModelInnovatorsInnovatorsEarlyEarlyAdoptersAdoptersEarly Early MajorityMajorityLateLateMajorityMajorityLaggardsLaggardsBowling AlleyMain StreetTornadoSource: Moore (1995), Inside the TornadoE140A 2005, Slide #9And Another:And Another:Sahlman’s Concept of FitSahlman’s Concept of FitPEOPLE & RESOURCESExperiences, Skill,Contacts, Attitude, KnowledgeCONTEXTMacroeconomy,Tax, Regulatory,Socio-politicalDEALAllocation of Riskand Reward, Incentives, Signals,Sorting, ConsequencesOPPORTUNITYEntry Barriers,Customers, Suppliers,Substitutes, Rivalry,EconomicsProject-AppropriateFinancingOption PreservationOpportunity-AppropriateKnowing andBeing KnownAppropriate Risk / RewardAllocation and IncentivesInvestor Value AddedFavorable TechnologyMacroeconomyFavorable Rulesof the GameFavorable Sociological FactorsReference: Sahlman, HBRE140A 2005, Slide #10The StartupGame:A race against time to create value and reduce risk From Today’s Reading:From Today’s Reading:Kaplan’s Dynamics of the Start-Up GameKaplan’s Dynamics of the Start-Up Game(1) Founding:An entrepreneur begins with a vision and shares of stock in the new venture.Entrepreneur trades stock for ideas, money, and people(2) Seed Stage:•Venture capitalists provide money in return for stock•Employees join via friends & associates in return for cash salary and stock options•Ideas become intellectual property which represents the initial value in the companyFurther growth is delayed until milestones are reached and risk of failure is reduced(3) Growth Stage:More money, ideas, and people are obtained, but for much less stock than in the earlier stage due to lower riskCompany balances earning cash, taking investment, and spending cash to create value(4) Exit Stage:•Company files for IPO•Entrepreneur, investors, and employees can cash in stock for money •A viable public company has been created•Each party continues to build the company, retires, or starts the game againValue has been successfully created.Reference: Start-Up by Jerry KaplanE140A 2005, Slide #112121stst Century Silicon Valley … Century Silicon Valley … “Built-to-Last” or “Built-to-Flip”? “Built-to-Last” or “Built-to-Flip”?“Built to Last”Ventures“Built to Flip”VenturesObjectiveCreate lasting value Short-term cash outHow to Retain Employees?Create a great culture & shared visionGive them lots of equityCommitment to InnovationPursuit of long-term, Big Hairy Audacious Goals (BHAGs)Market-driven initiativesHow to Survive Setbacks?Preserve core values while stimulating progressNo core values to rely on, so company is at riskSource: Fast Company, Jim CollinsE140A 2005, Slide #12MFP 2005’s Culture (Tina)MFP 2005’s Culture (Tina)1. What learning environment do we want to create? For example, how much formal professor/student versus student/student interaction? What can we do to support the culture we want to create? 2. What innovative approaches can we use to get to know each other quickly? How important is this in achieving our goals? 3. How will we measure our success in December, 2004? What must we achieve to make all the effort worthwhile? How, and how often, should we see if we are on track in meeting our


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Stanford E 140 - Stanford and Entrepreneurship

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