Strategy and the

Entrepreneur
Key Ingredients for Success

Big
Idea

Sufficient Competent
Relentless
Money Execution Team

Good
Plan

And a generous helping of luck…

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Idea: 7 Tests for A Winner

• Solve a real problem

• Solve a focused problem
• Solve a big problem
• Solve a hard problem
• Solve an obvious problem
• Solve a complete problem
• Solve a worsening problem

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Idea: Create a Value Proposition

A concise statement of the compelling

promise that your product or company
makes to a set of target customers that
is differentiated from available
alternatives, and supported by reasons
to believe in the promise.

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Idea: Assessing the Balance

What are my costs

What’s in it for me? Why is yours better? Is it worth it?
of making it useful?

Promise Price
Differentiation

Effort
Support Risk
required

Why should I
believe you? What might
Is this for me? Go wrong?
Target Audience

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Idea: Key Questions to Ask
• Who are the audiences you are addressing with your idea?
• What pain points you are addressing for these audiences?
• What evidence do you have that these pain points are real?
• What are the current solution approaches?
• What’s lacking in these approaches?
• How is your solution approach better?
• How big is this difference and what is it worth to customers?
• What’s in it for other stakeholders besides end-customers?
• Why hasn’t someone else thought of your idea yet?
• Are you sure nobody has thought of your idea yet?
• What is proprietary about your idea?
• What makes your team uniquely qualified to implement your idea?

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Team: A Good Foundation is Key

The 7 Deadly Sins:

BUILD Hiring based on convenience
STUFF Hiring without due diligence
Engineering/ Hiring big-company stars
Technology Hiring the wrong attitude
Hiring poor listeners
Hiring cheap onshore executives
Hiring VP of Sales with no product
RAISE MONEY,
HIRE TEAM,
PROVIDE DIRECTION
(CEO)
RUN
SELL
THE SHOW
STUFF
Finance/
Marketing/Sales
Administration

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Team: Questions Investors Ask
• Is the team leader strong and passionate?
• Will leader and team attract “A” players?
• Is the team appropriate for the stage of the company?
• Has the team worked together before?
• What are the team’s values and what type of culture will they create?
• Is there a strong technical leader?
• Is there a strong marketing leader?
• Does the team have deep domain or technical expertise?
• Does the team listen and take criticism in a positive way?
• Does team have a good blend of “thinkers” and “doers”?
• If current plan doesn’t work out, will team adapt?
• Will the founders give up control if that is what the venture demands?

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Plan: Why One is Needed

• You need it as a roadmap

• You need it to clarify priorities
• You need it to attract funding
• It is used as a guide when speed
bumps happen
• It is your company’s & your personal
scorecard

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Plan: Some Truths

• The planning process is more

important than the plan
• The assumptions are more important
than the forecasts
• Things will never turn out as planned
• It should be short enough to be
readable, long enough to be rigorous

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Plan: Tips for a Good One
• Be brief and direct; get to the bottom line quickly
• Identify what the business is immediately
• Define the customers quickly and the customer problem clearly
• Define what’s compelling and unique
• Describe how you will make money
• Provide a phased snapshot of your company 12, 24 and 36 months out
• Describe how you propose to take your product to market
• Make bottom-up as well as top-down projections
• Know what 4 to 5 assumptions your plan pivots on
• Discuss the key risk factors
• State how much money you will need and how you will use it
• State your possible exit strategies

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Money: A Typical Sequence

• F&F (Friends and Family)

• Angel Investors
• Venture Investors (Series A and
onwards)
• Strategic Investors
• Late-Stage and Mezzanine Funds
• Public Markets

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
The Money: Important Considerations

• Put some of your skin in the game

• Size of the pie wins every time over share of the pie
• Getting a high valuation early can be fatal
• Don’t value the company in the angel round
• Make advisors into angel investors and vice versa
• More startups die of indigestion than of starvation
• Venture capital is like synthetic fertilizer – use sparingly and with
caution
• Raise money when you can, not when you need it
• It will take twice as long and thrice as much work as you think to
raise money

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management
Final Thoughts….

• Growth vs. Profit

– Growth today is worth many times the profits tomorrow

• Speed vs. Deliberation

– Know your speed limit, and don’t let VCs make you exceed it

• Opportunism vs. Strategy

– Start out being opportunistic, but quickly become strategic

• Service vs. Product

– Servicize to learn, then productize to earn

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Elements of this Presentation are Courtesy of Dr. Mohan Sawhney @ Kellogg School of Management