Customer Attribute of Product or service, Relative to competing offers A Typical Consumption Chain

attitude Awareness of need -> Search -> Selection -> Order & Purchase -> Delivery -> Payment ->
Basic Discriminator Energizer Financing -> Receipt -> Installation & Assembly -> Storage & Transport -> Use -> Service ->
Positive Non-Negotiable- Differentiator- performs Exciter- Performs better Repairs & Returns -> Final Disposal
performs atleast as well better than competition than competitors
as competition where it counts. (Ex- Quick and competent Entrepreneurial Managers
(Ex- Back office is (Ex- High-level service) response) More driven by perception of opportunity than resources at hand ; Commit to those
efficient) opportunities (often very quickly and for short time frames) ; Stage their commitment with
Negative Tolerable- performs no Dissatisfier- performs below Enrager- Must be corrected minimal exposure at each stage ; Use resources only episodically (often rent instead of
worse the level of competitors at any cost(to capitalize on buying) ; Tend to organize with minimal hierarchy and along informal networks ; Focus
than competitors (Ex- Time-consuming claims competitors’ negatives)
compensation on value creation
(Ex- higher Premiums) processes) (EX- Any denials)
Neuutral So what?- Does not Parallel- Influences segment
Characteristics of habitual entrepreneurs
affect attitude but is not directly
the purchase in a related to product or service Passionately seek new opportunities ; Engage energies of everyone in their domain
meaningful way performance.(Ex- Availability Pursue opportunities with enormous discipline ; Focus on execution
(Ex- Number of of complementary products) Pursue very best opportunities and avoid exhausting by chasing all options
branches)
How to manage risk and uncertainty?
Define and analyze the business model ; Start small ; Conduct conscious experiments ; Make fixed costs variable costs ; Manage the nature and timing of commitments ; Stage financing ; Stay flexible
Developing and applying an entrepreneurial mindset
Set challenging goals ; Create Attribute Map(s) ; Scope out new market segments ; Build breakthrough competencies ; Select your terrain ; Execute entry strategy ; Put “discovery”-driven planning to work ;
Manage projects with “uncertain” outcomes
Difference between risk and uncertainty Where are entrepreneurial opportunities?

TYPES OF RISK UNCERTAINTY KNIGHTIAN UNCERTAINTY Discovery Theory Creation

UNCERTAINTY Nature of Opportunities exist, Opportunities do not exist
The distribution The future has a The future has an The future has distribution- Opportunities independent of independent of entrepreneurs.
of the future known distribution unknown distribution it is unknowable entrepreneurs, Applies a Applies an evolutionary realist
Type of A priori Statistical Unclassifiable instances realist philosophy philosophy
probability Nature of Differ in some important May or may not differ from
Example An urn contains five Urn contains an Urn may or may not contain Entrepreneurs ways from non- nonentrepreneurs, ex-ante,
red balls and five unknown number of any balls- even. entrepreneurs, ex-ante Differences may emerge, ex-post.
green balls. Drawing balls. Drawing a red the existence of an urn may Nature of Risky Uncertain
a red ball win $50 ball wins $50. be in doubt Decision-Making
Methods to deal Analysis Estimation Effectuation Context
with uncertainty
5 principles
Means (Bird in Hand) - Bird in Hand Principle - Start with your means. Don't wait for the perfect opportunity. Start taking action, based on what you have readily available: who you are, what you know,
and who you know.
Affordable Loss - Affordable Loss Principle - Set affordable loss Evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside.
Leverage Contingencies - Lemonade Principle - Leverage contingencies Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals.
Co-Creation Partnership - Crazy-Quilt Principle - Form partnerships Form partnerships with people and organizations willing to make a real commitment to jointly creating the future--product, firm,
market--with you. Don't worry so much about competitive analyses and strategic planning.
Worldview - Pilot in the Plane – Control vs Prediction If you can control something, you don’t need to predict what the future would look like

CAUSAL EFFECTUAL Categories of Causation processor Effectuation processor

View of the future Future can be reliably predicted Future cannot be predicted due to differentiation
uncertainty Givens Effect is given Only some means or tools are
Where to start? With given goals With readily Subject to resource constraints: Who I given
available means am, What I know; Whom I know Competencies Excellent at exploiting Excellent at exploiting
Basis for action Should: Focus on optimal Can: Focus on doing the doable and employed knowledge contingencies
scenarios and reaching for present then pushing it Context of More ubiquitous in nature More ubiquitous in human action
ideals relevance More useful in static, linear,
Attitude towards Calculate expected return Set affordable loss and independent environments
risk, return and Nature of Focus on the predictable Focus on the controllable aspects
resources unknown aspects of an uncertain future of an unpredictable future
Attitude towards Competitive Co-operational Underlying To the extent we can predict To the extent we can control
others logic the future, we can control it future we do not need to predict it
Attitude toward Avoid surprises Leverage surprises Outcomes Market share in existent New markets created through
the unexpected markets through competitive alliances and other cooperative
Underlying logic To the extent we can predict the To the extent we can control the strategies strategies.
future, we can control it. future, we do not need to predict it.

Design tools and techniques Seeing Green”: 7 Qs for every business

Customer Insights - What do they see? ; What do they think and feel? ; What do they hear? ; What do they say and do?
Engineering Can you create breakthrough technology instead
Ideation (ex., brainstorming) - Resource driven ; Offer driven ; Customer driven ; Finance driven ; Multiple epicenter
question of incremental improvements?
driven
Timing Is now the right time to start your particular
Visual thinking - Map the business model and its elements ;Define the story line ; Narrate the story question business?
Prototyping - Cyclical process of Decide → Design → Prototype → Execute→ Provoke ; Driven by Inquiry Monopoly Are you starting with a share of a small market?
Storytelling - Company perspective ; Customer perspective ; Use it to provoke ideas and justify change question
Scenarios - Start with directions ; Make the scenarios tangible ; Helps you move toward informed design People Do you have the right team?
question
Value Map - The Value (Proposition) Map describes the features of a specific value proposition in a more structured Distribution Do you have a way to not just create but deliver
and detailed way. It breaks your value proposition down into products and services, pain relievers, and gain creators question your product?
Gain Creators describe how your products and services create customer gains Durability Will your market position be defensible 10 and 20
Products and Services a value proposition is built around question years into the future?
Pain Relievers describe how your products and services alleviate customer pains Secret Have you identified a unique opportunity that
Customer Profile - The Customer (Segment) Profile describes a specific customer segment in a more structured question others don’t see?
and detailed way. It breaks the customer down into their jobs, pains, and gains.
Gains describe the outcomes customers want to achieve or the concrete benefits they are seeking
Customer Jobs describe what customers are trying to get done in their work and in their lives, as expressed in their own
words. Pains describe bad outcomes, risks, and obstacles related to customer jobs
Fit - You achieve Fit when your value map meets your customer profile – when your products and services produce pain
relievers and gain creators that match one or more of the jobs, pains and gains that are important to your customer
 3 kinds of fit
Problem – Solution Fit ✓Have evidence that customers care about certain jobs, pains, and gains ✓Designed a value proposition that addresses those jobs, pains, and gains
Product – Market Fit ✓Have evidence that products and services, pain relievers, and gain creators are actually creating customer value and getting traction in the market
Business Model Fit ✓Have evidence that your value proposition can be embedded in a profitable and scalable business model

Problem-Solution Fir Canvas

Customer State Fit Problem-Behavior fit Communication–Channel Fit Solution guess/Problem–Solution fit
Who is your target customer? • What are their Identify most urgent and frequent problems • • Sharpen communication Problem-solution fit achieved when • Fits into
limitations/inconveniences/annoyances? • What problem are you solving for your • Use strong triggers customer behavior and constraints • Addresses
What are the currently available solutions? • customer? • How often does this problem • Use Emotional messaging customer limitations • Addresses specific
What have they tried in the past? • What are occur? • What are the real reasons behind • Use right channels problems of target customers • Leverage
the pros and cons of the existing solutions? them? • What behavior supports them? • How existing data to understand fit
often does this behavior occur?

Generic steps to achieve product-market fit When to Pivot How to execute a successful pivot?
Who - Who is my target customer? Not enough traction from the targeted customer Have an idea compost pile 2. Know your customers, not just
Identify What are their needs and their relevance? Your value proposition fails to resonate with targeted customers their statistics 3. Fail earlier, more cheaply, and more often
Define How will my value proposition meet my target customer Your acquisition & retention strategy doesn't generate the growth you 4. Build a customer-focused culture, not a product-focused
needs better than alternatives? hoped for one 5. Don’t survive mediocrity
Specify What functionalities will my MVP feature? Customers are not willing to pay the price
Create What will my launched offering look like? You can't build the product and/or your costs are too high Dave McClure’s Pirate Metrics
Test What do my target customers think of my product/service External forces are threatening your business model Acquisition -> Activation -> Retention -> Revenue -> Referral
offering?
Launch/Pivot Based on feedback, should I Launch & Scale? Or
should I Pivot?

Experiment Pitfalls
Time trap - Not dedicating enough time Key Takeaways from Rent the Runway
Analysis paralysis - Overthinking things that you should just test and adapt ❑The process of going from idea to viable business: Fast frugal tests and quick
Incomparable data/ Evidence - Messy data that are not comparable pivots
Weak data/ evidence - Only measure what people say not what they do ❑Getting credible commitments is a more reliable gauge than
Confirmation bias - Only believing evidence that agree with your hypothesis perception/opinion based surveys or focus groups ❑Listen with open-ended
Too few experiments - Conduct only one experiment for your most important hypothesis questions aimed at getting into customer’s head
Failure to learn and adopt - When you don’t take time to analyze the evidence to generate insights and actions ❑“Minimum Viable Product” is what is absolutely necessary to test an
Outsource testing - When you outsource what you should be doing and learning yourself assumption (reminder). Constrained in:
❑ Product functionality: limited set geographically (whole country versus one
Strength of Evidence Types of risk in testing hypothesis.
neighborhood) or technologically (IOS &/or android) or problem set
Weak Evidence Strong Evidence Desirability risk- Customers aren’t interested in your
❑ Operational capability
idea
Opinions(beliefs) Facts(events)
Feasibility risk- cannot build and deliver your idea. ❑ Just a smoke test: “A test that gauges demand for a product that does not
What people say What people do Viability risk- cannot earn enough money from your idea yet exist”
❑Execution thumb rules:
Lab settings Real worlds settings
❑ Beta and launch versions should be separated by sufficient time ❑ Keep
Small investments Large investments product launch and marketing launch separated
❑Getting external funding at seed stage has some disadvantages too:
❑ Lower valuation due to higher uncertainty, plus more diluted
❑ More potential for conflict due to higher uncertainty
❑Unfair advantage can be a niche with highly efficient operations
❑Invest significant money (and time) in customer acquisition, operational
infrastructure, and scaling only after business model has been validated

Pros of using venture capital Cons of using venture capital Tactical strategies for financing startups
A necessary evil. Angels, grants, and corporate money may be too little, too late VCs may demand a majority stake ✓ Pitch right for your type ✓ Understand that valuation is in the
VC will help to maximize long-term shareholder value VC will likely base offer on a low valuation and context of a financing negotiation ✓ Deal terms have value, and it is
Assists rapid progress in product development, etc. offer financial terms unfavorable to the owner: easier to negotiate these than the value itself ✓ Who you raise equity
The VC’s deep pockets can rescue the company if there is a setback “Vulture” capital
money from is extremely important ✓ Raise appropriate amount of
VC will facilitate an IPO VC process are very selective, slow, and cyclical
money to reach the next milestones ✓ Build feelings of desire and
VCs add validation and prestige in the eyes of corporate partners and follow-on VCs prefer later-stage companies to startups
investors VCs board position may be less useful than urgency in investors ✓ Do not run out of cash! ✓ Start early and build
VC sits on the board, adding value and focus promised (too busy sitting on multiple boards) a relationship ✓ Demonstrate the “Mo” ✓ Do your homework
VCs are smart, experienced entrepreneurs with proven track records

Key Takeaways Entrepreneurial Ecosystem Interests

• VC works within definitional and structural boundaries • Not suitable Accessible markets ; Human
for every type of venture and at every stage of the venture (nascent to capital/workforce ; Funding & finance ; Entrepreneur VC Firm
scale up) • VCs don’t have a crystal ball – Early stage financing more an Support systems/mentors ; Govt & Get outside capital ; Maximize Solving sorting problem in selecting
art than science • Larger VC investments come into play once regulatory framework ; Education & financial gains from equity stake ; best entrepreneurial firm ; Minimize
‘uncertainties’ surrounding a venture are reduced to ‘risks’ through training ; Major universities as catalysts ; Retain control, minimize constraints agency costs/problems ; Maximize
actions of the entrepreneur • VC has helped in creating some great Cultural support on behavior and decision making ; financial returns ; Maintain option to
companies. But, not every venture that succeeded got VC and not every Build reputation ; Get outside abandon Be able to influence/force
VC funded venture succeeded • VC comes as a package – the Enablers of startup ecosystem in India expertise and contacts ; Build entrepreneur to exit and distribute
entrepreneur exchanges ‘decision making freedom and flexibility’ for Infrastructure ; Funding ; Enterprises are successful firm proceeds ; Maintain reputation
assured capital – voluntarily partnering/investing in startups in India

Sources of negotiating power Control mechanisms in VC contracts

Entrepreneur VC Firm ❑Amount and time of investments ❑Form of investments (e.g., convertible preferred)
Deep expertise in hot specialty ; Great Providing capital ; Adding credibility to ❑Terms of investments (e.g., conversion price, liquidation preference, dividend rates, voting
track record Solid team ; Can keep VC entrepreneur ; Actions send signal to other rights) ❑Put and call rights ❑Registration rights ❑Preemptive rights and rights of first refusal
from investing in later rounds/funds ; potential VCs; Adding value through expertise ❑Option pools ❑Employment contracts ❑Vesting schedules and buy-back provisions
VC wants to lay ground for productive and contacts ; Entrepreneur’s reputation ❑Information rights ❑Board representation
working relationship ; VC’s reputational concerns ; Imbalance between supply and
constraints; will need entrepreneur as demand BATNAs*: ; Providing capital/time to
reference ; BATNAs*: Other VCs, other startups or existing portfolio companies,
angels, banks, corporations spending time fund raising