The magic success formula part 2

Entrepreneurship has evolved over the years from startups in garages (Hewlett Packard, Apple) to startups in universities (Google, Facebook). With the advancement of technology, it is obvious that most startups will begin in universities or research laboratories and that most entrepreneurs will be college students with strong technical skills or scientists. In the past, entrepreneurship is a course taught mostly in business programs but today it is often taught in science or technology programs.

Basically startup begins with a good idea that can be turned into a successful business. The success formula that many entrepreneurs use is: “To solve a problem that lots of people have and offer them a reason to pay you money for it.” The factor is startup must be designed to grow by captures more customers, be highly profitable, then eventually grow larger to an enterprise. The success of these enterprises will create a movement as more people want to become entrepreneurs and start their own startups. More startups, more enterprises will impact society, change the way people live and work, change the way business operates, drive the economy to grows and bring more jobs and prosperity to society.

It is important to note that only the best startup with the best technology will become a profitable enterprise. The question often asked is can startup be built only with technology knowledge? Of course, technology alone is not enough because you have to commercialize it and make money. Therefore both technology and business knowledge are important to succeed. Without business knowledge, entrepreneurs often fall into the “If we build it, people will buy” symptom and try to build a “perfect product” without understand the market needs. Without technology knowledge, entrepreneurs often fall into the “If people buy, we will build it” symptom and make promises to customers without knowing how to do solve the problem.

To make sure that technical students do not make business mistake, I often break down the “magic formula” to a number of questions that students must answer when they begin their entrepreneurship journey:

1. Value Proposition: Exactly what problem that you want to solve?

2. Customers segments: For whom do you solve that problem? Who are your customers? How many of them?

3. Channels: How do you reach your customers?

4. Customer relationships: How do you get customers, keep them, and increase the number of customers?

5. Market Size: How big is the opportunity? How much can you get?

6. Metrics/Revenue: How will you measure success? How much do you think you could sell your product for? What is your business strategy?

7. Competitive Market: What alternatives are out there now? Who are your competitors?

8. Differentiator: Why are you best suited to pursue this? What do you have that is better than your competitors?

9. Partnerships: Do you plan to have partners? Who are they?

10. Solution Requirements: What factors are critical to success? What technology so you use to solve the problems?

11. Risks: What are the risks and how do you mitigate them?

12. Needs: What do you plan to do NOW? Should you start or should you wait – when do you start?

Sources

  • Blogs of Prof. John Vu, Carnegie Mellon University

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