Creating a plan for a new enterprise is important, but successful execution is essential. Execution is a discipline for connecting strategy with reality by aligning goals and people to achieve the desired results. Execution is about turning a concept into a great business. New businesses move from startup to growth to maturity in stages. Managing a new business through these stages requires different skills and organizational arrangements. Startups need to plan for having the right people in the right positions as they grow. Organizations, like people, need to learn and adapt to change. Organizing for recognizing and responding to challenges can build resilience and responding to challenges can build resilience in a startup firm. The ability to adapt to change may be the most important sustainable advantage. Furthermore, to achieve long-term success, a firm needs an ethical base for action. 1. "Obligation to Create Value" with Tim O'Reilly, O'Reilly Media https://youtu.be/l8I7UQy7opQ 2. "Company Ethics" with Karen Richardson, E.piphany https://youtu.be/FZBieLUbr7M 3. "Reaching the Masses" with Matt Rogers, Nest https://youtu.be/8i43YkyrW70

The creators of a new enterprise need to tell their story about the future of their business. Establishing credibility and trust through presentations of the venture's innovative solution to an important problem can lead to an investment. The integrated vision, story, and plan, including the business model, should show how the solution will be profitable within a reasonable period. Investors are interested in a favorable financial return. They also want to believe that they can be partners with trustworthy and capable entrepreneurs. A sample business model is provided in appendix A. Links to additional business plans, models, and slide (pitch) decks are provided on the textbook's websites. Negotiating a deal with an investor is an important part of the process. One can cement the relationship or destroy it through the negotiation process. The terms of the final agreement should align the means of achieving the potential return with the allocation of risk between the investors and the entrepreneurs. 1. "Energetic Fundraising" with Peter Diamandis, Human Longevity https://youtu.be/7q_ty0q2WwA 2. "Tips for A Good Pitch" with Heidi Roizen, DFJ https://youtu.be/JXB9J0BeYmE 3. "Tell the Story Better than Anybody Else" with Tristan Walker, Walker & Company Brands https://youtu.be/HibVNumsYw0 Continue to Chapter 20

In this chapter, we describe the capital that may be available from various sources. Entrepreneurs can estimate the capital required for their new business by reviewing the financial projections they prepare using the methods detailed in Chapter 17. In examining the projections and the cash flow statement, it becomes clear how much capital will be needed and when. This chapter addresses the task of creating an investment offering that will meet the venture's needs and potential investors' requirements for an attractive return. The entrepreneurs may provide some of the required capital, and friends and family may help with modest investments. Government grants, bootstrapping, and crowdfunding can also supply necessary capital to launch a venture. Debt financing from a bank or other financial institution may be another option. Most high-growth ventures that expect to grow on a significant scale will need outside capital from experienced investors, such as angels and venture capitalists. Typically, several stages of investment will be required over the life of the business. The entrepreneurs also must determine what percentage ownership of the venture is offered to the investors. This determination is based on the valuation of the new enterprise at each stage and on what the entrepreneurs are willing to sacrifice in terms of ownership. Ventures with proven value can raise additional growth capital via an initial public offering (IPO), a secondary offering, or a sale to a growth equity or private equity investment firm. Early investors and employees can often harvest a portion or all of the value created by these options or by secondary markets or a merger and acquisition transaction. 1. "Start on Your Own" with Mark Suster, Upfront Ventures https://youtu.be/fgihHnC-kG0 2. "Reasons Not to Sell" with Geoff Donaker, Yelp https://youtu.be/TMMrUyTGhCQ 3. "A Steve Jobs IPO Story" with Ed Catmull, Pixar https://youtu.be/4BNFL-Uakzg Continue to Chapter 19

Entrepreneurs build a financial plan to determine the economic potential for their venture. This plan provides an estimate of the potential of the venture. Of course, any estimate is based on a list of assumptions regarding sales revenues and costs. Using the best available information and their intuition, entrepreneurs calculate the potential profitability of the venture. Furthermore, they need to determine the flow of cash monthly to identify the cash investments that will be required over a two- or three-year period. An income statement and a balance sheet also are required to demonstrate profitability and liquidity. Using the estimates of sales, the venture team can determine the number of units it needs to sell to break even. Furthermore, it can calculate several measures of profitability that demonstrate the return provided by its venture for investors. The best ventures grow sales consistently and provide positive cash flow and profit early in their lives. 1. "Exponential Growth" with Peter Thiel and Max Levchin, Palantir and Affirm https://youtu.be/HlUSCQPciww 2. "No Patience for Profitability" with Thomas Prescott, Align Technology https://youtu.be/buRJVTpaiqo 3. "Ensuring Fair Prices" with Leah Busque, TaskRabbit https://youtu.be/-yR89pdyNms Continue to Chapter 18

A new firm creates a sales model describing how it will generate revenues from its customers. Then it determines a cost model and how to generate profits from its revenues. The revenue and profit engines show how the firm will create value for its customers and how customers will enable the new firm to profit. Many new ventures assume that profit will flow naturally from sales but discover that profits are not guaranteed. It is especially challenging to operate in markets that are often unprofitable. Except in circumstances where market dominance is a priority, most ventures seek positive cash flow as soon as is feasible. Managing revenue growth is important since uncontrolled growth can lead to negative cash flow and the need to constantly raise new funds from outside investors. Furthermore, a firm needs a plan to harvest the benefits of its growing venture for all owners. Entrepreneurs must also be realistic and accept that termination of the new venture is a possibility. 1. "Critical Early Decisions with Long-Lasting Results" with Robin Li, GGV Capital https://youtu.be/I7SxOoiTuVk 2. "Why Google Won Desktop Search" with Chi-Hua Chien and Dan Rosensweig, Goodwater Capital and Chegg https://youtu.be/4vw0UzACLaE 3. "Being Real About Entrepreneurship" with Derek Belch, STRIVR Labs https://youtu.be/4WXFDMCWaZY Continue to Chapter 17

Entrepreneurs often create a new business by acquiring an existing firm and then improving it. The acquirers try to create growth and new value for the firm. Another strategy is for entrepreneurs to start and build their own firm and then expand the company by acquiring other firms. A series of successful acquisitions can help build a firm into a powerful leader in an industry. The integration of the newly acquired firm within the existing firm is a large challenge, however, especially when the cultures of the two firms differ significantly. Most new firms develop, at the appropriate time, a plan for building an international strategy for growth. The forces for globalization are powerful, and new business ventures need to plan for them. 1. "Getting Acquired by Google" with Brett Crosby, PeerStreet https://youtu.be/aExLnRgGVhk 2. "Building Resistance to Acquisition" with Hugh Martin, Verizon https://youtu.be/kIrF4e7mPdY 3. "Lessons Learned from First Acquisition" with Jeff Seibert, Twitter https://youtu.be/fXPiYMwJETU Continue to Chapter 16

Each element of the value chain provides added value to the product. A new enterprise manages its value chain to provide the ultimate product or service to the customer. The firm also moves, stores, and tracks parts and materials through its supply chain, striving to ensure timely, efficient production of the product or service. Information flow along the value chain enables the coordination of the distributed tasks. An effective enterprise manages for operational excellence by developing and communicating measurements of efficiency and timeliness. Using common communications technologies, new enterprises can build a powerful virtual organization, communicating with a set of partners in a quick and effective manner. This set of partners can work from a common schedule, manage how jointly assigned tasks are allocated, and see how interdependencies affect a common schedule. Interrelated tasks can be better managed across firms, which results in better forecasting and stronger chances of achieving on-time production. 1. "Overcoming Some of the Early Mistakes of Dell" with Michael Dell, Dell https://youtu.be/RAIk4Wgx6rs 2. "Develop Operating Range" with Sukhinder Singh Cassidy, JOYUS https://youtu.be/uMBAV1qPpWE 3. "High Efficiency and Happy Accidents" with Kevin Hartz, Eventbrite https://youtu.be/iJBTdm2xrcI Continue to Chapter 15

To tap required resources, entrepreneurs need to build credibility and legitimacy in the marketplace of resources and talent. Influence and persuasion can help entrepreneurs build their case for securing scarce resources. Both choosing a physical location and operating as a virtual organization are viable options for a firm today. We examine the benefits of joining a cluster of interconnected enterprises operating within a geographic region. Entrepreneurs need to create a plan for which functions to outsource and which functions to keep within the venture. As they strive to be innovative and competitive, costs can be controlled by outsourcing functions to others who can do them better and cheaper. However, those ventures are challenged to retain the cohesion and coordination required to effectively manage these supplier partners. Seeking financial resources will be discussed in Chapter 18. 1. "Being Small Inside of Big" with Teresa Briggs, Deloitte https://youtu.be/i5_0jLMK16U 2. "Outsourcing" with Jeff Hawkins, Numenta https://youtu.be/IyGfOImFfL8 3. "Leaders Must Be Honest" with John Hennessy, Stanford University https://youtu.be/OBuGlgdF0Qg Continue to Chapter 14

After recognizing an opportunity and deciding it is attractive, the founders assemble a new venture team to build a plan and an organization to execute it. A key aspect of any team is that its members possess different core competencies and can work in a collaborative manner. A new firm also builds a set of advisors and a board of directors to provide guidance and counsel as the team moves forward. The senior leaders of the venture are identified early in the organization’s development. These leaders must be capable of inspiring and motivating others to join the new venture. As an organization grows, managers will be needed to carry out the tasks that keep the organization running well. A leader is a team’s emotional guide and exhibits solid emotional intelligence. As the organization grows, the firm works to build an organizational culture and trust among team members. Leaders and teams strive to build social relationships and networks to foster collaboration. Knowledge assets and intellectual capital are potential sources of wealth. Sharing knowledge throughout a firm can enhance the firm's processes and core competencies, thus making the firm more innovative and competitive. Most technology ventures are based on knowledge and intellectual property that must be enhanced and managed. A learning organization is skilled at creating and sharing new knowledge. 1. “The Scaling of Vision” with Sheryl Sandberg, Facebook https://youtu.be/pA2m2IWN3rQ 2. “Landing the Right Position” with Bonny Simi, JetBlue Technology Ventures https://youtu.be/E0B6uZEcXvg 3. “Relentless Attention to Culture” with Dharmesh Shah, HubSpot https://youtu.be/yHZUa-2BnjA Continue to Chapter 13

New ventures need to have a plan to build and protect their intellectual property. The proper array of trade secrets, patents, trademarks, and copyrights can add up to a set of very valuable proprietary assets. For many new firms built on innovation and technology, intellectual property can provide a competitive advantage in the marketplace. Licensing, including the licensing of university-developed innovations, can be an important source of new technology or a potential source of revenue. 1. "Protecting Intellectual Property" with Martin Nichols, DLA Piper https://youtu.be/6IuXUnY_ErM 2. "The Role of Lawyers in the Startup Ecosystem" with Gordon Davidson, Fenwick and West https://youtu.be/NUo-Z8LfSKw 3. "Why Build a Patent Portfolio" with Jeffrey Schox, Schox Patent Group https://youtu.be/eyqsMWuKs4I Continue to Chapter 12

The appropriate legal and organizational format used to establish a new venture will vary according to several factors such as context, people, legal and tax consequences, and cultural and social norms. In this chapter, we consider the various organizational and legal forms that entrepreneurs use to achieve their objectives. New ventures can range from small businesses or consulting services to high-growth, high-impact enterprises. When entrepreneurs establish a new enterprise, they must make some critical decisions about these matters. An important contrast to independent ventures is the corporate new venture. It emerges within larger existing enterprises and is granted autonomy so it can fulfill its promise. Corporate new ventures are an important part of the entrepreneurial world and account for many new innovations. Often constrained by existing commitments and capabilities, corporations can fail to respond to significant new opportunities. Well-planned corporate ventures, however, help refresh and strengthen large corporations. 1. "Extreme Users Are the Experts" with Michael Tubbs, Mayor, City of Stockton https://youtu.be/2ySO8FtfpjI 2. "Deep Thought About Values" with Stewart Butterfield, Slack https://youtu.be/yQ1l3AAnWtE 3. "Big Opportunities Draw Big Talent" with Jennifer Pahlka, Code for America https://youtu.be/syJcBPDjDds Continue to Chapter 11

Marketing and sales are critical to the success of a new firm since the firm normally starts without any customers. A new business must create a marketing and sales plan, which describes its target customers for its product offering. The plan should include a product position and a mix of price, product, promotion, and distribution channels that will attract and satisfy the customer. Gaining recognition and acceptance in a target market requires the following steps in sequence: Describe the product offering Describe the target customer State the marketing objectives Gather information through market research Create a marketing plan Create a sales plan Build a marketing and sales staff to implement the plans 1. "Marketing by Surfacing the Product" with Jack Dorsey, Twitter, Square https://youtu.be/OHk9eYeVZFI 2. "Marketing A Startup" with Donna Novitsky, Yiftee https://youtu.be/6lH3nuX41AQ 3. "Consumers Shape Marketing and Product" with Tina Wells, Buzz Marketing Group https://youtu.be/gf-8xdY6mgE Continue to Chapter 10

Over the past 20 years, product life cycles have gotten shorter and shorter--in large part due to faster technological breakthroughs. To keep pace with this environment of rapid change, companies must establish a creative culture that strongly encourages spending time on new ideas, concepts, and solutions. Creative ideas, concepts, and solutions are turned into products and services through the product design and development process. This process is concerned with the concrete details that embody a new product or service. Prototypes are models of a product or service and can help a new technology venture to learn about the right form of the product for the customer. Scenarios are used to create a mental model of a possible sequence of future events or outcomes. 1. "Product Development Process: Observation" with David Kelley, IDEO https://youtu.be/GWqEJzxcdDQ 2. "Ideas Come From Everywhere" with Marissa Mayer, Yahoo https://youtu.be/_Rap2BEADyY 3. "Unlock Creativity with Motivation and Expertise" with Tina Seelig, Stanford University https://youtu.be/VH7SzKNS9Ik Continue to Chapter 9

A new venture that creates a novel solution to a problem will be subject to uncertainty of outcome. An action in an uncertain market is sure to experience a risk of delay or loss. It is the entrepreneur's task to reduce and manage all risks as much as possible. Attractive new ventures can be designed to grow as demand for their products increases. Furthermore, it is hoped that economies of scale will be experienced so that as demand and sales grow, the cost to produce a unit of product declines. It is also helpful to have economies of scope so that cost per unit decline when fixed costs are spread over a wide range of products. Industries based on network economies often see the emergence of an industry standard as a result. 1. "Realities of Consumer Internet at Scale" with John Lilly, Greylock https://youtu.be/_QIarMwMO-8 2. "Motivation Through Equity and Risk Taking" with Bill Gross, Idealab https://youtu.be/vBIRW3szVQQ 3. "Solve Only Real Problems" with Julie Zhuo, Facebook https://youtu.be/NhMyAN8OxB8 Continue to Chapter 8

Entrepreneurs respond to attractive opportunities by forming new firms. In this chapter, we consider the five-step process for establishing a new enterprise. One particularly noteworthy step in the process is the development of a story and a business plan, including a compelling business model. The story is a compelling synopsis of why this venture is needed at this moment in time and how it can achieve success. We then detail the task of writing a business plan, which is an effort to better prepare the venture for testing its assumptions and hypotheses. An example of a well-prepared business model is provided in appendix A. Visit the textbook website for additional sample business plans, models and slide (or pitch) decks. 1. "Purpose of a Business Plan" with Tom Byers, Stanford University https://youtu.be/vZUurWk9QDg 2. "Work Backwards From the Customer" with Diego Piacentini, Amazon https://youtu.be/mGSzWuDqH7o 3. "Have a Sense of Urgency" with Mike Maples, Floodgate https://youtu.be/4_14t0Zynlk Continue to Chapter 7

Innovation strategies that are bold and compelling are vital to entrepreneurship. For example, the decision to try to be the first to market or to wait is important to all entrepreneurs. Using an idealized model of the window of opportunity, the entrepreneur can decide when and how to act. The entrepreneur needs to maintain a sense of urgency but must avoid being too early or too late to market. Entrepreneurs also seek to build an innovation strategy that involves new technologies, ideas, and creativity, which leads to invention and ultimately commercialization. High-potential ventures often reshape entire industries through the creation of new products or services. 1. "Facing Competition Through Innovation" with Reid Hoffman, LinkedIn, Greylock https://youtu.be/f65P5NrDy54 2. "Out Innovate Bigger Competitors" with Aaron Levie, Box https://youtu.be/t3cHRJRktKs 3. "Systematize Innovation" with Astro Teller, X https://youtu.be/adLiT8JAc3E Continue to Chapter 6

Every new venture has a strategy or approach to achieve its goals. This strategy is in response to its plan to implement a solution to an important problem or opportunity. Step 1 was described in Chapter 3. With sound vision and mission statements and an initial business model, the entrepreneur identifies the venture's core competencies and examines the political context of the industry (steps 2 and 3). Once the industry is understood, steps 4 and 5 are used to describe the firm's strengths and weaknesses and its opportunities and threats (SWOT). In step 6, the entrepreneur integrates his or her knowledge of the industry and competitors with his or her own SWOT to identify key success factors. Based on the information gathered in the preceding steps, the entrepreneur refines his or her vision, mission, and business model and creates a strategy to achieve a sustainable competitive advantage. The formation of cooperative alliances with other enterprises can be an important way for a new venture to position itself within an industry. Long-term success depends upon addressing the needs of all stakeholders and acting in a responsible manner. 1. "Neutralizing Competition is a Speed Game" with Geoffrey Moore, Wildcat Venture Partners https://youtu.be/pwz7K7KdkHY 2. "Sustainable Advantages" with Kevin and Julia Hartz, Eventbrite https://youtu.be/KpVkhJu9EKE 3. "Make Bookkeeping Less Taxing" with Scott Cook, Intuit https://youtu.be/6I6PUhnqO0s Continue to Chapter 5

Entrepreneurs must understand what they are trying to accomplish with their new venture and how they intend to execute on these goals. They must have a clear vision for long-term development that can be distilled down to a mission statement capturing the entrepreneur's intent and objectives. Understanding the intended customers, their needs, and how these needs will be met by the venture is vital to developing the business model. A business model describes the relationship between a venture's customers, value proposition, differentiating features, scope, organization design, and profit model. 1. "Innovate in Technology and Business: The Founding of Google" with Larry Page and Eric Schmidt, Alphabet https://youtu.be/1jTDaS2ZPVo 2. "The Principles of Lean" with Steve Blank, Stanford University https://youtu.be/S4nCY0H4598 3. "Balancing Form and Functionality" with Elon Musk, Tesla, SpaceX https://youtu.be/eCqw2SCFLYs Continue to Chapter 4

The identification and evaluation of opportunities is one of the entrepreneur’s most important tasks. Good opportunities address important market needs. Examining social, technological, and economic trends can lead to the identification of emerging needs. Entrepreneurs seek to build new ventures and to act on a good opportunity when it matches their capabilities and interests, exists in a favorable context, exhibits the potential for sustainable long-term growth, and facilitates the acquisition of required resources. Such opportunities offer a reasonable chance of success and require the entrepreneur to make a difficult decision to act or not act. The choice of an opportunity and the decision to act is a critical juncture in the life of an entrepreneur. With the decision to act, the entrepreneur prepares a business summary for the venture that is used to test the new venture with potential investors, employees, and customers. 1. "Disruptive Technologies" with John Doerr, KPCB https://youtu.be/hN8FbeEL2_c 2. "Pressure Points Around Opportunity" with Brad Feld, Foundry Group https://youtu.be/gcbCO3vWE6g 3. "Internet of Everything" with Padmasree Warrior, NextEV https://youtu.be/mc_mlkD7op4 Continue to Chapter 3

Entrepreneurs strive to make a difference in our world and to contribute to its betterment. They identify opportunities, mobilize resources, and relentlessly execute on their visions. In this chapter, we describe how entrepreneurs act to create new enterprises. We identify firms as key structures in the economy and the role of entrepreneurship as the engine of economic growth. New technologies form the basis of many important ventures where scientists and engineers combine their technical knowledge with sound business practices to foster innovation. Entrepreneurs are the critical people at the center of all of these activities. 1. "Entrepreneurial Skills Learned" with Mark Zuckerberg, Facebook https://youtu.be/VuqGdFTTIsc 2. "Reasons Not to Be An Entrepreneur" with Phil Libin, Evernote, General Catalyst https://youtu.be/FU7TvpvVHWw 3. "Being Entrepreneurial In A Big Company" with Shah Selbe, National Geographic https://youtu.be/v1VZEK3HbaY Continue to Chapter 2: Opportunities This article is a supplemental piece for 'Technology Ventures: From Idea to Enterprise (5th Edition)'