1 00:00:00,070 --> 00:00:02,430 The following content is provided under a Creative 2 00:00:02,430 --> 00:00:03,820 Commons license. 3 00:00:03,820 --> 00:00:06,050 Your support will help MIT OpenCourseWare 4 00:00:06,050 --> 00:00:10,150 continue to offer high quality educational resources for free. 5 00:00:10,150 --> 00:00:12,700 To make a donation or to view additional materials 6 00:00:12,700 --> 00:00:16,600 from hundreds of MIT courses, visit MIT OpenCourseWare 7 00:00:16,600 --> 00:00:17,305 at ocw.mit.edu. 8 00:00:26,685 --> 00:00:29,480 JOE HADZIMA: OK, Good evening. 9 00:00:29,480 --> 00:00:32,670 Everybody nice and warm from the snow? 10 00:00:32,670 --> 00:00:35,490 Thank you for coming to Nuts and Bolts of New Ventures 11 00:00:35,490 --> 00:00:39,860 and Business Plans on a snowy night in Cambridge. 12 00:00:39,860 --> 00:00:41,320 My name is Joe Hadzima. 13 00:00:41,320 --> 00:00:44,090 And this is the first of six evenings we're 14 00:00:44,090 --> 00:00:46,350 going to have for the course. 15 00:00:46,350 --> 00:00:49,950 The course name is Nuts and Bolts of New Ventures 16 00:00:49,950 --> 00:00:51,250 and Business Plans. 17 00:00:51,250 --> 00:00:55,700 First of all, it's not really about the business plan itself. 18 00:00:55,700 --> 00:00:58,140 Think of it as we're going to talk about how to plan 19 00:00:58,140 --> 00:01:01,870 and execute a new venture. 20 00:01:01,870 --> 00:01:04,150 And don't think of a business plan 21 00:01:04,150 --> 00:01:08,030 as a fixed document in this course. 22 00:01:08,030 --> 00:01:11,410 Really, it's a dynamic process we're going through. 23 00:01:11,410 --> 00:01:13,150 It may be a document. 24 00:01:13,150 --> 00:01:15,774 It may be a few slides. 25 00:01:15,774 --> 00:01:17,190 But at the end of the day, what it 26 00:01:17,190 --> 00:01:21,420 ends up being is a shared vision between you 27 00:01:21,420 --> 00:01:26,060 and your team as to where we are, where we're going, 28 00:01:26,060 --> 00:01:28,780 and how we plan to get there. 29 00:01:28,780 --> 00:01:32,370 So that's the goal of all this. 30 00:01:32,370 --> 00:01:34,820 And I should also say, because I know 31 00:01:34,820 --> 00:01:37,700 some people in the audience are not doing traditional business 32 00:01:37,700 --> 00:01:42,340 ventures, we're going to use the business terms a lot, 33 00:01:42,340 --> 00:01:45,580 but this could equally apply to social-developmental 34 00:01:45,580 --> 00:01:50,610 entrepreneurship, to nonprofits even to governmental ventures. 35 00:01:50,610 --> 00:01:54,130 It's a way of thinking about how to organize new ideas 36 00:01:54,130 --> 00:01:56,480 and get them going. 37 00:01:56,480 --> 00:01:58,410 Now a little bit about the course. 38 00:01:58,410 --> 00:02:00,430 This is the 25th year-- it's hard for me 39 00:02:00,430 --> 00:02:03,660 to believe it's been 25 years-- for the course. 40 00:02:03,660 --> 00:02:06,950 And the founding of the course has an entrepreneurial lesson 41 00:02:06,950 --> 00:02:08,060 in it. 42 00:02:08,060 --> 00:02:09,590 So here's the backstory. 43 00:02:09,590 --> 00:02:13,180 I was teaching some things here on legal stuff. 44 00:02:13,180 --> 00:02:17,110 And some students came up and said-- 45 00:02:17,110 --> 00:02:18,970 I think we had one entrepreneurship 46 00:02:18,970 --> 00:02:20,485 course at Sloan at the time and they 47 00:02:20,485 --> 00:02:22,850 had taken that-- and they said it's a great course, 48 00:02:22,850 --> 00:02:27,110 but it's not telling us anything practical. 49 00:02:27,110 --> 00:02:30,050 So could you do a course during IAP 50 00:02:30,050 --> 00:02:32,470 to tell us how to do something practical, 51 00:02:32,470 --> 00:02:34,460 how to start a company? 52 00:02:34,460 --> 00:02:38,740 So this was back 25 years ago before the internet. 53 00:02:38,740 --> 00:02:42,580 And the IAP courses were in a fixed, printed catalog 54 00:02:42,580 --> 00:02:43,480 that you would get. 55 00:02:43,480 --> 00:02:45,260 Shows you how far we've come. 56 00:02:45,260 --> 00:02:47,950 So I said, well, I'll think about doing a course 57 00:02:47,950 --> 00:02:49,290 and let me get back to you. 58 00:02:49,290 --> 00:02:52,650 Well, I got tied-up with some other things. 59 00:02:52,650 --> 00:02:56,110 And then they came to me and said, we put it in the catalog 60 00:02:56,110 --> 00:03:00,010 and we dare you not to show up. 61 00:03:00,010 --> 00:03:01,220 Interesting. 62 00:03:01,220 --> 00:03:03,160 So I thought about it for a while 63 00:03:03,160 --> 00:03:04,860 and I thought, well, I should be angry, 64 00:03:04,860 --> 00:03:08,110 but I think I have a customer. 65 00:03:08,110 --> 00:03:09,820 I think these people want something. 66 00:03:09,820 --> 00:03:12,285 So the first attribute was I had a customer. 67 00:03:12,285 --> 00:03:14,450 I'll right, I'll play this game for a bit. 68 00:03:14,450 --> 00:03:17,970 Problem is I only had two weeks to organize it. 69 00:03:17,970 --> 00:03:20,780 So that wasn't enough time to really do anything formal. 70 00:03:20,780 --> 00:03:25,870 So I said-- I think it was four nights-- all right, 71 00:03:25,870 --> 00:03:29,580 we'll do two hours, three hours, we'll do eight topics 72 00:03:29,580 --> 00:03:32,932 and I'll go and find some people who know about those. 73 00:03:32,932 --> 00:03:35,140 And how am I going to make it easy at the last minute 74 00:03:35,140 --> 00:03:36,430 to get these people? 75 00:03:36,430 --> 00:03:39,320 I said just come into class and whatever the field 76 00:03:39,320 --> 00:03:43,515 is that you're in speak maybe 10 minutes on the five things 77 00:03:43,515 --> 00:03:45,890 I wish somebody had told me about whatever you're talking 78 00:03:45,890 --> 00:03:47,760 about before I got started. 79 00:03:47,760 --> 00:03:50,615 Then we'll do questions and answers. 80 00:03:50,615 --> 00:03:52,490 And I said, I've got to make it entertaining. 81 00:03:52,490 --> 00:03:55,800 So I called up people and said, do you 82 00:03:55,800 --> 00:03:58,960 know somebody who can do this talk? 83 00:03:58,960 --> 00:04:01,625 And if you do, you have to have seen the person talk, 84 00:04:01,625 --> 00:04:05,100 they have to be entertaining, you have to vouch for them. 85 00:04:05,100 --> 00:04:08,500 And so we did this in a period of two weeks. 86 00:04:08,500 --> 00:04:10,540 And probably half the speakers that 87 00:04:10,540 --> 00:04:13,870 showed up for that first session I had never met before. 88 00:04:13,870 --> 00:04:17,730 So I'm thinking this is going to be a disaster. 89 00:04:17,730 --> 00:04:19,709 It turned out to be a great success. 90 00:04:19,709 --> 00:04:22,590 And I think the lessons for this, 91 00:04:22,590 --> 00:04:28,280 in an entrepreneurial way were I had a customer for a product, 92 00:04:28,280 --> 00:04:32,570 they wanted something, I was able to clearly define 93 00:04:32,570 --> 00:04:35,580 the task-- because I didn't have time to do anything more; 94 00:04:35,580 --> 00:04:37,310 if I had done it myself, it probably 95 00:04:37,310 --> 00:04:38,810 would have taken longer and not been 96 00:04:38,810 --> 00:04:44,110 as good-- I got great people, and I was able to communicate 97 00:04:44,110 --> 00:04:49,480 to them what the task was, and then I got out of their way 98 00:04:49,480 --> 00:04:50,600 and they did a great job. 99 00:04:50,600 --> 00:04:52,180 So there's an entrepreneurial lesson 100 00:04:52,180 --> 00:04:53,830 in how to start a company. 101 00:04:53,830 --> 00:04:57,590 Make sure you have customers, get great people. 102 00:04:57,590 --> 00:05:00,350 The whole business planning, new venture-type thing 103 00:05:00,350 --> 00:05:03,080 is really trying to find what the task is 104 00:05:03,080 --> 00:05:05,580 and then to be able to communicate, and execute on it. 105 00:05:05,580 --> 00:05:09,214 So the course really is an entrepreneur venture. 106 00:05:09,214 --> 00:05:10,130 That's how we started. 107 00:05:10,130 --> 00:05:14,539 And later Joost basically figured out 108 00:05:14,539 --> 00:05:15,830 how we could get credit for it. 109 00:05:15,830 --> 00:05:18,450 And it's just blossomed ever since. 110 00:05:18,450 --> 00:05:21,820 So that's the background. 111 00:05:21,820 --> 00:05:25,490 In the 25 years we've seen all sorts of things. 112 00:05:25,490 --> 00:05:29,610 We've seen bubbles-- the internet bubble. 113 00:05:29,610 --> 00:05:32,750 I stood here thinking I just read in the paper 114 00:05:32,750 --> 00:05:36,810 that Hotmail, back in 1997 or so, 115 00:05:36,810 --> 00:05:44,450 had started up and been sold in 18 months for $450 million, 116 00:05:44,450 --> 00:05:45,730 basically giving away email. 117 00:05:45,730 --> 00:05:47,480 And I'm thinking how am I going to explain 118 00:05:47,480 --> 00:05:49,440 to people this isn't the way it usually 119 00:05:49,440 --> 00:05:51,950 works in periods of time. 120 00:05:51,950 --> 00:05:53,270 More recently, Instagram. 121 00:05:53,270 --> 00:05:57,090 So there are some things that happen at points in time that 122 00:05:57,090 --> 00:05:59,730 defy direct logic. 123 00:05:59,730 --> 00:06:01,970 And if you can catch those waves, 124 00:06:01,970 --> 00:06:05,390 that becomes a good thing to do. 125 00:06:05,390 --> 00:06:08,170 We've also seen busts after the internet collapsed, 126 00:06:08,170 --> 00:06:10,840 after the financial markets collapsed. 127 00:06:10,840 --> 00:06:15,270 Actually, that is one of the best times to start a company. 128 00:06:15,270 --> 00:06:17,320 And many of the really enduring companies 129 00:06:17,320 --> 00:06:19,770 have been started during down times. 130 00:06:19,770 --> 00:06:22,850 And the reason is resources aren't available-- financing 131 00:06:22,850 --> 00:06:26,070 dries up-- you've got to be really focused, 132 00:06:26,070 --> 00:06:28,350 you have to actually deliver something of value. 133 00:06:28,350 --> 00:06:31,260 And there's a lot of history about companies to get 134 00:06:31,260 --> 00:06:33,400 started during down times. 135 00:06:33,400 --> 00:06:36,930 But through all of that, ups and downs, 136 00:06:36,930 --> 00:06:39,240 it all boils down to really two basic thoughts, 137 00:06:39,240 --> 00:06:41,390 and we're going to touch on it over and over again 138 00:06:41,390 --> 00:06:43,190 in the course. 139 00:06:43,190 --> 00:06:46,600 And that is whether it's a business, whether it's 140 00:06:46,600 --> 00:06:51,360 a nonprofit, whether it's a governmental project, 141 00:06:51,360 --> 00:06:54,470 the first thing you've got to do is create value. 142 00:06:54,470 --> 00:06:58,479 So if you're not creating value, You can't really do anything. 143 00:06:58,479 --> 00:07:00,270 And then having created value, the question 144 00:07:00,270 --> 00:07:03,810 is how do you capture some or all of that value 145 00:07:03,810 --> 00:07:06,580 to make what you're doing sustainable. 146 00:07:06,580 --> 00:07:13,740 And sustainable in the concept of the traditional companies is 147 00:07:13,740 --> 00:07:17,350 profit and in the context of developmental stuff 148 00:07:17,350 --> 00:07:20,760 it can be we can do it again, rinse and repeat. 149 00:07:20,760 --> 00:07:22,494 So when we look at creating value, 150 00:07:22,494 --> 00:07:23,910 we're going to be asking questions 151 00:07:23,910 --> 00:07:27,140 about who do we create value for, 152 00:07:27,140 --> 00:07:33,340 how much value do we create, and how do we create it. 153 00:07:33,340 --> 00:07:35,290 And then when we talk about capturing value, 154 00:07:35,290 --> 00:07:40,570 the traditional way has been for customers somebody who 155 00:07:40,570 --> 00:07:44,830 will pay you for your goods, the product you do, 156 00:07:44,830 --> 00:07:46,220 or your services. 157 00:07:46,220 --> 00:07:48,910 And the trick, as we'll see, in financial projections 158 00:07:48,910 --> 00:07:50,420 and the business model parts that'll 159 00:07:50,420 --> 00:07:54,710 come in the next few days, is that whole process something 160 00:07:54,710 --> 00:07:57,920 where you can make enough money that you can continue it. 161 00:07:57,920 --> 00:08:02,230 So traditional capture of value is through customers. 162 00:08:02,230 --> 00:08:04,750 There are other ways to capture value 163 00:08:04,750 --> 00:08:09,320 in the area of the advertising or monetization 164 00:08:09,320 --> 00:08:11,660 that we'll talk about also. 165 00:08:11,660 --> 00:08:15,930 And you think about things like where third parties provide 166 00:08:15,930 --> 00:08:17,470 that payment. 167 00:08:17,470 --> 00:08:19,110 So think of the US health care system 168 00:08:19,110 --> 00:08:23,280 where historically the patient, the person who the value is 169 00:08:23,280 --> 00:08:26,650 delivered to-- as in you're going to get treated-- 170 00:08:26,650 --> 00:08:29,800 isn't really paying directly the cost of that. 171 00:08:29,800 --> 00:08:31,770 So sometimes figuring out how that works 172 00:08:31,770 --> 00:08:33,320 can be the challenging part. 173 00:08:40,900 --> 00:08:43,640 So at the end of the day, to make all this happy, 174 00:08:43,640 --> 00:08:46,390 we're going to need people-- that's the number one 175 00:08:46,390 --> 00:08:48,200 thing you're going to need for a venture-- 176 00:08:48,200 --> 00:08:53,822 resources of some sort-- either cash or partnerships-- skills-- 177 00:08:53,822 --> 00:08:56,030 some of them you'll learn in this class, some of them 178 00:08:56,030 --> 00:08:59,000 you'll learn on the job-- and then that one that's 179 00:08:59,000 --> 00:09:01,800 the hardest one to figure out, but if you can get it 180 00:09:01,800 --> 00:09:04,200 it's the best, and that's called luck. 181 00:09:04,200 --> 00:09:07,440 I'll always, go with some luck. 182 00:09:07,440 --> 00:09:11,000 So our goal for the course is basically 183 00:09:11,000 --> 00:09:15,740 to make sure you get infected with the entrepreneurial 184 00:09:15,740 --> 00:09:17,490 thinking virus. 185 00:09:17,490 --> 00:09:22,540 And it really is a virus that can be infectious. 186 00:09:22,540 --> 00:09:26,430 The good news is it's not known to be fatal. 187 00:09:26,430 --> 00:09:27,980 It's highly contagious. 188 00:09:27,980 --> 00:09:32,850 It is a lifelong affliction, so you'll have to get used to it. 189 00:09:32,850 --> 00:09:35,260 But at the end of the day, I think if you catch it 190 00:09:35,260 --> 00:09:36,850 you'll be in best shape. 191 00:09:39,640 --> 00:09:41,670 This is what we're going to be doing tonight. 192 00:09:41,670 --> 00:09:44,660 We're going to tell you a little bit about who you are, we're 193 00:09:44,660 --> 00:09:47,390 going to introduce the teaching team, 194 00:09:47,390 --> 00:09:50,230 we'll introduce the case study and business plan 195 00:09:50,230 --> 00:09:53,920 basics tonight, and then we'll take a small break, 196 00:09:53,920 --> 00:09:55,980 and then we'll get on with Steve Pearse, who's 197 00:09:55,980 --> 00:09:58,850 come all the way from Florida today to talk to us. 198 00:09:58,850 --> 00:10:04,570 He's thinking maybe that wasn't such a good idea. 199 00:10:04,570 --> 00:10:05,665 So who is in the class? 200 00:10:10,670 --> 00:10:14,140 Some of you signed up-- many of you signed up-- at the website. 201 00:10:14,140 --> 00:10:15,690 We had 160 signed up. 202 00:10:15,690 --> 00:10:18,114 And the organizations that you're from 203 00:10:18,114 --> 00:10:20,030 are-- and I'll just read them alphabetically-- 204 00:10:20,030 --> 00:10:24,740 Boston University, Broad Institute, Columbia University, 205 00:10:24,740 --> 00:10:28,030 the Department of Defense, Harvard College, Harvard 206 00:10:28,030 --> 00:10:30,730 Kennedy School, and Harvard Business School, 207 00:10:30,730 --> 00:10:34,400 Mass General Hospital, University of Massachusetts, 208 00:10:34,400 --> 00:10:38,620 University of Macedonia, University of Michigan, 209 00:10:38,620 --> 00:10:41,745 Toronto, Wellesley College, several private companies 210 00:10:41,745 --> 00:10:46,610 that I won't say your names to protect you, and of course MIT. 211 00:10:46,610 --> 00:10:48,710 Now the areas that you said you were interested 212 00:10:48,710 --> 00:10:50,200 in are all over the place. 213 00:10:50,200 --> 00:10:54,500 We have consumer devices, foreign language learning, 214 00:10:54,500 --> 00:10:57,580 financial technology, social enterprise 215 00:10:57,580 --> 00:11:01,880 related to health care, educational technology, 216 00:11:01,880 --> 00:11:02,772 medical devices. 217 00:11:02,772 --> 00:11:04,480 One of the reasons I'm going through this 218 00:11:04,480 --> 00:11:08,120 is that we hope that in the period of this course 219 00:11:08,120 --> 00:11:09,650 you'll actually form some teams. 220 00:11:09,650 --> 00:11:12,424 So if you find some of these topics interesting, 221 00:11:12,424 --> 00:11:13,840 or if you're some of these people, 222 00:11:13,840 --> 00:11:16,112 then at least I'm shouting you out a bit. 223 00:11:16,112 --> 00:11:17,820 We have nuclear energy-- for those of you 224 00:11:17,820 --> 00:11:22,910 into that-- specialty biotech chemicals, a sleep product, 225 00:11:22,910 --> 00:11:28,970 oncology drug delivery, biotechnology, 3D printing, 226 00:11:28,970 --> 00:11:34,500 eyeglasses in West Africa, independent film industry, lab 227 00:11:34,500 --> 00:11:40,490 testing process and equipment, big data, data privacy, 228 00:11:40,490 --> 00:11:46,040 B2B information technology, energy technology, aerospace, 229 00:11:46,040 --> 00:11:49,050 crowd-funding, and e-commerce. 230 00:11:49,050 --> 00:11:52,590 So hopefully you'll find a kindred spirit in those. 231 00:11:52,590 --> 00:11:55,230 Now what about the background of the people? 232 00:11:55,230 --> 00:11:59,050 We have some people this is the first course they've ever 233 00:11:59,050 --> 00:12:01,674 taken in entrepreneurship. 234 00:12:01,674 --> 00:12:03,340 We've had people that have taken a bunch 235 00:12:03,340 --> 00:12:05,340 of other entrepreneurial courses at MIT 236 00:12:05,340 --> 00:12:07,347 or at other universities. 237 00:12:07,347 --> 00:12:09,180 In fact, we have a couple of people who have 238 00:12:09,180 --> 00:12:12,030 taken Nuts and Bolts before. 239 00:12:12,030 --> 00:12:15,520 They did pass before, but they're back for more. 240 00:12:15,520 --> 00:12:19,520 Several start-ups, somebody who has always been in government, 241 00:12:19,520 --> 00:12:25,530 and a couple people in 15 plus years in large organizations. 242 00:12:25,530 --> 00:12:28,070 And some members of the venture mentoring service 243 00:12:28,070 --> 00:12:30,520 are actually in the audience. 244 00:12:30,520 --> 00:12:33,240 So we have undergraduates, grad students, post-docs, 245 00:12:33,240 --> 00:12:35,450 visiting faculty, and staff. 246 00:12:35,450 --> 00:12:39,510 So it's a pretty diverse audience 247 00:12:39,510 --> 00:12:40,760 and we've got a lot to cover. 248 00:12:40,760 --> 00:12:43,530 So a little advice to the people that are first timers. 249 00:12:43,530 --> 00:12:46,580 I would say soak it all in. 250 00:12:46,580 --> 00:12:48,829 And as you go forward, try to think 251 00:12:48,829 --> 00:12:50,620 about the kind of things we talk about when 252 00:12:50,620 --> 00:12:54,660 you approach entrepreneurial things for the first time. 253 00:12:54,660 --> 00:12:58,670 More experienced people, now use this to refine your thinking. 254 00:12:58,670 --> 00:13:01,950 I've been in this course for, as I said, 25 years. 255 00:13:01,950 --> 00:13:04,540 And every single year I come up with some refinement 256 00:13:04,540 --> 00:13:07,220 of my thinking listening not only the speakers 257 00:13:07,220 --> 00:13:09,770 but to the questions that come. 258 00:13:09,770 --> 00:13:13,380 So I hope you enjoy the course. 259 00:13:13,380 --> 00:13:19,246 We do have to calibrate before we get going, though. 260 00:13:19,246 --> 00:13:23,310 It is MIT, so we have our first formula. 261 00:13:23,310 --> 00:13:32,270 And it is H equals R divided by E. 262 00:13:32,270 --> 00:13:35,480 So I've got an audience with a whole bunch of different people 263 00:13:35,480 --> 00:13:38,670 and we're trying to solve this equation. 264 00:13:38,670 --> 00:13:41,844 And we're trying to maximize H. So 265 00:13:41,844 --> 00:13:43,260 for those of you that can't see, H 266 00:13:43,260 --> 00:13:46,970 equals R divided by E. Anybody want to take 267 00:13:46,970 --> 00:13:49,410 a guess what these symbols are? 268 00:13:52,805 --> 00:13:54,426 Yeah, the snow has got to you. 269 00:13:54,426 --> 00:13:55,300 I'll give you a hint. 270 00:13:55,300 --> 00:13:56,160 H is happiness. 271 00:13:58,940 --> 00:13:59,577 OK, let's see. 272 00:13:59,577 --> 00:14:00,077 Yeah. 273 00:14:00,077 --> 00:14:01,540 AUDIENCE: Reality over Expectations. 274 00:14:01,540 --> 00:14:03,164 JOE HADZIMA: Oh, he jumped right to it. 275 00:14:03,164 --> 00:14:06,730 Reality over expectations. 276 00:14:06,730 --> 00:14:09,760 Last year somebody said revenue divided by expenses, 277 00:14:09,760 --> 00:14:11,610 which is equally good I guess. 278 00:14:11,610 --> 00:14:12,590 [LAUGHTER] 279 00:14:12,590 --> 00:14:15,175 So this is a generalizable formula. 280 00:14:15,175 --> 00:14:19,730 And for those of you who have even slight idea of math, 281 00:14:19,730 --> 00:14:21,640 if I lower your expectations to zero, 282 00:14:21,640 --> 00:14:24,087 I can make you infinitely happy. 283 00:14:24,087 --> 00:14:26,170 But I think I'm never going to be able to do that. 284 00:14:26,170 --> 00:14:31,260 But the point is this works both for teaching here 285 00:14:31,260 --> 00:14:33,870 and for everything you do. 286 00:14:33,870 --> 00:14:39,450 If you over-deliver on what you promise, 287 00:14:39,450 --> 00:14:41,510 you'll have people happy-- your investors will 288 00:14:41,510 --> 00:14:43,410 be happy, your customers. 289 00:14:43,410 --> 00:14:47,360 So happiness is reality divided by expectation, 290 00:14:47,360 --> 00:14:51,920 with the fact that you can never quite get expectations to zero. 291 00:14:51,920 --> 00:14:55,250 So lower your expectations-- I want you to all be happy 292 00:14:55,250 --> 00:14:57,170 as we move through the course. 293 00:14:57,170 --> 00:14:58,348 So who are we? 294 00:15:01,554 --> 00:15:06,270 We have Joe Hadzima, Joost, Gino, Yonald 295 00:15:06,270 --> 00:15:08,990 Chery, and some highly paid volunteer speakers 296 00:15:08,990 --> 00:15:10,710 I'll introduce. 297 00:15:10,710 --> 00:15:12,310 A little bit about my background. 298 00:15:12,310 --> 00:15:13,530 Senior lecturer at Sloan. 299 00:15:13,530 --> 00:15:16,800 Was a partner in a law firm in Boston for many years. 300 00:15:16,800 --> 00:15:18,510 Was one of the founding judges of what's 301 00:15:18,510 --> 00:15:21,080 now the 100K competition. 302 00:15:21,080 --> 00:15:24,590 Former global chairman of the MIT Enterprise Forum. 303 00:15:24,590 --> 00:15:27,140 Managing director at Main Street Partners, where we do 304 00:15:27,140 --> 00:15:29,170 technology commercialization. 305 00:15:29,170 --> 00:15:31,410 And co-founder and president of IPVision 306 00:15:31,410 --> 00:15:34,010 that does intellectual property analysis. 307 00:15:34,010 --> 00:15:36,890 I should say this is the first course at MIT 308 00:15:36,890 --> 00:15:39,600 that we're aware of that brought both sides of campus together, 309 00:15:39,600 --> 00:15:43,400 the engineering, science, architecture side of campus 310 00:15:43,400 --> 00:15:44,582 to the Sloan side. 311 00:15:44,582 --> 00:15:46,040 You would think they're miles away. 312 00:15:46,040 --> 00:15:48,492 Until this class, they really weren't together. 313 00:15:48,492 --> 00:15:50,450 There have been a lot of companies launched out 314 00:15:50,450 --> 00:15:51,130 of this class. 315 00:15:51,130 --> 00:15:53,390 Some have gone public. 316 00:15:53,390 --> 00:15:58,080 And it's been quite a history over time. 317 00:15:58,080 --> 00:16:02,100 Then I'd like to introduce our case study next. 318 00:16:02,100 --> 00:16:09,920 This is Virtual Ink, if you can't read that logo up there. 319 00:16:09,920 --> 00:16:12,810 This is a case you have in the materials. 320 00:16:12,810 --> 00:16:16,460 Is a computer peripheral company. 321 00:16:16,460 --> 00:16:21,020 And let me see if I can make this work. 322 00:16:30,440 --> 00:16:32,590 I'll give you a little bit of an introduction here. 323 00:16:32,590 --> 00:16:33,966 Is that appearing up there? 324 00:16:33,966 --> 00:16:34,632 [AUDIO PLAYBACK] 325 00:16:34,632 --> 00:16:37,530 [MUSIC PLAYING] 326 00:16:37,530 --> 00:16:39,622 -For the times when you don't need a projector 327 00:16:39,622 --> 00:16:42,246 and writing on the whiteboard is the best teaching tool, 328 00:16:42,246 --> 00:16:45,820 there's the MimioCapture ink recording system. 329 00:16:45,820 --> 00:16:49,630 Enabled by MimioStudio Software, the MimioCapture system 330 00:16:49,630 --> 00:16:51,610 actually sees and records everything 331 00:16:51,610 --> 00:16:55,570 you write on the board in real time and multiple colors. 332 00:16:55,570 --> 00:16:59,035 It can even convert handwriting into editable text. 333 00:16:59,035 --> 00:17:01,510 The system creates digital files that you 334 00:17:01,510 --> 00:17:04,975 can send to your students so now they can focus on the lesson 335 00:17:04,975 --> 00:17:06,460 rather than on taking notes. 336 00:17:06,460 --> 00:17:09,182 And you'll save time by using the digital files 337 00:17:09,182 --> 00:17:10,420 in other classes. 338 00:17:10,420 --> 00:17:12,760 The MimioCapture system works with you 339 00:17:12,760 --> 00:17:16,254 MimioTeach interactive system and comes complete 340 00:17:16,254 --> 00:17:19,150 with a magnetic charging tray, four rechargeable marker 341 00:17:19,150 --> 00:17:20,990 holders, and a digital eraser. 342 00:17:20,990 --> 00:17:24,150 The MimioCapture system, bringing your white board 343 00:17:24,150 --> 00:17:26,170 notes into the 21st century. 344 00:17:33,156 --> 00:17:34,374 [END PLAYBACK] 345 00:17:34,374 --> 00:17:35,040 JOE HADZIMA: OK. 346 00:17:35,040 --> 00:17:39,489 So that is an overview of what Virtual Ink eventually became. 347 00:17:39,489 --> 00:17:42,030 And in fact, today they have a whole bunch of other products. 348 00:17:42,030 --> 00:17:47,760 Yonald, our entrepreneur, who's going to come in at the end, 349 00:17:47,760 --> 00:17:48,830 was the founder of it. 350 00:17:48,830 --> 00:17:50,942 He's got a very interesting story. 351 00:17:50,942 --> 00:17:52,900 The reason we use Virtual Ink, even though it's 352 00:17:52,900 --> 00:17:55,780 a little bit dated-- it was in the late 1990s-- 353 00:17:55,780 --> 00:18:00,050 is that it's an easy concept to understand, 354 00:18:00,050 --> 00:18:02,090 although there is some technology behind it, 355 00:18:02,090 --> 00:18:03,470 to be sure. 356 00:18:03,470 --> 00:18:08,530 It was entered in what was then the 50K competition. 357 00:18:08,530 --> 00:18:12,400 It's an interesting story of the times and the company. 358 00:18:12,400 --> 00:18:16,390 And most importantly, Yonald himself comes in 359 00:18:16,390 --> 00:18:20,470 and he tells you stuff that you're not going to find. 360 00:18:20,470 --> 00:18:23,270 It's so easy to get people into a class like this 361 00:18:23,270 --> 00:18:24,180 who are successful. 362 00:18:24,180 --> 00:18:26,147 Oh, I came up with this idea in my dorm room, 363 00:18:26,147 --> 00:18:28,230 and I did this, we raised some money, went public, 364 00:18:28,230 --> 00:18:28,960 now I'm wealthy. 365 00:18:28,960 --> 00:18:32,829 Well, you don't really learn anything from that. 366 00:18:32,829 --> 00:18:34,870 You learn if it's lucky and everything works out. 367 00:18:34,870 --> 00:18:36,910 But Yonald comes in and he'll tell you 368 00:18:36,910 --> 00:18:39,510 a very interesting story of what he went through 369 00:18:39,510 --> 00:18:41,700 during the whole period. 370 00:18:41,700 --> 00:18:44,520 Now we'll mention it from time to time during the course. 371 00:18:44,520 --> 00:18:47,750 You'll see reference to it in some of the materials 372 00:18:47,750 --> 00:18:49,130 as you prepare. 373 00:18:49,130 --> 00:18:51,830 The entire plan is in the course reader. 374 00:18:51,830 --> 00:18:55,930 Do not assume, however, that it's a model plan. 375 00:18:55,930 --> 00:19:01,320 Every year we get people handing in the executive summary 376 00:19:01,320 --> 00:19:03,380 and they follow exactly the Virtual Ink thing. 377 00:19:03,380 --> 00:19:05,270 And I don't want you to do that-- I want you 378 00:19:05,270 --> 00:19:06,560 to think on your own about it. 379 00:19:06,560 --> 00:19:08,980 But it's an interesting one. 380 00:19:08,980 --> 00:19:13,770 I tried to find another plan to work on and a lot of people 381 00:19:13,770 --> 00:19:16,450 won't give up their original plan 382 00:19:16,450 --> 00:19:18,180 or they never actually had one. 383 00:19:18,180 --> 00:19:23,140 So it's a unique situation we have. 384 00:19:23,140 --> 00:19:26,150 Now we're going to go into business plan basics. 385 00:19:26,150 --> 00:19:28,960 This is a introduction I'm going to give about what's 386 00:19:28,960 --> 00:19:32,800 in a business plan, the kind of things you need to think about. 387 00:19:32,800 --> 00:19:35,579 And then over the course of the next five, six nights 388 00:19:35,579 --> 00:19:37,620 we'll be filling in each of the components of it. 389 00:19:37,620 --> 00:19:40,710 So think of this as a high-level overview. 390 00:19:40,710 --> 00:19:46,350 And it's going to be a little bit like the MIT fire hose 391 00:19:46,350 --> 00:19:47,430 approach. 392 00:19:47,430 --> 00:19:49,820 For those of you who aren't MIT students, 393 00:19:49,820 --> 00:19:53,560 they say that going to MIT is like trying 394 00:19:53,560 --> 00:19:55,560 to drink water from a fire house-- it's just 395 00:19:55,560 --> 00:19:57,240 so much coming at you. 396 00:19:57,240 --> 00:19:59,090 And we're going to throw a lot at you 397 00:19:59,090 --> 00:20:00,900 over this period of time. 398 00:20:00,900 --> 00:20:04,860 Some of it's going to stick right away and some of it you 399 00:20:04,860 --> 00:20:05,940 won't get for a while. 400 00:20:05,940 --> 00:20:07,790 And the reason I know that is we get emails 401 00:20:07,790 --> 00:20:11,504 back constantly saying, oh, I just encountered this situation 402 00:20:11,504 --> 00:20:12,920 and I finally figured out what you 403 00:20:12,920 --> 00:20:14,640 were trying to explain to us. 404 00:20:14,640 --> 00:20:16,360 So we always want feedback. 405 00:20:16,360 --> 00:20:19,212 And as long as people find what we're doing useful, 406 00:20:19,212 --> 00:20:20,920 we're going to continue to do the course. 407 00:20:24,590 --> 00:20:29,160 So topics in my overview is why write 408 00:20:29,160 --> 00:20:32,470 a plan, what should be in it, and then 409 00:20:32,470 --> 00:20:36,800 talk a little bit about the plan as a financing document. 410 00:20:36,800 --> 00:20:41,730 So does anyone know who this character is? 411 00:20:41,730 --> 00:20:44,810 This is Dwight Eisenhower, Supreme Commander 412 00:20:44,810 --> 00:20:48,680 allied forces Europe, D-day, became 413 00:20:48,680 --> 00:20:51,030 president of the United States. 414 00:20:51,030 --> 00:20:55,360 Life magazine he's on the cover and he says plans 415 00:20:55,360 --> 00:20:57,980 are worthless. 416 00:20:57,980 --> 00:21:01,810 So I guess we're done with the course. 417 00:21:01,810 --> 00:21:06,550 This is a guy who planned and executed this massive invasion. 418 00:21:06,550 --> 00:21:08,710 And if you've read any of the history of it, 419 00:21:08,710 --> 00:21:11,090 it's just an amazing operation. 420 00:21:11,090 --> 00:21:12,420 So plans are worthless. 421 00:21:12,420 --> 00:21:16,710 But planning is everything. 422 00:21:16,710 --> 00:21:21,310 So we'll talk about business plans 423 00:21:21,310 --> 00:21:24,130 and whether to write one specifically. 424 00:21:24,130 --> 00:21:26,050 So for example, the Wall Street Journal 425 00:21:26,050 --> 00:21:29,210 had a big article about does a start-up really 426 00:21:29,210 --> 00:21:30,950 need a business plan. 427 00:21:30,950 --> 00:21:34,470 And what they're talking about are written business plans. 428 00:21:34,470 --> 00:21:36,250 And there are academic studies showing 429 00:21:36,250 --> 00:21:38,170 that people would be better off just 430 00:21:38,170 --> 00:21:40,390 to go off and launch the company. 431 00:21:40,390 --> 00:21:43,410 And I pretty much agree with that at one level. 432 00:21:43,410 --> 00:21:48,060 I've been around the country judging various business plan 433 00:21:48,060 --> 00:21:50,890 competitions or classes that have business plans. 434 00:21:50,890 --> 00:21:53,550 It's pretty clear that the people doing it 435 00:21:53,550 --> 00:21:56,400 have no intention of actually starting a company. 436 00:21:56,400 --> 00:21:59,360 It's just an academic exercise. 437 00:21:59,360 --> 00:22:01,630 At MIT, that's not what we're doing. 438 00:22:01,630 --> 00:22:04,490 And what Joost and the people at the 100K did was 439 00:22:04,490 --> 00:22:08,010 say we're trying to build tomorrow's leading companies. 440 00:22:08,010 --> 00:22:10,150 This is about trying to actually get things going. 441 00:22:10,150 --> 00:22:15,120 So a business plan, or at least thinking about a business plan, 442 00:22:15,120 --> 00:22:19,390 is really what you need to do to launch a company. 443 00:22:19,390 --> 00:22:22,930 So why actually write a real plan? 444 00:22:22,930 --> 00:22:28,360 Well, you have to, you think, because nobody's 445 00:22:28,360 --> 00:22:31,460 going to finance you without something written. 446 00:22:31,460 --> 00:22:34,210 You may need it to talk to strategic partners, 447 00:22:34,210 --> 00:22:38,180 to explain what you're doing to others, 448 00:22:38,180 --> 00:22:40,060 and to attract key people. 449 00:22:40,060 --> 00:22:43,005 But the real reason you need to write a plan 450 00:22:43,005 --> 00:22:47,990 or think about it is you need to understand your business. 451 00:22:47,990 --> 00:22:53,860 What is the scarcest resource that you as an entrepreneur 452 00:22:53,860 --> 00:22:56,610 have out there? 453 00:22:56,610 --> 00:22:57,690 AUDIENCE: Money. 454 00:22:57,690 --> 00:22:58,510 JOE HADZIMA: Money? 455 00:22:58,510 --> 00:23:00,051 We have plenty of money in the world. 456 00:23:00,051 --> 00:23:00,770 AUDIENCE: Time. 457 00:23:00,770 --> 00:23:01,520 JOE HADZIMA: Time. 458 00:23:01,520 --> 00:23:02,900 It's your time. 459 00:23:02,900 --> 00:23:04,320 The reason to think it through is 460 00:23:04,320 --> 00:23:06,550 you want to spend the next three to five years-- 461 00:23:06,550 --> 00:23:09,350 or whatever-- working on something. 462 00:23:09,350 --> 00:23:12,712 Is this the best idea you have? 463 00:23:12,712 --> 00:23:14,920 For an entrepreneur, it's always, well, I need money. 464 00:23:14,920 --> 00:23:17,210 Well, the point is money tends to flow 465 00:23:17,210 --> 00:23:18,210 to where opportunity is. 466 00:23:18,210 --> 00:23:22,210 So if you can create value and opportunity, you can get money. 467 00:23:22,210 --> 00:23:24,950 It's harder in some parts of the country than others. 468 00:23:24,950 --> 00:23:26,950 But the real scarce thing is your time. 469 00:23:26,950 --> 00:23:31,160 So you really need to understand and think 470 00:23:31,160 --> 00:23:33,140 about the process of planning. 471 00:23:33,140 --> 00:23:36,690 The famous expression people don't plan to fail, 472 00:23:36,690 --> 00:23:39,100 they just fail to plan. 473 00:23:39,100 --> 00:23:40,530 And in the course of this course, 474 00:23:40,530 --> 00:23:42,520 we're going to be asking you to think about who 475 00:23:42,520 --> 00:23:44,240 are your customers or users. 476 00:23:44,240 --> 00:23:47,210 Who cares about what I do? 477 00:23:47,210 --> 00:23:50,720 Will they buy or use what you're doing? 478 00:23:50,720 --> 00:23:54,840 What will they pay or how can you otherwise make money or get 479 00:23:54,840 --> 00:23:56,980 resources, capture value? 480 00:23:56,980 --> 00:23:59,010 How are you going to make and deliver it? 481 00:23:59,010 --> 00:24:03,050 Think about something as simple as Netflix as a concept. 482 00:24:03,050 --> 00:24:07,240 Back when it wasn't streaming it was a DVD 483 00:24:07,240 --> 00:24:08,780 in a packet shipped to you. 484 00:24:08,780 --> 00:24:12,120 It's not an amazing concept; it's pretty straightforward. 485 00:24:12,120 --> 00:24:15,240 But their key was they could actually deliver on it 486 00:24:15,240 --> 00:24:17,220 effectively and efficiently. 487 00:24:17,220 --> 00:24:20,960 Or Amazon selling books online-- that's how they got started. 488 00:24:20,960 --> 00:24:22,610 What's so hard? 489 00:24:22,610 --> 00:24:25,020 Well, there's a lot that goes on in the background. 490 00:24:25,020 --> 00:24:27,390 And what are the resources, people, and technology 491 00:24:27,390 --> 00:24:27,890 you'll need? 492 00:24:30,480 --> 00:24:35,930 And so whether it's a Web 2.0, or biotech, 493 00:24:35,930 --> 00:24:39,675 or social-developmental, I want to just reiterate that there 494 00:24:39,675 --> 00:24:41,740 are really two basic things. 495 00:24:41,740 --> 00:24:48,110 It's create value and then figure out a capture or harvest 496 00:24:48,110 --> 00:24:49,494 the value. 497 00:24:49,494 --> 00:24:51,160 That's the key thing we're trying to do. 498 00:24:51,160 --> 00:25:00,874 So how many of you have seen the movie The Social Network? 499 00:25:00,874 --> 00:25:02,040 You may remember this scene. 500 00:25:02,040 --> 00:25:05,080 Let's see if this works, if I can do that. 501 00:25:05,080 --> 00:25:10,150 So Eduardo says, it's time to monetize the site. 502 00:25:10,150 --> 00:25:13,870 And Mark says, what's that mean? 503 00:25:13,870 --> 00:25:17,070 And Eduardo says, it means it's time for the website 504 00:25:17,070 --> 00:25:18,195 to generate revenue. 505 00:25:21,740 --> 00:25:24,320 No, I know what that means, but I'm asking you 506 00:25:24,320 --> 00:25:26,460 how you want to do it. 507 00:25:26,460 --> 00:25:29,480 And he says advertising-- remember 508 00:25:29,480 --> 00:25:31,640 that famous advertising. 509 00:25:31,640 --> 00:25:35,910 And Mark's reaction is, no. 510 00:25:35,910 --> 00:25:41,300 And Eduardo says, well, we've got 4,000 members-- this 511 00:25:41,300 --> 00:25:45,260 is Facebook, 4,000 members. 512 00:25:45,260 --> 00:25:48,030 And Mark says, because Facebook is cool. 513 00:25:48,030 --> 00:25:50,170 If we start installing pop-ups for Mountain Dew, 514 00:25:50,170 --> 00:25:51,031 it's not going to. 515 00:25:51,031 --> 00:25:53,030 And Eduardo says, well, I wasn't really thinking 516 00:25:53,030 --> 00:25:54,160 about Mountain Dew. 517 00:25:54,160 --> 00:25:55,160 But maybe at some point. 518 00:25:55,160 --> 00:25:58,800 I'm talking about the business, and the company, the site. 519 00:25:58,800 --> 00:26:01,370 And Mark says, we don't even know what it is yet. 520 00:26:01,370 --> 00:26:04,640 We don't know what it is, we don't know what it can be, 521 00:26:04,640 --> 00:26:06,540 we don't know what it will be. 522 00:26:06,540 --> 00:26:09,460 We know that it's cool, it's a priceless asset. 523 00:26:09,460 --> 00:26:12,490 I'm not giving it up. 524 00:26:12,490 --> 00:26:15,570 Eduardo says, when will it be finished? 525 00:26:15,570 --> 00:26:19,450 And the famous answer is, it won't be finished. 526 00:26:19,450 --> 00:26:22,587 That's the point-- the way fashion is never finished. 527 00:26:22,587 --> 00:26:24,920 So here they are, these guys that have created something 528 00:26:24,920 --> 00:26:26,503 that they think has value, and they're 529 00:26:26,503 --> 00:26:28,960 trying to figure out how to harvest the value. 530 00:26:28,960 --> 00:26:35,500 So I went and I looked at the 10-K for Facebook. 531 00:26:35,500 --> 00:26:38,220 10-K is the annual report you file with the Securities 532 00:26:38,220 --> 00:26:42,150 and Exchange Commission when you're a public company. 533 00:26:42,150 --> 00:26:44,710 And in the first part of it you have 534 00:26:44,710 --> 00:26:45,930 to say what your business is. 535 00:26:45,930 --> 00:26:48,850 And they say our mission is to make the world more 536 00:26:48,850 --> 00:26:50,540 open and connected. 537 00:26:50,540 --> 00:26:52,970 And so I'm looking to try to figure out what they say 538 00:26:52,970 --> 00:26:54,380 they're business is after that. 539 00:26:54,380 --> 00:26:56,830 And it was very curious. 540 00:26:56,830 --> 00:26:59,400 They had three major headings in the 10-K. 541 00:26:59,400 --> 00:27:06,060 The first one was how we create value for users. 542 00:27:06,060 --> 00:27:10,450 The second one was how we create value for developers 543 00:27:10,450 --> 00:27:12,940 through the Facebook platform. 544 00:27:12,940 --> 00:27:16,210 And the third one was how do we create value for marketers. 545 00:27:16,210 --> 00:27:20,090 So here they are a public company with billions of users 546 00:27:20,090 --> 00:27:23,040 now and they're focused on how do they create value, 547 00:27:23,040 --> 00:27:26,560 and they're still struggling a bit with what their revenue 548 00:27:26,560 --> 00:27:28,420 model is on the other side. 549 00:27:28,420 --> 00:27:30,666 So my point is the same things that you're 550 00:27:30,666 --> 00:27:32,540 going to think about starting a company-- how 551 00:27:32,540 --> 00:27:35,110 do you create value and how do you harvest value-- never 552 00:27:35,110 --> 00:27:35,610 goes away. 553 00:27:35,610 --> 00:27:38,600 It's constant through this. 554 00:27:38,600 --> 00:27:41,890 I thought I could go to the 10-K and find some really nice story 555 00:27:41,890 --> 00:27:44,710 about how they harvest value and they're still thinking 556 00:27:44,710 --> 00:27:45,850 about how to create value. 557 00:27:48,460 --> 00:27:51,680 Now one way to think about what we're going to do here 558 00:27:51,680 --> 00:27:53,390 is to have a visualization. 559 00:27:53,390 --> 00:27:57,060 And I think of it as a pyramid. 560 00:27:57,060 --> 00:27:59,370 So at the top of the pyramid you can 561 00:27:59,370 --> 00:28:02,120 think of as your mission statement, 562 00:28:02,120 --> 00:28:05,210 similar to what Facebook said. 563 00:28:05,210 --> 00:28:06,800 And underneath that, supporting that, 564 00:28:06,800 --> 00:28:09,140 is your elevator pitch-- do people 565 00:28:09,140 --> 00:28:11,330 know what elevator pitches are? 566 00:28:11,330 --> 00:28:12,500 We did that in the 100K. 567 00:28:12,500 --> 00:28:17,810 It used to be all of the venture capitalist offices were 568 00:28:17,810 --> 00:28:18,650 high buildings. 569 00:28:18,650 --> 00:28:21,380 So you'd have maybe 20 floors. 570 00:28:21,380 --> 00:28:23,520 The theory is you get into the elevator, 571 00:28:23,520 --> 00:28:25,930 the person turns you and say what do you do, 572 00:28:25,930 --> 00:28:30,760 and you have 20 floors to explain it in maybe 30 seconds. 573 00:28:30,760 --> 00:28:35,924 A lot of the VCs have moved to two story buildings, 574 00:28:35,924 --> 00:28:38,340 so you have to do this as you run up the stairs with them. 575 00:28:38,340 --> 00:28:41,810 So you've got to be even crisper today than before. 576 00:28:41,810 --> 00:28:44,070 Underneath that might be the executive summary-- we'll 577 00:28:44,070 --> 00:28:46,260 go into that a little bit. 578 00:28:46,260 --> 00:28:50,630 Under that might be that the PowerPoint presentation. 579 00:28:50,630 --> 00:28:52,420 Under that could be the full plan, 580 00:28:52,420 --> 00:28:55,250 if you get to the point of writing one. 581 00:28:55,250 --> 00:28:58,530 But underneath all of that are a set of foundations 582 00:28:58,530 --> 00:29:00,190 of individual topics. 583 00:29:00,190 --> 00:29:02,480 We'll go through some of these through the course. 584 00:29:02,480 --> 00:29:05,200 And the point is that it takes a lot of effort 585 00:29:05,200 --> 00:29:08,500 to distill everything down up to the tip of the pyramid. 586 00:29:08,500 --> 00:29:10,580 And what you're looking for is you 587 00:29:10,580 --> 00:29:13,180 can describe that top very clearly 588 00:29:13,180 --> 00:29:16,810 and have it supported all the way down through it. 589 00:29:16,810 --> 00:29:21,770 The mission statement might be a sentence or a paragraph, 590 00:29:21,770 --> 00:29:25,390 the elevator pitch could be 30 seconds, 591 00:29:25,390 --> 00:29:29,020 the executive summary two to five pages, 592 00:29:29,020 --> 00:29:32,250 PowerPoint 10/20/30. 593 00:29:32,250 --> 00:29:34,480 Do you know the 10/20/30 rule? 594 00:29:34,480 --> 00:29:39,190 I put a link in on the website to the Guy Kawasaki clip 595 00:29:39,190 --> 00:29:40,050 about that. 596 00:29:40,050 --> 00:29:45,080 So PowerPoint-- I totally don't do this in this presentation-- 597 00:29:45,080 --> 00:29:52,400 he says 10 slides, 20 minutes, 30 point font, 598 00:29:52,400 --> 00:29:53,650 that's what you're aiming for. 599 00:29:56,700 --> 00:30:00,220 And then the full business plan could be anywhere from 25 to 30 600 00:30:00,220 --> 00:30:02,590 pages, if you end up doing that. 601 00:30:02,590 --> 00:30:06,200 The slides, by the way, for most of the presentations 602 00:30:06,200 --> 00:30:09,420 will be posted on the website afterwards. 603 00:30:09,420 --> 00:30:12,960 So that will help you out. 604 00:30:12,960 --> 00:30:15,190 So now the question is, all right, I sort of get it, 605 00:30:15,190 --> 00:30:19,140 it's this image that I have to do and figure out. 606 00:30:19,140 --> 00:30:21,590 Question is who actually writes this. 607 00:30:21,590 --> 00:30:24,780 Is it the founder alone, the team, 608 00:30:24,780 --> 00:30:28,750 or even a professional hired writer consultant? 609 00:30:28,750 --> 00:30:35,880 Charlie Tillett-- who will be here on Thursday-- and I 610 00:30:35,880 --> 00:30:39,380 stood outside this room at an MIT Enterprise forum event 611 00:30:39,380 --> 00:30:43,030 during the break, and I asked Charlie who had entered the 10K 612 00:30:43,030 --> 00:30:44,260 competition back in the day. 613 00:30:44,260 --> 00:30:46,430 What are you doing this summer, Charlie? 614 00:30:46,430 --> 00:30:48,810 He says, well, I'm graduating from Sloan, 615 00:30:48,810 --> 00:30:50,410 I'm trying to think what to do. 616 00:30:50,410 --> 00:30:52,584 I said, well, I'm working with some entrepreneurs. 617 00:30:52,584 --> 00:30:54,500 I've been working with them for a couple years 618 00:30:54,500 --> 00:30:57,550 and they really could use someone to help write a plan. 619 00:30:57,550 --> 00:30:59,430 They need to get some funding. 620 00:30:59,430 --> 00:31:00,950 And Charlie was game. 621 00:31:00,950 --> 00:31:03,665 We hopped in his truck, drove up to a strip mall 622 00:31:03,665 --> 00:31:09,010 up in Tewksbury, I think it was, a room with 10 engineers. 623 00:31:09,010 --> 00:31:14,335 And ended up joining the company to write the plan 624 00:31:14,335 --> 00:31:18,210 and stayed with them through when they went public. 625 00:31:18,210 --> 00:31:20,335 But at the end of the day, it was the entrepreneurs 626 00:31:20,335 --> 00:31:22,120 that needed to own the plan. 627 00:31:22,120 --> 00:31:24,000 These guys were great engineers, but they 628 00:31:24,000 --> 00:31:26,680 couldn't write a plan if you paid them a million dollars. 629 00:31:26,680 --> 00:31:29,440 They just couldn't articulate it well. 630 00:31:29,440 --> 00:31:32,610 So that's one of the reasons we try to put teams together. 631 00:31:32,610 --> 00:31:35,940 Because if you have a great idea but you're missing some skills, 632 00:31:35,940 --> 00:31:38,440 you've got to figure out a way of getting people with skills 633 00:31:38,440 --> 00:31:39,600 together. 634 00:31:39,600 --> 00:31:41,350 And those entrepreneurs would never 635 00:31:41,350 --> 00:31:43,320 have gotten anywhere near where they are today 636 00:31:43,320 --> 00:31:44,830 if Charlie hadn't joined them. 637 00:31:44,830 --> 00:31:47,330 And Charlie wouldn't have been able to take a company public 638 00:31:47,330 --> 00:31:48,871 if he hadn't hooked up with the idea. 639 00:31:48,871 --> 00:31:52,160 So the point is whoever writes it, 640 00:31:52,160 --> 00:31:54,790 the team has to own the plan, by which I mean they really 641 00:31:54,790 --> 00:31:58,324 have to be able to defend it. 642 00:31:58,324 --> 00:32:00,490 Sometimes the issue is, well what do they look like. 643 00:32:02,962 --> 00:32:04,170 Don't put it in a big binder. 644 00:32:06,800 --> 00:32:09,670 It doesn't really matter how you put it together. 645 00:32:09,670 --> 00:32:12,720 It should just look somewhat professional, but not overly 646 00:32:12,720 --> 00:32:13,420 slick. 647 00:32:13,420 --> 00:32:15,630 You're an unknown character. 648 00:32:15,630 --> 00:32:18,000 If Bill Gates came up to me and threw a napkin 649 00:32:18,000 --> 00:32:22,370 on the table with some ideas on it, he'd have my attention. 650 00:32:22,370 --> 00:32:26,100 But if you do the same thing, you're not quite there yet. 651 00:32:26,100 --> 00:32:28,630 So it's the first step towards it. 652 00:32:28,630 --> 00:32:30,290 You've got to have something that 653 00:32:30,290 --> 00:32:32,670 says this is a serious team or person that are going 654 00:32:32,670 --> 00:32:35,790 to do some serious things. 655 00:32:35,790 --> 00:32:37,760 Now the thing to remember is the plan 656 00:32:37,760 --> 00:32:42,137 is really a selling document at the end of the day. 657 00:32:42,137 --> 00:32:43,720 If you're going to be an entrepreneur, 658 00:32:43,720 --> 00:32:46,250 you better get comfortable with selling, 659 00:32:46,250 --> 00:32:47,900 because you're always selling. 660 00:32:47,900 --> 00:32:53,410 You're selling customers, you're selling financing people 661 00:32:53,410 --> 00:32:54,410 trying to convince them. 662 00:32:54,410 --> 00:32:56,201 By selling I mean you're trying to convince 663 00:32:56,201 --> 00:32:58,800 somebody that's what you want them to do 664 00:32:58,800 --> 00:33:01,250 is something they should do. 665 00:33:01,250 --> 00:33:04,840 Convincing people to do something is quite a skill 666 00:33:04,840 --> 00:33:07,092 and you should get good at it. 667 00:33:07,092 --> 00:33:08,300 You really should work at it. 668 00:33:08,300 --> 00:33:12,930 It's selling customers, financing sources, partners, 669 00:33:12,930 --> 00:33:13,700 recruiting people. 670 00:33:13,700 --> 00:33:17,450 So you're always selling as an entrepreneur at some level. 671 00:33:17,450 --> 00:33:21,040 You may not be the best, but you should really practice that. 672 00:33:21,040 --> 00:33:25,100 So this plan, the first part it's a selling document. 673 00:33:25,100 --> 00:33:27,584 And whatever it is, it's not a hype document. 674 00:33:27,584 --> 00:33:29,625 At the end of the day, it's got to be defensible. 675 00:33:32,200 --> 00:33:36,050 The elements of a full plan-- these are the topic areas, 676 00:33:36,050 --> 00:33:38,490 whether or not you put them in a written document or not, 677 00:33:38,490 --> 00:33:40,810 you need to start to think about. 678 00:33:40,810 --> 00:33:44,180 And during the course we'll touch on a number of these. 679 00:33:44,180 --> 00:33:47,810 There's executive summary in a traditional plan, something 680 00:33:47,810 --> 00:33:51,470 it says what's the opportunity you're looking at, 681 00:33:51,470 --> 00:33:54,060 what's the market you're going after, 682 00:33:54,060 --> 00:33:56,150 what are the economics of the business, 683 00:33:56,150 --> 00:33:58,930 all of these things we'll go into a little more detail. 684 00:33:58,930 --> 00:34:00,680 For the technologists in the audience, 685 00:34:00,680 --> 00:34:04,600 note then there's no particular section here 686 00:34:04,600 --> 00:34:07,250 that says technology. 687 00:34:07,250 --> 00:34:13,280 And the reason is people by and large don't buy technology. 688 00:34:13,280 --> 00:34:16,620 Technology is something we use to accomplish things. 689 00:34:16,620 --> 00:34:19,540 And so the plan really isn't fundamentally 690 00:34:19,540 --> 00:34:22,060 about the technology, it's what the technology enables. 691 00:34:22,060 --> 00:34:24,260 And when Bob Jones comes in tomorrow, 692 00:34:24,260 --> 00:34:26,250 he'll talk a little bit more about that 693 00:34:26,250 --> 00:34:30,695 from a "what people actually buy" viewpoint. 694 00:34:30,695 --> 00:34:32,820 Now a little bit more into the nuts and bolts here. 695 00:34:32,820 --> 00:34:35,429 Cover page-- you should have one in a plan. 696 00:34:35,429 --> 00:34:38,650 It should have some information that you can figure out 697 00:34:38,650 --> 00:34:42,360 who this plan is. 698 00:34:42,360 --> 00:34:45,880 How to reach people, confidentiality legend, 699 00:34:45,880 --> 00:34:48,210 and the securities law legend, we're 700 00:34:48,210 --> 00:34:50,840 going to cover that in detail on the night 701 00:34:50,840 --> 00:34:53,260 we do the legal stuff. 702 00:34:53,260 --> 00:34:56,620 Here is the Virtual Ink cover page as an example. 703 00:34:56,620 --> 00:34:58,972 They've got some contact info there. 704 00:34:58,972 --> 00:35:01,430 It always frustrated me, when I actually got a written plan 705 00:35:01,430 --> 00:35:04,340 if I liked it, often I wouldn't be able to figure out 706 00:35:04,340 --> 00:35:06,220 how to contact the people. 707 00:35:06,220 --> 00:35:08,230 So put the address on it. 708 00:35:08,230 --> 00:35:12,090 And they at they put a little confidentiality legend 709 00:35:12,090 --> 00:35:16,100 on it-- it looks something like that, initially. 710 00:35:16,100 --> 00:35:18,390 And, as we'll see in the night when 711 00:35:18,390 --> 00:35:21,750 we do the legal stuff, when the lawyers get ahold of this, 712 00:35:21,750 --> 00:35:24,282 the legend changes a little bit. 713 00:35:24,282 --> 00:35:26,130 [LAUGHTER] 714 00:35:26,130 --> 00:35:29,620 So I'm not saying don't get the lawyers early on, 715 00:35:29,620 --> 00:35:33,200 but realize that you've got to manage them a little bit. 716 00:35:33,200 --> 00:35:37,290 But we'll go into that in more detail. 717 00:35:37,290 --> 00:35:39,680 Now if you actually have a written document, 718 00:35:39,680 --> 00:35:41,660 it should have a table of contents 719 00:35:41,660 --> 00:35:44,440 so people can figure out what's in it. 720 00:35:44,440 --> 00:35:47,580 And it should have page numbers and all that sort of thing. 721 00:35:47,580 --> 00:35:51,710 So my question to you is what do you think people read first 722 00:35:51,710 --> 00:35:53,400 in a business plan? 723 00:35:53,400 --> 00:35:55,220 What's the first thing you would read 724 00:35:55,220 --> 00:35:57,204 if someone gave you a plan? 725 00:35:57,204 --> 00:35:58,700 AUDIENCE: Executive summary. 726 00:35:58,700 --> 00:36:01,200 JOE HADZIMA: Executive summary, because, as you'll see here, 727 00:36:01,200 --> 00:36:02,890 that explains what's going on. 728 00:36:02,890 --> 00:36:05,630 What's the second thing people look at? 729 00:36:09,070 --> 00:36:11,360 Probably most important beyond when they figure out 730 00:36:11,360 --> 00:36:13,610 what the heck this is about. 731 00:36:13,610 --> 00:36:15,230 It's the people. 732 00:36:15,230 --> 00:36:16,410 Who are these people? 733 00:36:16,410 --> 00:36:18,307 So if you've got actual document and they're 734 00:36:18,307 --> 00:36:19,890 trying to figure it out, they're going 735 00:36:19,890 --> 00:36:22,015 to get a little frustrated if they can't figure out 736 00:36:22,015 --> 00:36:23,270 where the information is. 737 00:36:23,270 --> 00:36:26,205 So not to overdo it, but have a table of contents. 738 00:36:28,870 --> 00:36:32,770 So if the first thing they read is an executive summary, 739 00:36:32,770 --> 00:36:33,670 what is it really? 740 00:36:33,670 --> 00:36:38,290 Well, it's the first thing investors read, as I said. 741 00:36:38,290 --> 00:36:42,990 Think of it as a resume for your full plan. 742 00:36:42,990 --> 00:36:45,910 So the goal is to get the interview. 743 00:36:45,910 --> 00:36:48,500 When you have a resume, it goes out there, 744 00:36:48,500 --> 00:36:52,070 you want to get the interview so you can explain yourself 745 00:36:52,070 --> 00:36:53,720 and hopefully get the job. 746 00:36:53,720 --> 00:36:58,090 In the case of a business plan, the executive summary 747 00:36:58,090 --> 00:37:01,360 or the elevator pitch is really to get a chance 748 00:37:01,360 --> 00:37:03,590 to explain more fully what it is you're doing. 749 00:37:06,250 --> 00:37:09,760 And then when they look at the executive summary, 750 00:37:09,760 --> 00:37:15,220 I like to think about what investors are looking for. 751 00:37:15,220 --> 00:37:18,380 And they're the three Ws. 752 00:37:18,380 --> 00:37:22,370 First one is why this. 753 00:37:22,370 --> 00:37:25,240 Why is what these people are proposing to do, 754 00:37:25,240 --> 00:37:28,130 why is it something I should be interested in? 755 00:37:28,130 --> 00:37:31,550 Why are they interested in it? 756 00:37:31,550 --> 00:37:34,180 Is it a big problem? 757 00:37:34,180 --> 00:37:35,680 It could be a big market opportunity 758 00:37:35,680 --> 00:37:37,550 or a big problem in the world. 759 00:37:37,550 --> 00:37:41,180 Amy Smith, who was a MacArthur fellow, 760 00:37:41,180 --> 00:37:44,080 teaches over at the Edgerton Center, was in the 100K. 761 00:37:44,080 --> 00:37:45,580 And I remember quite distinctly when 762 00:37:45,580 --> 00:37:48,546 she got up to give her pitch at the judging competition. 763 00:37:48,546 --> 00:37:50,170 She said something that went like this. 764 00:37:50,170 --> 00:37:56,770 She said 1.9 billion people in the world 765 00:37:56,770 --> 00:38:00,760 don't have access to clean water. 766 00:38:00,760 --> 00:38:03,420 Well, I didn't know that. 767 00:38:03,420 --> 00:38:06,854 In order to test whether water is clean, 768 00:38:06,854 --> 00:38:08,270 the traditional way of doing it is 769 00:38:08,270 --> 00:38:12,640 to incubate the water to see if anything bad is growing in it-- 770 00:38:12,640 --> 00:38:15,630 she said it a little more articulately than I did. 771 00:38:15,630 --> 00:38:18,410 And she said all the existing incubators 772 00:38:18,410 --> 00:38:21,980 are powered by electricity. 773 00:38:21,980 --> 00:38:24,180 If you look where the 1.9 billion people 774 00:38:24,180 --> 00:38:27,760 without clean water live and you look where the electricity is, 775 00:38:27,760 --> 00:38:29,810 they're not in the same place. 776 00:38:29,810 --> 00:38:32,950 Our invention is a way to test water 777 00:38:32,950 --> 00:38:34,620 without using electricity. 778 00:38:34,620 --> 00:38:36,220 Let me explain how you did it. 779 00:38:36,220 --> 00:38:39,220 So from an initial viewpoint, well this is a big problem. 780 00:38:39,220 --> 00:38:40,050 So why this? 781 00:38:40,050 --> 00:38:41,290 Big problem. 782 00:38:41,290 --> 00:38:43,560 So that's the first thing-- why is what you're 783 00:38:43,560 --> 00:38:46,290 proposing something important? 784 00:38:46,290 --> 00:38:48,400 Why are you spending your time on it? 785 00:38:48,400 --> 00:38:49,950 The second is why now. 786 00:38:49,950 --> 00:38:52,650 Why it is now the right time to do it? 787 00:38:55,470 --> 00:38:59,640 I've been on the bleeding edge of technology for many years. 788 00:38:59,640 --> 00:39:02,470 I had somebody come up to me at an investment conference 789 00:39:02,470 --> 00:39:05,390 last year and he said, you're at MIT, 790 00:39:05,390 --> 00:39:08,920 and he said, well, tell me about this new 3D printing thing, 791 00:39:08,920 --> 00:39:09,870 it's really hot. 792 00:39:09,870 --> 00:39:12,170 And I said that's been around for 20 plus years. 793 00:39:14,841 --> 00:39:17,090 Now it's getting interesting for a variety of reasons, 794 00:39:17,090 --> 00:39:20,900 but I can show you '20 years ago. 795 00:39:20,900 --> 00:39:24,290 So sometimes right now is the right time. 796 00:39:24,290 --> 00:39:28,690 And I'll give you some examples down the road. 797 00:39:28,690 --> 00:39:31,070 The third is why this team. 798 00:39:31,070 --> 00:39:33,710 Big problem, something important, 799 00:39:33,710 --> 00:39:35,300 there's a good reason why it's now-- 800 00:39:35,300 --> 00:39:38,517 why are these people right people to do it? 801 00:39:38,517 --> 00:39:40,100 Those are the things people are really 802 00:39:40,100 --> 00:39:44,920 trying to glean when they read your plan or hear your pitch. 803 00:39:44,920 --> 00:39:47,670 To which I asked, if they get the first three, 804 00:39:47,670 --> 00:39:49,500 there's a fourth one they get, which 805 00:39:49,500 --> 00:39:54,410 is-- want to guess what the fourth one is? 806 00:39:54,410 --> 00:39:56,240 Why won't this work? 807 00:39:56,240 --> 00:40:00,110 So in a selling process when they 808 00:40:00,110 --> 00:40:03,610 get the potential customer pushes back and is starting 809 00:40:03,610 --> 00:40:07,490 to ask questions about will it work for this or work for that, 810 00:40:07,490 --> 00:40:09,180 you've sort of got them hooked. 811 00:40:09,180 --> 00:40:10,650 And Steve will probably talk to you 812 00:40:10,650 --> 00:40:14,470 about how to set the hook a little bit later tonight. 813 00:40:14,470 --> 00:40:18,550 So the three whys-- why this, why now, why this team. 814 00:40:18,550 --> 00:40:21,500 That's what should come up. 815 00:40:21,500 --> 00:40:25,180 And the why won't this work, part of the task 816 00:40:25,180 --> 00:40:27,490 is to figure out how to lead people 817 00:40:27,490 --> 00:40:28,870 to the right conclusion on that. 818 00:40:28,870 --> 00:40:32,700 And I'll talk about it in a little moment on that. 819 00:40:32,700 --> 00:40:36,280 So the executive summary, two to five pages max. 820 00:40:36,280 --> 00:40:38,020 It's got to be clear. 821 00:40:38,020 --> 00:40:39,586 It's like a resume. 822 00:40:39,586 --> 00:40:41,210 And the object is at the end of the day 823 00:40:41,210 --> 00:40:44,580 someone could really articulate what you're going to do. 824 00:40:44,580 --> 00:40:46,660 The elevator speech is to the executive summary-- 825 00:40:46,660 --> 00:40:48,950 the elevator speech might get you an invite 826 00:40:48,950 --> 00:40:53,510 to submit an executive summary, which might give you an invite 827 00:40:53,510 --> 00:40:57,240 to do the whole plan or a pitch. 828 00:40:57,240 --> 00:41:01,580 It's going to try in two to five pages to say who you are, 829 00:41:01,580 --> 00:41:07,480 what are you doing, what is a market, how many dollars 830 00:41:07,480 --> 00:41:10,980 do you need, what resources, what is your sustainable 831 00:41:10,980 --> 00:41:13,545 advantage if you do this, why you're going to succeed. 832 00:41:13,545 --> 00:41:15,170 You've got to pull all of that together 833 00:41:15,170 --> 00:41:16,461 in a very short period of time. 834 00:41:16,461 --> 00:41:19,550 It's a difficult document to write. 835 00:41:19,550 --> 00:41:22,140 And you may end up writing it over and over again, 836 00:41:22,140 --> 00:41:26,550 because you've got to distill that whole thing down to it. 837 00:41:26,550 --> 00:41:32,600 Let me give you an example of two executive summaries. 838 00:41:32,600 --> 00:41:36,420 And since the font is so small, I'll read it from here. 839 00:41:36,420 --> 00:41:41,280 The first one is called electronic components. 840 00:41:41,280 --> 00:41:44,280 And let me read it to you, if you can't see it on the screen. 841 00:41:44,280 --> 00:41:46,890 Electronic Components Inc is a start-up company 842 00:41:46,890 --> 00:41:50,790 that will make a variety of electronic components 843 00:41:50,790 --> 00:41:54,750 beginning with a new type of aluminum base capacitor. 844 00:41:54,750 --> 00:41:57,020 The unique product, coupled with an excessive demand 845 00:41:57,020 --> 00:41:59,640 for capacitor devices, will provide us 846 00:41:59,640 --> 00:42:02,460 with an ample share of the capacitor market 847 00:42:02,460 --> 00:42:04,600 and numerous opportunities for expansion 848 00:42:04,600 --> 00:42:07,750 into related electronic components. 849 00:42:07,750 --> 00:42:10,060 Everybody on board? 850 00:42:10,060 --> 00:42:11,530 This is a real one. 851 00:42:11,530 --> 00:42:13,510 The founders are dedicated and determined 852 00:42:13,510 --> 00:42:17,470 to make the venture a successful and profitable entity. 853 00:42:17,470 --> 00:42:18,606 That's good to know. 854 00:42:18,606 --> 00:42:19,320 [LAUGHTER] 855 00:42:19,320 --> 00:42:22,400 I thought they were just doing this for fun. 856 00:42:22,400 --> 00:42:24,570 Technical expertise is provided by James F 857 00:42:24,570 --> 00:42:26,820 Lynch, who's been involved in designing capacitors 858 00:42:26,820 --> 00:42:27,975 for 11 years. 859 00:42:27,975 --> 00:42:29,350 He attained a bachelor of science 860 00:42:29,350 --> 00:42:31,840 in electronic engineering from Massachusetts Institute 861 00:42:31,840 --> 00:42:33,040 of Technology. 862 00:42:33,040 --> 00:42:35,500 That alone is probably going to get 863 00:42:35,500 --> 00:42:37,186 him-- the experience and the fact 864 00:42:37,186 --> 00:42:40,406 that he's MIT-- will overcome all the other deficiencies 865 00:42:40,406 --> 00:42:42,780 here, which is I don't think most people would understand 866 00:42:42,780 --> 00:42:46,560 what it is he's proposing to do. 867 00:42:46,560 --> 00:42:49,920 Do you know what they propose to do? 868 00:42:49,920 --> 00:42:54,000 What its excessive demand for capacitors? 869 00:42:54,000 --> 00:42:55,920 Why is there excessive demand? 870 00:42:55,920 --> 00:42:57,920 How big is the market? 871 00:42:57,920 --> 00:43:00,790 And if you read the rest of it, which 872 00:43:00,790 --> 00:43:02,720 I suggest you do when you get the slides, 873 00:43:02,720 --> 00:43:05,780 it reads a bit like a grant proposal. 874 00:43:05,780 --> 00:43:07,237 There is a good thing in here that 875 00:43:07,237 --> 00:43:09,320 says that they've actually put their own money in, 876 00:43:09,320 --> 00:43:11,620 so the guy is committed. 877 00:43:11,620 --> 00:43:13,400 Now this is an example of something 878 00:43:13,400 --> 00:43:16,160 where, given the nature of the person involved, 879 00:43:16,160 --> 00:43:18,230 there's probably a lot of substance underneath. 880 00:43:18,230 --> 00:43:21,700 But it's not doing a very good service in trying to convey it. 881 00:43:21,700 --> 00:43:25,000 So that's a shame, because there's so many 882 00:43:25,000 --> 00:43:28,360 plans you read which don't have any substance behind them 883 00:43:28,360 --> 00:43:29,830 and yet they read a lot better. 884 00:43:29,830 --> 00:43:33,600 So we've got to figure out how to make things better. 885 00:43:33,600 --> 00:43:38,450 Now the other one, by way of contrast, is People Express. 886 00:43:38,450 --> 00:43:39,960 Well, let me read it. 887 00:43:39,960 --> 00:43:41,820 The eastern seaboard of the United States 888 00:43:41,820 --> 00:43:45,350 is ripe for the entry of a new, super-efficient, low cost air 889 00:43:45,350 --> 00:43:48,590 carrier to provide quick, reliable, intercity air 890 00:43:48,590 --> 00:43:50,289 transportation. 891 00:43:50,289 --> 00:43:52,080 Such an entity would bring to the Northeast 892 00:43:52,080 --> 00:43:53,730 the same benefits that have accrued 893 00:43:53,730 --> 00:43:56,370 to other areas of the United States. 894 00:43:56,370 --> 00:43:58,760 Chief among these are frequent jet commuter service 895 00:43:58,760 --> 00:44:01,190 between major cities, prices competitive 896 00:44:01,190 --> 00:44:03,660 with private automobiles, fulfillment 897 00:44:03,660 --> 00:44:05,920 of the congressional goals in enacting the Airline 898 00:44:05,920 --> 00:44:08,335 Deregulation Act. 899 00:44:08,335 --> 00:44:09,960 The new company will be able to achieve 900 00:44:09,960 --> 00:44:12,440 these goals for the following reasons-- aggressive 901 00:44:12,440 --> 00:44:15,170 innovative management that's been tested in the field; 902 00:44:15,170 --> 00:44:17,380 equipment and facilities designed specifically 903 00:44:17,380 --> 00:44:20,970 for low cost production of air transportation; 904 00:44:20,970 --> 00:44:23,370 manpower selected, trained, and motivated 905 00:44:23,370 --> 00:44:26,390 to be efficient and profit-oriented-- 906 00:44:26,390 --> 00:44:29,210 read between the lines, non-union, probably; 907 00:44:29,210 --> 00:44:32,110 and new systems to be applied to the entire business. 908 00:44:32,110 --> 00:44:35,770 Now if you look at those two executive summaries, 909 00:44:35,770 --> 00:44:38,680 I think most people think that the People Express, which 910 00:44:38,680 --> 00:44:41,990 was the early version of what we now call JetBlue, 911 00:44:41,990 --> 00:44:44,290 is a lot clearer to understand what it is. 912 00:44:49,410 --> 00:44:51,500 You could pretty much see what they're doing. 913 00:44:51,500 --> 00:44:54,720 They're experienced guys, they thought about how to design it. 914 00:44:54,720 --> 00:44:57,482 And you could start having a discussion around this 915 00:44:57,482 --> 00:44:58,940 in a lot more detail than you would 916 00:44:58,940 --> 00:45:02,080 with the electronic components. 917 00:45:02,080 --> 00:45:05,130 So the trick is to end up having an executive summary looks more 918 00:45:05,130 --> 00:45:08,900 like the People Express than one that just wastes a lot of words 919 00:45:08,900 --> 00:45:11,120 and doesn't get to what they're supposed to be doing. 920 00:45:13,810 --> 00:45:15,750 This is the Virtual Ink executive summary, 921 00:45:15,750 --> 00:45:18,510 which you'll see. 922 00:45:18,510 --> 00:45:23,300 And again, it's not exactly the model, but look at it. 923 00:45:23,300 --> 00:45:26,540 It was put this way into the 50K at the time. 924 00:45:26,540 --> 00:45:28,420 And you decide yourself whether you 925 00:45:28,420 --> 00:45:30,330 think it's a good executive summary as part 926 00:45:30,330 --> 00:45:33,120 of your assignment. 927 00:45:33,120 --> 00:45:35,855 So let's move into the body of the plan. 928 00:45:38,410 --> 00:45:41,910 And when I say the plan, I mean in your planning process also. 929 00:45:41,910 --> 00:45:44,910 So the question is, what is the opportunity you're going after; 930 00:45:44,910 --> 00:45:47,960 what is the problem you're trying to solve? 931 00:45:47,960 --> 00:45:50,470 How big is it, what's the opportunity now, 932 00:45:50,470 --> 00:45:53,530 what's going to happen over time, 933 00:45:53,530 --> 00:45:59,290 and why is this the right time for the product or service? 934 00:45:59,290 --> 00:46:03,070 This reminds me in the 100K-- when it was the 50K back one 935 00:46:03,070 --> 00:46:06,322 year we had a semifinal award saying 936 00:46:06,322 --> 00:46:07,530 here are the semifinal teams. 937 00:46:07,530 --> 00:46:10,000 And one team came up and said, I guess 938 00:46:10,000 --> 00:46:12,760 you guys didn't like our plan. 939 00:46:12,760 --> 00:46:14,510 Now back in those days, we didn't actually 940 00:46:14,510 --> 00:46:15,370 know who the people were. 941 00:46:15,370 --> 00:46:17,244 That was part of it-- they were all no names, 942 00:46:17,244 --> 00:46:19,050 we just looked at the ideas. 943 00:46:19,050 --> 00:46:21,614 And I said, well, I don't actually know what yours was. 944 00:46:21,614 --> 00:46:24,030 And they said, well, we were the guys with the air traffic 945 00:46:24,030 --> 00:46:26,900 control system improvement. 946 00:46:26,900 --> 00:46:29,750 And it was a fascinating plan. 947 00:46:29,750 --> 00:46:31,989 They had figured out how to make it more efficient. 948 00:46:31,989 --> 00:46:34,280 And I learned a lot of things about air traffic control 949 00:46:34,280 --> 00:46:35,170 systems. 950 00:46:35,170 --> 00:46:38,100 And I said, the problem is none of us 951 00:46:38,100 --> 00:46:39,960 could see how that could be a business. 952 00:46:39,960 --> 00:46:42,670 You would have to change the entire air traffic control 953 00:46:42,670 --> 00:46:45,340 system it appeared in the United States. 954 00:46:45,340 --> 00:46:49,450 It looked like a great solution, but is it a business? 955 00:46:49,450 --> 00:46:52,220 And they said, well, did you know 956 00:46:52,220 --> 00:46:56,010 that the Federal Aeronautics Administration-- 957 00:46:56,010 --> 00:46:59,070 FAA-- has put out a request for proposal 958 00:46:59,070 --> 00:47:01,790 for changing the air traffic control system in the United 959 00:47:01,790 --> 00:47:04,550 States? 960 00:47:04,550 --> 00:47:05,890 No. 961 00:47:05,890 --> 00:47:07,840 Why would I know that? 962 00:47:07,840 --> 00:47:09,730 They had assumed everyone knew that. 963 00:47:09,730 --> 00:47:11,729 That would have changed at the whole complexion. 964 00:47:11,729 --> 00:47:14,820 That meant at that time the convergence 965 00:47:14,820 --> 00:47:18,860 of a driver for the business was there 966 00:47:18,860 --> 00:47:20,070 and they didn't tell us that. 967 00:47:20,070 --> 00:47:22,240 So they didn't get another opportunity. 968 00:47:22,240 --> 00:47:24,910 In the health care area for many years 969 00:47:24,910 --> 00:47:27,180 we'd see really interesting technologies that could 970 00:47:27,180 --> 00:47:30,520 improve outcomes for patients. 971 00:47:30,520 --> 00:47:33,090 And the question was, well, who was going to pay for it. 972 00:47:33,090 --> 00:47:35,130 And a couple years ago Medicare put 973 00:47:35,130 --> 00:47:38,690 in some rules that said that hospitals get penalized 974 00:47:38,690 --> 00:47:40,920 if patients get readmitted. 975 00:47:40,920 --> 00:47:42,890 That's opened up a huge opportunity 976 00:47:42,890 --> 00:47:46,690 for things like home monitoring or other kinds of things 977 00:47:46,690 --> 00:47:49,887 that before it'd be very hard to see how that was going to work. 978 00:47:49,887 --> 00:47:52,220 So there are a lot of new companies trying to figure out 979 00:47:52,220 --> 00:47:54,570 how they can do things to finally help 980 00:47:54,570 --> 00:47:56,985 patients for better outcomes. 981 00:47:56,985 --> 00:47:59,360 There wouldn't be a market for that five years ago-- it'd 982 00:47:59,360 --> 00:48:01,950 be a long, hard, uphill climb. 983 00:48:01,950 --> 00:48:04,140 So why is this the right time? 984 00:48:04,140 --> 00:48:05,760 As I said, I've been on the bleeding 985 00:48:05,760 --> 00:48:08,290 edge of some of the stuff. 986 00:48:08,290 --> 00:48:09,790 The body of the plan, it should talk 987 00:48:09,790 --> 00:48:11,920 about the market, who's there. 988 00:48:11,920 --> 00:48:14,000 We'll go into more detail with Bob 989 00:48:14,000 --> 00:48:17,520 about talking about customers. 990 00:48:17,520 --> 00:48:20,741 Investors have these different ways of thinking of things. 991 00:48:20,741 --> 00:48:22,490 And one of the questions that surprised me 992 00:48:22,490 --> 00:48:27,260 early on in my career was a VC that's said, OK, I get it, 993 00:48:27,260 --> 00:48:28,260 you've got a great idea. 994 00:48:28,260 --> 00:48:32,830 But let's say you do everything that you said and you win. 995 00:48:32,830 --> 00:48:37,140 Who loses and what are they going to do about it? 996 00:48:37,140 --> 00:48:39,920 And we hadn't thought about that. 997 00:48:39,920 --> 00:48:43,310 So you've got to think about you're disrupting a market, 998 00:48:43,310 --> 00:48:45,759 for example-- what's the response going to be? 999 00:48:45,759 --> 00:48:47,550 The incumbents are just going to sit there. 1000 00:48:47,550 --> 00:48:50,280 So what's your plan for thinking it through? 1001 00:48:50,280 --> 00:48:54,245 That's an example of the planning process. 1002 00:48:54,245 --> 00:48:55,620 These are the kind of questions-- 1003 00:48:55,620 --> 00:48:57,920 again, with Bob Jones tomorrow night 1004 00:48:57,920 --> 00:49:00,230 we'll go into pricing, and distribution, 1005 00:49:00,230 --> 00:49:01,380 and sales tactics. 1006 00:49:01,380 --> 00:49:07,940 And another VC expression is will the dogs eat the dog food. 1007 00:49:07,940 --> 00:49:10,944 So it sounds like a great thing, you convinced me 1008 00:49:10,944 --> 00:49:12,610 it's a great thing, but what evidence do 1009 00:49:12,610 --> 00:49:15,440 you have that anyone wants it? 1010 00:49:15,440 --> 00:49:20,990 That's customers-- will the dogs eat the dog food? 1011 00:49:20,990 --> 00:49:25,110 Now the development plan is how do you 1012 00:49:25,110 --> 00:49:28,300 piece the different components together 1013 00:49:28,300 --> 00:49:32,410 in order to make something that can work within the time 1014 00:49:32,410 --> 00:49:36,610 constraint you have as a start-up. 1015 00:49:36,610 --> 00:49:38,290 You don't want nuclear fusion. 1016 00:49:38,290 --> 00:49:39,790 Nuclear fusion we've been working on 1017 00:49:39,790 --> 00:49:42,030 for 50, 70 years now. 1018 00:49:42,030 --> 00:49:44,260 And the problem is, if you've got a nuclear fusion 1019 00:49:44,260 --> 00:49:47,760 kind of project, is until it completely works, 1020 00:49:47,760 --> 00:49:48,720 nothing works. 1021 00:49:48,720 --> 00:49:50,150 So there's really not a business. 1022 00:49:50,150 --> 00:49:55,460 Is there a way you can take a portion of it and make it work? 1023 00:49:55,460 --> 00:49:58,570 I looked at Zipcar early on. 1024 00:49:58,570 --> 00:50:00,820 Everyone's familiar with Zipcar? 1025 00:50:00,820 --> 00:50:04,090 Fascinating concept-- it's revolutionized a whole bunch 1026 00:50:04,090 --> 00:50:05,550 of transportation things. 1027 00:50:05,550 --> 00:50:08,110 But there were so many moving parts 1028 00:50:08,110 --> 00:50:12,010 that you had to put together in order to make that work. 1029 00:50:12,010 --> 00:50:13,900 At a place like MIT, where the joke 1030 00:50:13,900 --> 00:50:17,140 is-- if you're recruiting a faculty member, 1031 00:50:17,140 --> 00:50:20,090 you can have one of three things, 1032 00:50:20,090 --> 00:50:25,650 you can have tenure, the Nobel Prize, or parking. 1033 00:50:25,650 --> 00:50:28,510 So parking is what everyone picks. 1034 00:50:28,510 --> 00:50:30,150 So here's a company Zipcar that's 1035 00:50:30,150 --> 00:50:32,400 got to figure out how to get parking places. 1036 00:50:32,400 --> 00:50:35,050 There are a lot of things that were out of their control. 1037 00:50:35,050 --> 00:50:36,900 And at the end of the day, it may not 1038 00:50:36,900 --> 00:50:38,896 have been a good investment. 1039 00:50:38,896 --> 00:50:40,270 It may have changed things, but I 1040 00:50:40,270 --> 00:50:43,400 don't think a lot of people made a lot of money in Zipcar. 1041 00:50:43,400 --> 00:50:45,360 So you want to try to think through 1042 00:50:45,360 --> 00:50:48,630 do you have to change the world totally in order 1043 00:50:48,630 --> 00:50:51,690 to make a dent in the world. 1044 00:50:51,690 --> 00:50:54,760 Because again, limited time. 1045 00:50:54,760 --> 00:51:00,950 The action plan-- this is part of what 1046 00:51:00,950 --> 00:51:04,080 I like to think of as the identification of credibility 1047 00:51:04,080 --> 00:51:05,140 testers. 1048 00:51:05,140 --> 00:51:07,670 As engineers, if you said I've got 1049 00:51:07,670 --> 00:51:13,220 to build a bridge across the Golden Gate, 1050 00:51:13,220 --> 00:51:16,620 there's a lot of things you have to do to make that work. 1051 00:51:16,620 --> 00:51:19,740 And engineering is very much a think everything 1052 00:51:19,740 --> 00:51:21,860 through kind of thing and often is very sequential 1053 00:51:21,860 --> 00:51:25,230 in its process. 1054 00:51:25,230 --> 00:51:29,370 The credibility testers, a different way of thinking of it 1055 00:51:29,370 --> 00:51:32,480 is are there some things that will make this project 1056 00:51:32,480 --> 00:51:35,240 extremely difficult that if I can show 1057 00:51:35,240 --> 00:51:39,060 I can solve I can de-risk the situation. 1058 00:51:39,060 --> 00:51:41,660 So thinking about a project from how 1059 00:51:41,660 --> 00:51:44,410 do I convince somebody this is doable 1060 00:51:44,410 --> 00:51:46,110 is an important part of it. 1061 00:51:46,110 --> 00:51:48,900 Maybe in the case of the Golden Gate Bridge, 1062 00:51:48,900 --> 00:51:54,740 it would be securing access right to an on-ramp. 1063 00:51:54,740 --> 00:51:59,110 Or if you think the issue is a technical issue, doing 1064 00:51:59,110 --> 00:52:03,100 are sounding to figure out how deep the bedrock was. 1065 00:52:03,100 --> 00:52:05,842 I was sitting out on Cape Cod beach 1066 00:52:05,842 --> 00:52:07,300 one weekend with some house-guests. 1067 00:52:07,300 --> 00:52:10,365 And one guys told me he's working on this project. 1068 00:52:10,365 --> 00:52:13,619 It was very windy out there and he said it's really windy here. 1069 00:52:13,619 --> 00:52:15,160 I said, yeah, it's always windy here. 1070 00:52:15,160 --> 00:52:17,700 And he says we're working on something involving that. 1071 00:52:17,700 --> 00:52:21,100 And it turned out he was one of the guys from Cape Wind. 1072 00:52:21,100 --> 00:52:23,300 And what they were doing was securing access rights 1073 00:52:23,300 --> 00:52:26,740 to land the cables on it. 1074 00:52:26,740 --> 00:52:28,240 Because if they didn't do that, they 1075 00:52:28,240 --> 00:52:30,240 couldn't get to the next level. 1076 00:52:30,240 --> 00:52:32,830 So that first thing is can you identify credibility testers 1077 00:52:32,830 --> 00:52:35,020 to reduce the risk. 1078 00:52:35,020 --> 00:52:37,860 And if you reduce the risk, both for you and for investors, 1079 00:52:37,860 --> 00:52:40,287 you have a higher probability of success. 1080 00:52:40,287 --> 00:52:42,120 The other thing is to think about-- whatever 1081 00:52:42,120 --> 00:52:44,980 you're doing-- about how to sequence 1082 00:52:44,980 --> 00:52:47,090 that relative to your resources. 1083 00:52:47,090 --> 00:52:49,680 So the ideal scenario again, remembering 1084 00:52:49,680 --> 00:52:52,390 H equals R divided by E, is you want 1085 00:52:52,390 --> 00:52:56,120 to be able to ideally say I'm going to do X and actually 1086 00:52:56,120 --> 00:52:57,430 achieve it. 1087 00:52:57,430 --> 00:52:59,910 And then you can ask for additional resources 1088 00:52:59,910 --> 00:53:02,530 to do the next step. 1089 00:53:02,530 --> 00:53:04,860 If you don't plan that out well and you 1090 00:53:04,860 --> 00:53:08,830 get stuck between tasks, then you 1091 00:53:08,830 --> 00:53:10,590 might be able to get away with that once. 1092 00:53:10,590 --> 00:53:12,923 But if you do it a second time, people are going to say, 1093 00:53:12,923 --> 00:53:15,290 well, I'm not sure these guys can actually execute. 1094 00:53:15,290 --> 00:53:18,130 So thinking about what are the steps I can do versus 1095 00:53:18,130 --> 00:53:20,830 the resources in order to achieve something 1096 00:53:20,830 --> 00:53:23,105 that I can say, look, I've added value 1097 00:53:23,105 --> 00:53:24,605 so you should give me an opportunity 1098 00:53:24,605 --> 00:53:28,120 to add even more value. 1099 00:53:28,120 --> 00:53:31,510 And I always like to try to avoid dependencies 1100 00:53:31,510 --> 00:53:33,859 on others if I can. 1101 00:53:33,859 --> 00:53:34,650 That's a big thing. 1102 00:53:34,650 --> 00:53:37,350 When you deal with a large company as a start-up, 1103 00:53:37,350 --> 00:53:38,490 you're moving fast. 1104 00:53:38,490 --> 00:53:42,590 And what they think is fast is an eternity for a start-up, 1105 00:53:42,590 --> 00:53:45,280 because they just have cumbersome processes. 1106 00:53:45,280 --> 00:53:49,950 So if you can figure out how to avoid dependency on them. 1107 00:53:49,950 --> 00:53:53,560 We won't cover the lean start-up concept in the class here, 1108 00:53:53,560 --> 00:53:57,260 but I do recommend the book for you to think about. 1109 00:53:57,260 --> 00:54:02,160 How do you test out concepts with a minimum viable product? 1110 00:54:02,160 --> 00:54:03,840 It's a valuable read. 1111 00:54:03,840 --> 00:54:09,170 And it applies beyond the Web 2.0 area. 1112 00:54:09,170 --> 00:54:12,560 And then often there's some things you need in a plan. 1113 00:54:12,560 --> 00:54:15,620 But this doesn't go in the plan, it goes in the appendices. 1114 00:54:15,620 --> 00:54:19,770 All of these things about resumes, 1115 00:54:19,770 --> 00:54:25,950 getting a business plan that has the founder 1116 00:54:25,950 --> 00:54:30,750 with 15 pages of publications and stuff is just overkill. 1117 00:54:30,750 --> 00:54:32,840 Put it in the appendices. 1118 00:54:32,840 --> 00:54:34,484 If you have any of these other things, 1119 00:54:34,484 --> 00:54:36,525 don't put it in the main plan, have it available. 1120 00:54:39,440 --> 00:54:43,350 So now we'll talk about the business plan 1121 00:54:43,350 --> 00:54:45,900 as a financing document. 1122 00:54:45,900 --> 00:54:50,490 And think of this about three different levels of reading. 1123 00:54:50,490 --> 00:54:53,621 The first reading is like a resume. 1124 00:54:53,621 --> 00:54:55,620 If you make the cut, you get the second reading, 1125 00:54:55,620 --> 00:54:58,320 which is to figure out if this going to justify 1126 00:54:58,320 --> 00:55:00,090 the investment. 1127 00:55:00,090 --> 00:55:01,940 And the third reading is to say, OK, 1128 00:55:01,940 --> 00:55:03,750 is this a plan that I as an investor 1129 00:55:03,750 --> 00:55:07,430 and you as an entrepreneurial team can commit to. 1130 00:55:07,430 --> 00:55:09,930 And the point is if you don't make the first cut, 1131 00:55:09,930 --> 00:55:11,560 you don't get the second two cuts. 1132 00:55:11,560 --> 00:55:16,710 So the question is what helps people make the first cut. 1133 00:55:16,710 --> 00:55:18,960 And these are some of the things that occur to people. 1134 00:55:18,960 --> 00:55:22,780 Here's an idea there's just too good to ignore; god, 1135 00:55:22,780 --> 00:55:24,630 what a brilliant idea. 1136 00:55:24,630 --> 00:55:28,120 Or a financial promise that's too good to turn down, 1137 00:55:28,120 --> 00:55:30,290 if you have that. 1138 00:55:30,290 --> 00:55:34,510 A team that's good enough to believe in-- most investors 1139 00:55:34,510 --> 00:55:36,170 will tell you they'd rather invest 1140 00:55:36,170 --> 00:55:41,430 in a top team, an A team, with a B idea 1141 00:55:41,430 --> 00:55:43,502 than an A idea with a B team. 1142 00:55:43,502 --> 00:55:44,960 Because things are going to change. 1143 00:55:44,960 --> 00:55:48,540 You want to make sure you've got a team that can deliver on it 1144 00:55:48,540 --> 00:55:50,740 when things happen. 1145 00:55:50,740 --> 00:55:54,320 An action plan that's credible and focused. 1146 00:55:54,320 --> 00:55:56,610 Details to give assurance of insight, commitment, 1147 00:55:56,610 --> 00:55:58,590 and follow through. 1148 00:55:58,590 --> 00:56:01,130 And actually a format and style that says these guys 1149 00:56:01,130 --> 00:56:05,940 are serious about achieving what they want to do. 1150 00:56:05,940 --> 00:56:08,480 Some reasons plans fail to make that first cut? 1151 00:56:08,480 --> 00:56:12,550 One is just an insignificant market. 1152 00:56:12,550 --> 00:56:15,369 I've seen plans that say our market is 1153 00:56:15,369 --> 00:56:16,410 going to be $100 million. 1154 00:56:16,410 --> 00:56:18,250 And you look at the financing requirements 1155 00:56:18,250 --> 00:56:20,125 and they say we're going to need $20 million. 1156 00:56:20,125 --> 00:56:26,020 Well, that's just too much money for that size market. 1157 00:56:26,020 --> 00:56:27,752 So that's an example of either they 1158 00:56:27,752 --> 00:56:29,460 have to redefine the market or figure out 1159 00:56:29,460 --> 00:56:31,350 how to do it cheaper. 1160 00:56:31,350 --> 00:56:35,110 Non-credible technology-- this is usually not an MIT problem, 1161 00:56:35,110 --> 00:56:38,235 although the issue can be at MIT that you're 1162 00:56:38,235 --> 00:56:40,960 much too early along. 1163 00:56:40,960 --> 00:56:42,710 That is, if it's working on the lab bench, 1164 00:56:42,710 --> 00:56:45,293 there's a lot of steps until it actually gets into the market. 1165 00:56:48,010 --> 00:56:51,630 And then a failure to understand the market can be an example. 1166 00:56:51,630 --> 00:56:59,910 For example, I was reading a plan that the device clearly 1167 00:56:59,910 --> 00:57:02,690 required an FDA approval. 1168 00:57:02,690 --> 00:57:04,930 I mean, I just couldn't believe it didn't. 1169 00:57:04,930 --> 00:57:07,110 And yet, they never said anything about it. 1170 00:57:07,110 --> 00:57:11,379 And the question was, well, they should've addressed that. 1171 00:57:11,379 --> 00:57:12,920 And if I have to pull it out of them, 1172 00:57:12,920 --> 00:57:16,570 then it gives you a negative feeling about the team. 1173 00:57:19,310 --> 00:57:20,690 And then other reasons. 1174 00:57:20,690 --> 00:57:24,320 The plans is too optimistic or naive. 1175 00:57:24,320 --> 00:57:26,770 Or maybe sometimes not ambitious enough-- 1176 00:57:26,770 --> 00:57:30,100 I have a semiconductor device that I'm 1177 00:57:30,100 --> 00:57:32,510 going to double the speed in five years. 1178 00:57:32,510 --> 00:57:36,550 Well, that's probably not a big enough improvement. 1179 00:57:36,550 --> 00:57:39,930 So these are all reasons why things may not 1180 00:57:39,930 --> 00:57:43,340 get the second read. 1181 00:57:43,340 --> 00:57:44,940 There are cosmetic reasons. 1182 00:57:44,940 --> 00:57:48,180 And I hate to say it, but it's so aggravating 1183 00:57:48,180 --> 00:57:51,180 to see a team with really good ideas screw up on the basics 1184 00:57:51,180 --> 00:57:56,040 like misspellings, sloppy stuff. 1185 00:57:56,040 --> 00:57:57,820 Again, it's like a resume. 1186 00:57:57,820 --> 00:58:00,230 If you can't get the resume looking professional, 1187 00:58:00,230 --> 00:58:02,250 why would I even want to talk you or hire you? 1188 00:58:04,770 --> 00:58:08,000 So that's see the overview of things 1189 00:58:08,000 --> 00:58:10,150 tonight for the business plan. 1190 00:58:10,150 --> 00:58:13,330 Why write a plan or have a planning process, 1191 00:58:13,330 --> 00:58:14,694 what should be in the plan. 1192 00:58:14,694 --> 00:58:16,110 Again, at a high level we're going 1193 00:58:16,110 --> 00:58:19,740 to go into each of the sections over the next six days. 1194 00:58:19,740 --> 00:58:21,740 And then a little bit of thinking about the plan 1195 00:58:21,740 --> 00:58:24,820 as a financing document. 1196 00:58:24,820 --> 00:58:28,660 And I'd like to leave you at this point with this triangle 1197 00:58:28,660 --> 00:58:30,410 that we're going to come back to probably 1198 00:58:30,410 --> 00:58:33,340 each night just to drill it in of what you're trying to do. 1199 00:58:33,340 --> 00:58:37,150 At the end you're trying to come to a very clear idea of what 1200 00:58:37,150 --> 00:58:39,070 you want to do, what it takes to do it, 1201 00:58:39,070 --> 00:58:41,020 and have all the support underneath. 1202 00:58:41,020 --> 00:58:43,264 And it's an iterative process. 1203 00:58:43,264 --> 00:58:45,680 Some people think this is all linear-- I think about this, 1204 00:58:45,680 --> 00:58:47,820 I test that, it moves on. 1205 00:58:47,820 --> 00:58:51,240 It's very much like science can be-- we try something, 1206 00:58:51,240 --> 00:58:53,710 it fails, we figure out why it fails, we go back 1207 00:58:53,710 --> 00:58:55,770 and try it again. 1208 00:58:55,770 --> 00:58:58,810 But the goal is to find that sweet spot where you 1209 00:58:58,810 --> 00:59:01,550 can actually make a difference. 1210 00:59:01,550 --> 00:59:05,980 So with that, I'll ask if there are any questions. 1211 00:59:05,980 --> 00:59:08,270 Again, this is a high level, but if there's 1212 00:59:08,270 --> 00:59:10,890 some things that need clarification, 1213 00:59:10,890 --> 00:59:12,150 I'll do the questions now. 1214 00:59:12,150 --> 00:59:14,060 Otherwise, we'll take a break. 1215 00:59:14,060 --> 00:59:19,110 We usually say take 10 or 15 minutes 1216 00:59:19,110 --> 00:59:20,480 and meet the people next to you. 1217 00:59:20,480 --> 00:59:22,690 Because one of the requirements for the course, 1218 00:59:22,690 --> 00:59:25,250 if you're doing it for credit, is 1219 00:59:25,250 --> 00:59:27,740 you've got to put together a written requirement, 1220 00:59:27,740 --> 00:59:30,380 the executive summary or a pitch deck. 1221 00:59:30,380 --> 00:59:35,197 We want to try to get teams formed to help you 1222 00:59:35,197 --> 00:59:37,530 if you're somebody with an idea and you need some people 1223 00:59:37,530 --> 00:59:39,800 to help, vice versa. 1224 00:59:39,800 --> 00:59:43,410 Given that it's probably a blizzard out there tonight, 1225 00:59:43,410 --> 00:59:46,300 I think we'll defer that initial meeting until tomorrow night, 1226 00:59:46,300 --> 00:59:49,000 take like a five minute break or so. 1227 00:59:49,000 --> 00:59:51,270 And we'll get Steve to get stuff, 1228 00:59:51,270 --> 00:59:53,480 who's going to tell you how to make a pitch. 1229 00:59:53,480 --> 00:59:55,870 So at the end of the day, after everything you've done, 1230 00:59:55,870 --> 00:59:57,495 you've got to come and make that pitch. 1231 00:59:57,495 --> 01:00:00,030 And Steve is going to give you the precursors of that. 1232 01:00:00,030 --> 01:00:06,740 So we'll come back at about 7:15, give you eight minutes.