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In this video we are gonna be talking about Entrepreneurship and Silicon Valley. So what can and can't we teach about Entrepreneurship. What we'd like to do in this class is move something beyond just the basic formula that venture's performance is driven by characteristics of the team, characteristics of the technology, the market size, the market growth plus some aspect of luck. Of course, there's always gonna be some aspect of luck in entrepreneurship. But those factors that we can control, those factors that we have choices over and commit decisions about we want to make sure these are as lined as possible towards venture's performance. So an addition to these factors, that I've just mention one factor involved in driving venture performance is the startup process that the team goes through in deciding who will be the co-founders, what technology will we use and what type of market should we go after. All of the aspects about choosing the opportunity and how to pursue it. So the basis of this class is going be the technology startups are essentially the elements of society that experiments. That technology entrepreneurship is really all about experimentation. And so in that case - What is the process for creating a new venture? We think about experiments. What we typically use in science is the scientific method. So when there's an area of uncertainty, then we want to begin to create hypotheses and run experiments trying to reduce that uncertainty. And that's what we're gonna to be doing in this class. So I'd like to show you a quick video segment with a venture capitalist whose name is Randy Komisar. He is a partner at Kleiner Perkins - one of the top venture capital firms in Silicon Valley. He is gonna be giving his views on what it is that we can and we can't teach about entrepreneurship. So this is just a 3 minute video clip and let's go ahead and take a look at it. I think what can be taught by and large it's a set of very basic skills about the various domains required for startup to succeed. Finance, organization, transactions, strategy, business models. You can get that. An exposure to that, which can raise your entrepreneurial IQ a 100 points, because starting without that, without that context, it could be awfully hard to understand what's happening around you as you work in these environments let alone try to do it. I also think you can get exposure to the personality and character of entrepreneurship. Through the case study method, in particular, you can begin to see the tortured lives that many entrepreneurs have to live in order to pursue their dreams. And you can get a sense of how that relates to your abilities to cope and to make trade-offs in your life. I think there's stuff you can't possibly learn in school and I'm not even sure you can learn that on the job. There's an entrepreneurial character. Some people have it and some people don't. Some people may not think they have it, and they may have it. A lot of people they think they have it, and they don't. The entrepreneurial character is very, very comfortable with uncertainty and ambiguity. That entrepreneur character is very capable of understanding and targeting opportunities that others don't see and is tenacious about their pursuit. At the same time, they remain permeable to know ideas and to course corrections from feedback from the market and from people who might have more experience or more insights than they've got. There's a personality that works in this environment. And there's a personality that I think is uncomfortable. And I try to explain this in particular in the classes that I help teach and then lecturing that I do. There is a badge of courage in being an entrepreneur. I mean, we sort of, you know, if you read the press and you read the local technology rags. You know, there is a real sense that entrepreneurs are a special super breed. They're different. They create a lot of value. I love working with them. But if you're not an entrepreneur that's OK, too. There's lots of other value to be created. There's lots of other things to be "attacked" in the market place that maybe more appropriate. So I think you can learn a lot. And I think you can accelerate your ability to learn more by building a context. But I think ultimately you got to ask yourself a hard question. Am I suited for the uncertainties and ambiguities, the ups and downs, and the risks of being an entrepreneur, or am I not? This video was recorder as a part of the Entrepreneurial Thought Leaders seminar series, here at Stanford and this video and others are upon our web-site: ecorner.stanford.edu So that's a great clip from Randy Komisar, partner at Kleiner Perkins - one of the venture capital firms here in Silicon Valley. I really encourage you to check out some of his other videos and the books he has written, including "The Monk and the Riddle". It's an excellent book. You can hear him talking about this process of experimentation or getting feedback from the market and iterating on your business model and on your plans for your venture. And this is really important. But I want you to emphasize that in this class we're not trying to convert you all to be entrepreneurs, but rather to give you some exposure, to give you this context and to give you a mini entrepreneurial experience. That you can then decide whether the entrepreneurship is for you or whether you'd better suited to be entrepreneurial in the context of a larger company or organization. Moving forward. Start to think about whether there are patterns and whether there are things that we see occurring over and over again With technology or with industries that might point us to directions where we can either discover opportunities on the market or discover things that might help our chances as entrepreneurs. This chart shows from the late 1700s on through 2000s several waves on innovation have occurred. So you can see first wave here, that included iron, water power, textiles, innovations in commerce. Second wave that included the development of steam power, railroads, steel, innovations in cultivation of cotton. Third wave that brought in electricity, chemicals, internal combustion engine. Fourth wave - we started to develop petrochemicals, electronics, innovations in space and aviation. We come to more recently of innovations that has involved visual networks, biotechnology, information technology So seems that with each of these waves of development in technology there are certain entrepreneurial opportunities that are created out of these. Imagine if you could go back in time and knowing what we know now. Anticipate the scale of some of these changes that are happening and create ventures that will take advantages of these technological changes. So we can see a number of examples where technology continues to improve. This is a plot over time on a X axis here and we've got a storage capacity of various video storage technologies, including VHS, DVD, TiVo. You can see that over time and in terms of the number of lines of video and in terms of the number of hours and gigabytes of storage, this tends to steadily increase over time. As we know from Moor's law and other work we can see similar patterns in technology after technology. This is a similar apply over time, but here we now have the volume of energy density in various battery technologies. So you can see from 1985 we have changes occurring and what exactly the chemistry and what exactly the type of battery storage technology it is. But you see this continuous improvement doubling of energy density every 10 years. Let's look at another example. This is capacity of solar cells and in particular the price per watt of energy produced by solar cells. You can see this almost continuous linear decline and the cost of producing of watt of energy through photovoltaics. We have these patterns in the development of technology, what about patterns in firms and startups that attempting to commercialize these innovations. Could we see similar, repeated patterns that happen in technology ventures that are meant to commercialize these kind of innovations? Here we have a plot of some work by Christensen, Suarez and James Utterback. This overlooks over time at the US disk drive industry. On the X axis we have the years here and on the Y axis we have the number of firms in the rigid disks drive industry in the United States. And you can see this pattern where the number of entries is initially high, bumps along and then starts to decline. This line is the number of firm exits. You can see in the beginning the number of firms exiting the industry is rather low. But then we start to get this increase and exit rate. So we put these together and looked at overall total number of firms in the industry. We see this pattern where first the total number of disk drive firms is increasing but then meet at the certain point where starts to fall off and firms start to fail, to die from one reason or the other. Well the other existing firms in the industry continue to grow. So this is quite interesting. We can look also at the different product generations. If we look at the product generation in the disk drive industry and look who the leading firm was that commercialize that new product and who's the market leader. We see that for each of these new product generations - 14-inch disks, 8-inch disks, 5.25, 3.5-inch disks, it tends to be a different firm, that was a leading firm in commercializing these innovations. Each new product innovation allows for an opportunity for a new firm to take the lead in the industry. The one exception here is going from 3.5-inch disks to the 2.5-inch disks where the same two companies wind up being the leading firms. Otherwise, we seem to see this pattern where new product introduction offers a window, an opportunity for a new firm to take the lead in the industry. One model of this, that has been created by Abernathy and Utterback is this 3 stages of innovation. We often see an initial fluid phase in an industry where it's more trial and error regarding the product design, still an inefficient process but we see a lot of product innovations early on industry's life cycle. Over time, eventually, we come to have what's known as a "dominant design". So you might imagine the IPod or the IPhone in the case of smartphones. Once that product innovation has crystallized into this dominant design, we tend to get less new product innovation in the industry and process innovation starts to pick up. Once we know what we are producing, than we can start to have more innovations and how cheaply and how efficiently we can produce that product. This is a transitional phase and we have a later phase where the industry is kind of stabilizes. This whole process can start over again with a new round of product innovation or round of new technological breakthrough. However, it tends to be a window of opportunity here leading up to the dominant design and shortly thereafter when new entrance tend to have an advantage and this new product innovation enlarge established firms tend to have more in advantage of process innovations. This is a disks drive industry but do we tend to see any of these similar patterns in other industries? And it trends out we do - this is a plot of the audio industry, TV industry and number of different industries, that we can see here. And they all seem to have similar pattern over time. Where there is sharp growth in the number of firms and then it was a shake-out in the industry and we see a decline in a total number of firms as a few winners are chosen. And so as entrepreneurs what we really want is somehow be able to figure out when to enter the industry and how to become one of these firms that winds up surviving the industry's shake-out and becomes a surviving firm in a long term in the industry rather than one of these firms that winds up failing. That's we are gonna talk about in this class.

Video Details

Duration: 14 minutes and 53 seconds
Country: United States
Language: English
Views: 234
Posted by: ceesley on Apr 11, 2012

What can and can't be taught.

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