Entrepreneurship

Examples for how a paradigm shift has creatednew industries are the semiconductor industry in the 70s, the personal computer industryin the 80s and the internet industry in the 90s.

Examples of such companies are Netscape and Amazon.com. The early companies in a new market face a tremendous challenge.They have to cause a behavior that does not exist today to come into existence and tobecome popular.

Trying to create a market is a very difficult challenge. Especially if his is your first time around. lt is an incredible thing todo a market where there are no models.

For that reason it is dijficult to attract investors, to attractcustomers because they are not used to paying what you are providing

new product or new business model in an existing market

There is a problern that is very pressing, painful, and when you inject a solution into that market, the market ignites. Suddenly there is a solution space and the product gets consumed in huge amounts because there had been latent demand in the market. 

Here opportunity exists because of an existing but improved product in an ex1stmg market. The product is usually faster, eheaper or better. Successful me-too products are usually superior in an order of magnitude in one of these dimensions.

Markets that change

Markets that are badly understood

Markets that are large

Markets that are fast growing

Markets where the Incumbent Players cannot move

Markets where there is little Competition

To start a successful business you have to look for major shifts

Otherwise all you can do is cheaper, faster, or better. Onceyou see the shift, the key isto understand what the market opportunity is.

Look for an industry that is going through change and where the market is receptive to a change

Thereare small markets that are poorly understood and poorly served, but nobody cares,because they are small. The more well understood the markets are, the less theopportunity. The best opportunity is when you find a market that is large and is not well understood. New markets are often little understood.

Sometimes, it can make sense to go into a very unsophisticated industry, where forinstance the least nurober of MBAs are.

Find a large market that is not weil understood.

If the market opportunity is huge, the potential of your company is huge. If you do nothave a significant market opportunity from day one, you are putting yourself into a smallbox.

You will not get the size of the opportunity precisely, but you can get it in an order of magnitude: Is it a million dollar business, is it a hundred million dollar business or is it amultiple billion dollar business?One of the ways to figure out how big you can get is to Iook around at your potential competitors.

The scale of your venture will indicate how big yourcompany can become, how big you need to become to be able to compete, how muchmoney you have to raise, and whether you have to break it down into a series of smallsteps to get there. You should always try to visualize the competitive natural scalebecause it is a good sanity check.

Choose a large market opportunity and check the scale of yourcompetitors to visualize potential company size.

Find a large market where there is a big gap between the degree towhich its needs are met and the size of the potential demand.

in a fast growing market there are lots of new decisions being made.

lf you enter a market that is fixed in size and is not growing so that you getting an ordermeans, in order for you to eat, you have to take food from me, you are going to have amuch more aggressive fight for that food.

Find a fast growing market, because a fast growing market means alot of new decisions will be made by the customers. Also a fast growing market allows more than one company to flourish and be successful.

Look for a market where change has created new opportunities which the incumbent players due to limiting factors cannot or not as fast take advantage of but which you can use because you start over again.

Youhave to Iook at your chances of succeeding not based just on what you are doing, but onthe competitive environment. You just cannot assume that you are going to be better thanthe other 19 companies. Because you are not necessarily always smarter, or betterfinanced or more experienced.

Choose an opportunity that does not have a Iot of competition. Y ouhave to Iook at your chances of succeeding not based just on the thing that you are doing, but also based on the competitive environment.

intuitive and analytical approach

There are entrepreneurs who have a passion for something and out of that passion theydevelop a business. People who have built a business out of their hobby are for instance,Steve Jobs (Apple) and Bill Gates (Microsoft).

Jeff Bezos (Amazon.com) and David Bobnett (Geocities) have developed their business ideas in amore analytical fashion. Both made lists of the kinds of businesses that would bebusiness opportunities with the internet.

Jeff Bezos for instance was sitting there working for an investment trading firm and thething that was impressive to him was the growth of the internet. It was growing at 2000%per month and he knew he wanted to do a business that was taking advantage of theinternet. And he asked hirnself what kind of businesses would really benefit from theinternet. He just tried to rank order 30 different businesses. He did not know anythingabout books. But he felt that after really studying what the internet would truly enablethat was different, that books just fitted it to a tee. So he went after it a big time.

1. why do you believe opportunity exists?

2. why does your product or service create value?

e.g. n two years you can save 2 million dollar or in one year yoursales will increase by so much in value

3. why do you think you will win`? What is your competitive advantage?

You need to research the idea until you can clearly articulate your business. You need to be able to answer the question why there an opportunityexists, how your business creates value and why you can do it better than anyone eise.

1. Be open with your idea. Chances are, that it is a stupid idea.

2. Take enough time to pick and articulate the idea. Do not put yourself under pressure neither from yourself nor from others.

3. Take enough time to pick and articulate the idea. Do not put yourself under pressure neither from yourself nor from others.

When you have discovered an opportunity you should then go to research it. To learnabout industries, you should go to the library and read trade journals. And if you spend acouple of days, sometimes a couple of weeks, reading the back issues of trade journals insequence you can learn everything about an industry and what is going on in thatindustry.

Learn andunderstand the economic drivers of the industry, and how the value chain works andwhere your company fits into it. Then go and talk to people in the industry and call themup. For instance the authors of the articles that you read. Tell them you read their article,that it did not mak:e any sense to you, but that this idea mak:es sense to you. Challengethem and test your ideas on them.

e.g. "What do you think of that,would you buy that, how would you change that?" And they will say: "Talk to thisperson." And then you go and talk to that person

You should be worried more about whether your idea is stupid.

You will get a Iot more value out of usingtheir intelligence to clarify your idea, to get their piece to the puzzle than keeping theidea to yourself. In fact, everyone has a little piece of the big puzzle.

Six months. (from my point of view it is too much!)

I prefer testing it!

Another way is to research always two ideas at the same time. Because if you justresearch one idea you have a tendency to make it look good. If you are researching two ata time you always compare them. And you end up picking the best one.