Exam II

Which of the following types of plans is the simplest? back of a napkin the pitch deck feasibility study Business Model Canvas

Back of a napkin

What is social capital? people with whom you connect on social networks business contacts and vendors all of your friends and family members having a network of people who willingly cooperate, exchange information, and build trusting relationship

having a network of people who willingly cooperate, exchange information, and build trusting relationship

How much return does a typical angel investor expect from his or her investment? angel investors have no expectation of return double the amount invested within 2 years 10 times the investment in 5 years 3 times the investment within 3 years

10 times the investment in 5 years

What percentage of startup businesses start without any formal investment? 98% 75% 50% 24%

98%

Why would a growth mindset contribute to a person's grit? Both are a way to measure intelligence. A desire to learn will help overcome failure and allow the person to persevere. People with a growth mindset need to make things perfect. People with grit will keep doing the same thing repeatedly.

A desire to learn will help overcome failure and allow the person to persevere.

People with a strong fear of failure tend to exhibit which of the following characteristics? anxiety low self-esteem a reluctance to try new things all of these

All of these

What are the most beneficial ways to develop a business idea? collect data gather feedback test the business model all of these

All of these

What is the advantage of storyboarding that makes it so effective? It is shorter. it provokes discussion. The visual element gets the idea across quickly. all of these

All of these

What is a hypothesis? Answers: an assumption tested through experimentation a method used to prove or disprove the validity of an idea the process of conducting a research study a widespread belief

An assumption tested through experimentation

The general rule for a new startup is to: avoid seeking investment for as long as possible try to get as much funding as possible as soon as possible to immediately line up one committed investor with deep pockets seek many small investments from a wide range of people right away

Avoid seeking investment for as long as possible

Anthony is thinking of starting a small hot-dog cart that he will take to the beach area in San Diego, California. Before starting, he investigates city ordinances and talks to vendors in the beach area. He also talks to people at the local parks who sell hot dogs to find out what makes their business successful. Anthony is conducting what stage of the scientific process? background research experimentation data analysis testing the hypothesis

Background research

What is a typical investment range for the 3Fs? less than $1,000 between $500 and $20,000 between $25,000 and $200,000 between $1,000 and $100,000

Between $1,000 and $100,000

What is the name given to the process of building a business with very little funding? seed startup bootstrapping zero funding skeleton funding

Bootstrapping

What is the best advice for building networks? build networks with people who are powerful build networks with people in your industry build networks focusing on investors build networks with people who share your values

Build networks with people who are powerful

A conceptual framework that describes how a company creates, delivers, and extracts value is called a _____________. business model business plan mission vision

Business Model

What are the two revenue sources of Airbnb? air travel and gambling commission from the homeowner and a booking fee from visitors commission on the booking fee advertisement of the rooms

Commission from the homeowner and booking fee from customers

What is the term for customers who have a high level of authority in their ability to approve purchases others make due to their high position in the hierarchy? recommenders economic buyers decision makers end users

Decision makers

_________ angels are individuals who have already started and successfully operated their own businesses. Corporate Entrepreneurial Professional Enthusiast

Entrepreneurial

Experiments need to have a clear purpose, be achievable, and generate ______. positive outcomes product ideas reliable results action

Reliable results

Amy C. Edmondson, professor of leadership and management at Harvard Business School, describes a spectrum for failure that runs from blameworthy to praiseworthy. According to Edmondson, a praiseworthy reason for failure is ______. uncertainty—taking unreasonable actions due to lack of clarity deviance—defying ethical and legal boundaries inattention—getting sidetracked from the core business exploratory experimentation—conducting market tests to get early feedback

Exploratory experimentation- conducting market tests to get early feedback

Albert Einstein hung a sign in his office that read: "Not everything that counts can be counted, and not everything that can be counted counts." The authors go on to discuss how ROI of social entrepreneurism is easy, and for example that grades are the only thing to measure, not emotional intelligence. The authors also point out that the Teach For America does not define success by the number of alumni who assume leadership positions in public education. True False

False

In The Ecology of Commerce, Paul Hawken asserted that in every area of our economy we will have to find ways of accomplishing half as much, with twice the resources. To do so, we'll have to approach our challenges with what Buddhists call "beginner's mind"— a way of thinking that is open, alert, and free of dogma and what Thorstein Veblen called "trained incapacity." True False

False

Peter Drucker, in his book Management Challenges for the 21st Century, argued that in the coming years, individuals will be able to rely on institutions to guide their careers and lives. The traditional boundaries between professions, industries, and sectors will become less blurred. We will not have to navigate in a shifting landscape. For compass points, each person should not seek to understand how his or her values and strengths intersect with the changing needs of society. This is not where we can make our greatest contribution. True False

False

The Introduction of Social Entrepreneurship starts with using 9/11 of an example of individuals can destabilize nations, but then the authors goes into how individuals and small groups do not have constructive capabilities and can't help things and are powerless. The authors go on to use Lewis Thomas' The Lives of a Cell to compare social entrepreneurs around the world to ants who together can't make a difference. The authors go on further in the introduction and later in the book to explain that Microfinancing and crowdfunding doesn't work and hasn't expanded economic opportunities nor empowered people? True False

False

The author discusses social entrepreneurship pioneering groups such as Grameen Bank and the BRAC and Ashoka that were failures based on their exploitations of the poor. True False

False

The authors go on to point out how no one is working to change rules and incentive structures to ensure greater social responsibility from corporations and that the "Progressive Age" brought about the industrial revolution. True False

False

The authors point out that social entrepreneurs generally seek to elicit change by influencing the decision making of large institutions or by changing public attitudes, while activists pursue a wider range of options, including building institutions that directly implement solutions themselves. True False

False

The authors say that the social entrepreneur's job can be boiled down to one essential function: the social entrepreneur helps others to envision a new possibility, appreciate its meaning, and recognize how it can be broken down into doable steps that build momentum for change. They go on to say amongst other things, that long term thinking, ownership, experimentation, and failure are not acceptable and will not help the process. The authors go even further to point out that social entrepreneurs and entrepreneurs are born, tend to be risk takers, bad listeners and social entrepreneurs are surprisingly ideological with a defining characteristic of being charismatic. True False

False

The authors tell of how corporations have grown immensely powerful with three thousand multinational corporations controlling roughly a quarter of the world's wealth. And how "Their managers frequently make decisions that run counter to the long-term interests of the public. True False

False

The book goes onto share how in The Worldly Philosophers how innovation and commerce were not suppressed. The authors go on and say that later, population growth, urbanization, scientific advances, and improvements in transportation and accumulated wealth- compelled traditional structures to take control over social and commercial activates. And later during the dark ages, there was creation of the limited liability joint-stock corporation. True False

False

A business model: means the same thing as a revenue model focuses on how the product or service will serve a market need determines how profits will be made determines how revenue will be earned

Focuses on how the product or service will serve a market need

How does Chicago Food Planet Food Tours and Food Tour Pros generate revenue? food tasting tours and business courses for entrepreneurs business courses and entrepreneur courses travel and food tasting food tasting tours and cooking lessons

Food tasting tours and business courses for entrepreneurs

What phase of design thinking is associated with experimentation? inspiration ideation implementation nonlinearization

Implementation

Being aware of your body language, being polite and courteous, and being confident and open are all forms of ______________? impression management attitude adjustment self-confidence nonverbal management

Impression management

Greg is using a fundraiser site and is offering 10 shares of stock to those who contribute a minimum of $100 to his product. What model of crowdfunding is Greg using? investor patronage reward lending

Investor

When writing a business plan, you should be ___________ about the chance for success. bullish neutral conservative realistic

Realistic

A popular sports company grants a license to people who use their logo on T-shirts and caps. They charge the company for the rights to use the logo. This is an example of which of the following revenue models? advertising revenue model intermediation revenue model licensing revenue model razor-and-razor-blades model

Licensing revenue model

When someone states, "I don't have money to start a business," what fact might one consider? Most businesses start without any formal investment. This is a valid reason for not starting a business. Formal investment will be needed to make a successful company. People who have no money cannot start a business.

Most businesses start without any formal investment.

Which of the following reflects the three dimensions of social capital? financial, product, and service financial, production, and market relational, structural, and cognitive relational, durational, and commitment

Relational, structural, and cognitive

The ____________ has replaced the formal business plan in most venues. pitch deck Business Model Canvas feasibility study business brief

Pitch deck

The easiest way to determine a startup company's potential is to ______. see how similar companies in the same industry are being valued determine the economic health in the market area look at the track record of the cofounding team analyze the company's financial forecast

See how similar companies in the same industry are being valued

______ consist(s) of small amounts of capital given to help prove a concept. Startup loans Seed-stage financing Startup financing Early-stage financing

Seed-stage financing

Why is it important for entrepreneurs to manage the negative emotions associated with failure? so they can begin the process of learning from failure so they can avoid all the consequences of failure so they can understand the external reasons for their failure so they can blame others for their failure

So they can begin the process of learning from failure

______ is/are provided to help implement an entrepreneur's research and development. Startup loans Seed-stage financing Startup financing Early-stage financing

Startup financing

Paul is assessing his social ties and starts by listing everyone he knows, regardless of the type of relationship. He then intends to classify them. On which dimension of social ties is Paul working? relational structural dimensional cognitive

Structural

Before Carlos opened his new bakery, he baked a variety of sample cupcakes and cookies to sell at local farmers markets and other local events. Which stage of the scientific process of experimentation does this represent? asking lots of questions carrying out background research developing hypotheses testing the hypotheses by running experiments

Testing the hypotheses by running experiments

To produce a feasibility study, what action is needed? documenting important parts of your business testing, information gathering, and analysis creating a well-defined financial forecasts meeting with the founders who will agree on the plan of action

Testing, information gathering, and analysis

Even though you may not be profitable, investors will want to know how many customers you have because it will show potential _____ customer satisfaction to scale the business marketability revenue from that base

To scale the business

According to research studies, what element was reported as the most important factor to new venture success? the uniqueness of the product or service to fulfill a customer need the financial support to help the company through the initial years the lead entrepreneur and quality of the initial team the size of the lead entrepreneurs network

The lead entrepreneur and quality of the initial team

Equity financing is defined as ______. the value of the total company assets the value a company earns and borrows against the sale of shares of stock in exchange for cash a debt incurred by a company

The sale of shares of stock in exchange for cash

"Duckworth adds, "Having confidence in one's ideas does not mean 'I know my ideas are right'; it means 'I am willing to try out my ideas.'" The heart of social entrepreneurship is a willingness to try out ideas that are helpful to others. Social entrepreneurs are action researchers: they learn primarily through experimentation, not just by relying on theory. They approach the world the way a tinkerer approaches a broken clock. Educating young people to think and behave this way is different from helping them to acquire knowledge. Presenting the educational challenge in this light exposes the limitations of standardized tests. Given the way the world is changing, more people are going to have to improvise large stretches of their careers, responding to shifting needs and opportunities. Success may hinge less on what you know than on how well you learn new things, spot patterns, take initiative, and work with others. The development of empathy is critical to this process, as people now interact regularly with strangers who come from different cultures and have different values." True False

True

Although it is never easy to obtain the initial investment or grant funding for a new idea, most social entrepreneurs have less trouble in getting started than taking off. The major constraint is the difficulty in accessing growth capital. Unlike business entrepreneurs, who, once proven, can raise money from well-established capital markets through debt or stock issues, social entrepreneurs running nonprofit organizations are financed by foundations, philanthropists, or governments whose typical investments are modest in size and relatively short-term. To help, the authors say it is a good idea to participate in venture planning pitch competitions sponsored by business schools. True False

True

Bill Gates directs some of his philanthropic efforts to champion a more "creative capitalism" to "stretch" markets so they better serve the poor. Another example given by the authors is Jed Emerson coined the term "blended value" to describe the commingling of social and financial objectives. The authors go on an discuss initiatives such as Ashoka's Social Financial Services program and give examples of blended-value or "impact investors" that target social businesses. True False

True

Einstein cautioned against relying too much on knowledge at the expense of feeling and the authors go on to point out that combining data and storytelling can appeal to reason and emotion, which can help a social entrepreneurs convey the true impact of their work. True False

True

In Nonzero: The Logic of Human Destiny, Robert Wright asserts that this mindset shift is a necessary evolutionary adaptation. He argues that the world has no choice but to move progressively from what he calls "zero-sum" to "non-zero-sum" thinking: from a model of interaction in which one party's win is another's loss to a model in which all parties benefit. True False

True

In The Wealth of Nations, Adam Smith wrote that the "greatest improvement in the productive powers of society" came from the "division of labor." Smith used the example of a small pin factory to show that if instead of making whole pins, each worker specialized on a narrow aspect of production, and they all later combined their efforts, they could produce tens of thousands of pins in a day, rather than a few hundred. True False

True

In addition to the growth in resources, philanthropists are also experimenting with new models of financing that are better structured than past approaches to meet the needs of social innovators. For example, some provide loan guarantees and "first loss" funds to enable grantees to leverage capital markets; others use grants to catalyze innovation and seed new markets; still others make collaborative, multiyear "patient capital" investments to fuel the growth of proven organizations. These are some of the new approaches that have been described as "venture philanthropy," "strategic philanthropy," and "impact investing." True False

True

In the developing world, countless firms, both for-profit and nonprofit, are marketing to the four billion underserved people in the so-called "Bottom of the Pyramid," a term popularized by the business professor C. K. Prahalad in his influential book, The Fortune at the Bottom of the Pyramid. True False

True

In the opening to section 1, the authors give a definition of social entrepreneurship as a "process by which citizens build or transform institutions to advance solutions to social problems, such as poverty, illness, illiteracy, environmental destruction, human rights, abuses, and corruption, in order to make life better for many. True False

True

Over the past two decades, social entrepreneurs have also increasingly employed business strategies to address problems and generate revenues. In the mid 1980s, while Yunus and Abed were drawing attention to the potential of social enterprise in Bangladesh, Ed Skloot of New Ventures and Jerr Boschee of the National Center for Social Entrepreneurs were advancing this model for achieving impact and sustainability in the United States. The idea was taking root in other parts of the world, as well. By the early 1990s, more than a third of Ashoka fellows had launched earned-income ventures. But many were apprehensive. True False

True

The authors write about how social entrepreneurship has always existed, but differently, and gives examples such as in the past children learned of Florence Nightingale as one who ministered to wounded soldiers but not that she build the first professional school for nurses and revolutionized hospital construction. The authors go on to explain that was because of sexist ways. True False

True

To Yunus, a person deprived of education or opportunity is like a bonsai. The constraint isn't the seed, it's the pot. Yunus has noted that his "greatest challenge" has been getting this point across: changing mindsets about the poor, about financial institutions, about the nature of capitalism itself, which all stunt the growth of millions. "Mindsets play strange tricks on us," he says. "We see things the way our minds have instructed our eyes to see." True False

True

In experimentation, an entrepreneur's goal should be to do which of the following? Use continual iteration to test and shape ideas. Create perfect experiments for perfect outcomes. Use scientific rigor in the testing of his or her products. Use the scientific method sparingly so as to save resources.

Use continual iteration to test and shape ideas

Which of the following is a professional investor who generally invests in early-stage and emerging companies because of perceived long-term growth potential? crowdfunder angel investor venture capitalist friend

Venture capitalist

The planning exercise that involves getting out of your usual working environment and imagining what the business could look like in three years is called _______________. the Business Model Canvas Vivid Vision back of a napkin sketch a business brief

Vivid Vision

What areas would be explored under the "T" phase of TRIM? who needs to be on the start team the assets needed to start the business the benefits of your product knowing who your customer will be

Who needs to be on the start team

What conversational stance does a good networker take? generally takes the lead in the conversation actively listens, leaning forward, and mirroring the speaker's gestures tends to join the larger group where more people can hear his or her message will listen at first, then turn the conversation to his or her entrepreneurial goal

actively listens, leaning forward, and mirroring the speaker's gestures

If an experiment outcome indicates that the original hypothesis was incorrect, what should the entrepreneur do? conduct another experiment adapt the original assumption move forward until there is another assumption to test terminate the product or business concept

adapt the original assumption

What is Jenn Houser's advice for aligning team goals and values? select a team that already shares the goals and values of the company invest several days with your founders hashing out how the partnership will work before you commit clearly describe your goals and values up front before selecting the team let your goals and values evolve as the company forms

invest several days with your founders hashing out how the partnership will work before you commit

What type of investment vehicle do venture capitalists use? bank loan limited partnership angel account investment bonds

limited partnership

A change in direction in response to a small failure is called a ________

pivot

Nour operated a successful massage and health spa in a lucrative resort location. She handled all reservations herself and if a customer called to make an appointment when she wasn't in the spa, she asked her employees to leave her a note. The notes sometimes go missing, resulting in angry customers. Which startup failure would most likely be represented in this scenario? uncertainty process inadequacy inattention deviance

process inadequacy

The first part of the business plan is ________________. the market section a description of how you intend to design, develop, and implement the plan the business concept the financial section

the business concept

The first step of the scientific process for an entrepreneur is which of the following? to conduct a thorough Internet search to develop the hypothesis to ask a lot of questions to analyze the data

to ask a lot of questions

Which of the following best describes the purpose of a founding team? to brainstorm business ideas, finding one that will be most profitable to build and grow the company and provide economic and social return to fund the business and create its business structure to finalize the business product or service

to build and grow the company and provide economic and social return

Why is experimentation required? to meet the requirements of investors and loan officers to generate ideas that can be used in further business development to make sure that entrepreneurs have the right assumptions about meeting the demands of potential customers to form hypotheses about customer behavior towards their product or service

to make sure that entrepreneurs have the right assumptions about meeting the demands of potential customers

Why is experimentation required to test hypothesis? to meet the requirements of investors and loan officers to strengthen ideas by testing hypothesis rather than make assumptions to help with inspiration to form hypotheses

to strengthen ideas by testing hypothesis rather than make assumptions