MGMT 160 FINAL - quiz ?s

The article discusses a "Three-Dimensional Business Landscape." What point is the author trying to make using it, i.e. what does the Three Dimensional Business Landscape represent and why are they talking about it?

This metaphor of a business landscape is a very useful way to conceptualize the idea of how a business chooses where to compete and how to do so and their choices can lead to a higher or lower profitability, which is represented by points on the 3-dimensional business landscape. It also provides a visual for ways in which a business engages with its environment which is an essential component to businesses success. You have to have a clear perspective on the environment around you (target markets, business model and landscape) in order to steer your company to a higher point of profitability

This is a two-part question: (1) What is "cue utilization theory"? (2) For one type of crowdfunding defined in the article, list and define one of the cues and signals discussed in the article. Be sure to list the type of crowdfunding for which the cue and signal is relevant as part of your answer

(1) cue utilization theory = when faced with ambiguity about the quality of an entity individuals use surrogate information to make inferences about the entity's quality (2) lending crowdfunding Signal —> offer tangible resources

The text describes approximately 12 experiments types in the "Experiment Library". For example, the text describes "Ad Tracking" as one type of experiment. Name 4 others and describe in a sentence.

1. Ad Tracking → an established technique used by advertisers to measure the effectiveness of ad spending 2. Unique link tracking → this can verify potential customers' interest beyond what they might tell you in a meeting, interview, or call (track if they used the link or not) 3. MVP (minimum viable product) Catalog → efficiently tests the interest in a product before building it entirely (data sheets, brochures, storyboards, landing page, video, etc) 4. Illustrations, Storyboards, and Scenarios → share these (which relate to your VP) with your customers to learn what really matters to them 5. Life Size experiments → get customers to interact with life size prototypes and real world replicas of service experiences to gather customer insights (concept cars, etc) 6. Landing Page → a single web page or simple website that describes a VP or some aspects of it, through this you get a conversion rate from the # of people visiting the side to visitors performing the CTA (email sign up, simulated purchase) 7. Split Testing → a technique to compare the performance of 2 or more options 8. Innovation Games → a method popularized by Luke Hohmann to help you design better VPs by using collaborative play with your customers. The games can be played online or in person 9. Speed boat → a simple but powerful game to help verify your understanding of customer pains. Here, customers explicitly state the problems, obstacles, and risk that are holding them back by using an analogy of a speed boat held back by anchors 10. Product Box → in this game, you ask customers to design a product box that represents the VP they'd want to buy from you 11. Buy a Feature → a sophisticated game to get customers to prioritize among a list of predefined VP features 12. Mock sales → a way to test sincere customer interest by setting up a mock sale before your VP even exists with the goal to make your customers believe they're completing a real purchase 13. Presales → main objective is to explore customer interest, not to sell. Here, customers make a purchase commitment are are aware of the fact that your VP doesn't fully exist yet

Professor Stevenson discusses two historical definitions of entrepreneurship which he argues are both flawed. What were the two "Schools of Thought" on the way to define entrepreneurship according to Stevenson? According to Stevenson, what is the major flaw to each of the two?

1. As an economic function→ individual roles in society are considered entrepreneurial FLAW = hard to determine which economic functions are "entrepreneurial" and which aren't 2. With individual traits → believed that entrepreneurs held a common set of individual traits (i.e. need for achievement, perceived locus of control, risk taking opportunity) FLAW = entrepreneurship isn't just a personality trait, there's much more to it. Not everyone would fall under these common traits

The article discusses 12 basic accounting concepts and assumptions that anyone interested in financial statements need to understand. Excluding the "Dual Aspect," list FOUR of the other 11 and describe in a sentence or two.

1. Business Entity → financial statements are prepared for a business entity that is separate and distinct from its owners. Defines the accountants area of interest. 2. Going Concern → unless evidence suggests otherwise, it's assumed that the entity will continue operations into the foreseeable future. 3. Monetary Unit → Accounting is a measurement process dealing only with events that can be measured in monetary terms 4. Historical Cost → for accounting purposes, business transactions are measured initially in terms of their actual (historical) cost, a value that's usually easily documented by reliable sources (contracts, invoices, etc) 5. Accounting Period → accounting measures activities for a specific interval of time, called the accounting period. Definition of the accounting period depends on the nature of the business Most: january 1 to december 31 or february 1 to january 31 6. Consistency → once an entity has decided on one accounting method, it should use the same method for all subsequent events of the same character unless it has a sound reason to change methods. 7. Matching → the income or profit reported on a financial statement is the net result of matching related costs and revenues of a period Usually achieved through using the accrual method of accounting rather than the cash method Cash method → records cash receipts and disbursements and focuses on changes in the cash account Accrual method → seeks to measure changes in the owners' equity during the period (revenues realized from noncapital transactions that result in increasing owners' equity) These changes may not result in changes in the cash account 8. Dual Aspect → Every transaction affects at least two items in the basic accounting equation Accounting equation: assets = liabilities + stockholders' equity 9. Reliability of Evidence → accountants recording events rely as much as possible on objective, verifiable documentary evidence instead of on the subjective and potentially biased judgments of a person 10. Disclosure → accounting reports should disclose enough information that they will not mislead careful readers who are reasonably well informed in financial matters. 11. Materiality → accounting standards apply only to material items and inconsequential items can be dealt with expediently. 12. Conservatism → A degree of professional skepticism should be adopted when assessing the prospects that incomplete transactions will be concluded successfully

The article discusses three types of crowdfunding. What are they and briefly define each in a sentence or two.

1. Donation crowdfunding —> the founder receives money from a crowd without any tangible return for that contribution 2. Lending crowdfunding —> raises money with the expectation that founders will repay supporters 3. Equity crowdfunding —> the venture raises money from a crowd in exchange for an ownership stake in the firm

The article discusses the "Four Actions Framework." Describe the four forces and discuss how you can use the framework to develop a business strategy.

1. ELIMINATE: which of the factors that the industry takes for granted should be eliminated? 2. REDUCE: which factors should be reduced well below industry standards? 3. RAISE: which factors should be raised well above industry's standards? 4. CREATE: which factors should be created that the industry has never offered? USE: By pursuing questions 1&2 a company gains insight into how to drop its cost structure with regard to its competitors while questions 3&4 provide a company with insight into how to lift buyer value and create new demand thus developing a successful business strategy

The book describes "five data traps to avoid". Name THREE data traps and describe each in a sentence or two

1. False-positive trap → Risk of seeing things that are not there. This occurs when your data misleads you to conclude, for example, that your customer has a pain when in fact that's not true 2. False-negative trap → Risk of not seeing things that are there. This occurs when your experiment fails to detect, for example, a customer job it was designed to unearth 3. The "local maximum" trap → Risk of missing out on the real potential. This occurs when you conduct experiments that optimize around a local maximum while ignoring the larger opportunity 4. The "exhausted maximum" trap → Risk of overlooking limitations. This occurs when you think an opportunity is larger than it is in reality. 5. The wrong data trap → risk of searching in the wrong place. This occurs when you abandon an opportunity because you are looking at the wrong data

When describing "Customer Jobs", the text distinguishes between three main types of customer jobs to be done and supporting jobs. List the three types of customer jobs to be done and briefly describe in a sentence

1. Functional→ doing a job to complete a task or solve a problem (i.e. mowing the lawn) 2. Social → doing a job to gain power/status or look good (i.e. dressing trendy) 3.Personal/emotional → doing a job to reach a specific emotional state (i.e. finishing homework to lower stress)

The article discusses five benefits of crowdfunding for startups. Please list three of them.

1. Helps alleviate the capital crunch many startups face 2. Validating the overall business idea 3. Product validation 4. Market validation 5. Market penetration/growth

The VPC text discusses that value propositions in B2B transactions typically involve 6 stakeholders in the search, evaluation, purchase, and use of a product or service. Each one has a different profile and a different value proposition canvas. Stakeholders can tilt the purchasing decision in one direction or another. List FOUR of the stakeholders given in the text and describe in a sentence describing each, OR list all six stakeholders without definitions to receive full credit

1. Influencers → individuals/groups whose opinions might count and whom the decision maker might listen to 2. Recommenders → people carrying out the search & evaluation process and who make a formal recommendation for or against a purchase 3. Economic buyers → individual/group who controls the budget and makes the actual purchase. 4. Decision makers → person/group responsible for the choice of a product/service and for ordering the purchasing decision. Have ultimate authority over the budget. 5. End users → the ultimate beneficiaries of a product/service. For business users, an end user can be within their own organization or they can be external customers. 6. Saboteurs → people/groups who can obstruct or derail the process of searching, evaluating, and purchasing a product or service

The article discusses ten pieces of "Tactical Advice for Entrepreneurs". For example, the article provides the advice: "Understand that valuation is in the context of a financing negotiation. When developing a financing strategy and pitching to investors, entrepreneurs must recognize that there is no "true" value to their ventures." Name 4 of the other 9 pieces of tactical advice provided.

1. Pitch right for your type —> should reflect the interests of the financier 2. Understand that valuation is in the context of a financing negotiation —> when developing a financing strategy and pitching to investors, entrepreneurs must recognize that there's no "true" value to their ventures 3. Deal terms have value, and it's easier to negotiate these than the value itself 4. Choose equity investors with care 5. Raise appropriate amounts of money to reach the next milestones 6. Build feelings of desire and urgency in investors 7. Do not run out of cash 8. Start early and build a relationship 9. Demonstrate the "mo" (momentum

List the three types of "fit" discussed in the text. Specifically, for each "fit", list the "name" (e.g. foo-bar fit), the "slang" term used for each (e.g. "on-the-exam fit"). Describe the key attributes of each fit in a sentence of two.

1. Problem-solving solution fit → aka "on paper fit"; when you have evidence that customers care about certain jobs, pains and gains and you've designed a value proposition that addresses those jobs, pains and gains 2. Product-market fit → aka "in the market fit"; when you have evidence that your products and services, pain relievers, and gain creators are actually creating customer value and getting traction in the market 3. Business model fit → aka "in the bank fit"; when you have evidence that your VP can be embedded in a profitable and scalable business model

The VPC text describes six techniques to gain customer insights. These techniques help you understand the customer's perspective when designing value propositions. Name four of the techniques and in a sentence and describe each

1. The data detective → build off of prior work with desk research 2. The journalist → talks to customers as an easy way to gain customer insights (i.e. conducting interviews) 3. The anthropologist → observes potential customers in the real world to get good insights into how they really behave (i.e. stay with the family, work alongside them, observe shopping behavior, shadow for a day) 4. The impersonator → puts themselves in the shoes of the customer by using products.services they use 5. The co creator → integrates customers into the process of value creation to learn with them 6. The scientist → gets customers to participate in an experiment and learns from the outcome

The article discusses "Porter's Forces that Shape Industry Competition." As discussed in the article, what are the six forces? Sketch a simple diagram showing the six forces. In a sentence, define and describe each force

1. Threat of new entrants (most important determinant of profitability) Can quickly erode profits by increasing competition and introducing alternative products (i.e. apps for iphone/android) 2. Bargaining power of suppliers Can raise the prices if they offer a unique product, make it difficult to switch suppliers (i.e. coca cola) 3. Bargaining power of buyers Powerful if they are concentrated or free to direct their purchases elsewhere (i.e. US retail industry has seen buyer power increasingly consolidated to Walmart, Target, and other drugstore chains) 4. Threat of substitute products When multiple products from different industries all serve the same purpose for customers (i.e. taxi fares) Two factors to consider: closeness and performance/price The closer it is, the easier it is to switch Slightly lower performance at a much lower price is a greater threat than slightly lower performance with a small reduction in price 5. Intensity of rivalry (2nd most important determinant) Arises when competitors are of similar size and sell undifferentiated products or when industry growth is slow 6. Opportunity of complements When a company in one industry that provides products/services increase the value of the products/services of a company in another industry (i.e. microsoft and intel)

What are the three core financial implications of the business model, and explain each in a sentence or two.

1. Underlying profitability —> depends on the value of the output relative to the value of the input 2. Asset intensity of the business models —> the amount of assets that must be tied up in the business (net working capital + net fixed assets) in order to generate sales (and be cash flow positive 3. Pace of growth—> the speed at which a venture grows. The faster a business needs to grow, the more assets tend to be tied up in supporting its growth, hence the more cash it will require

When describing "Customer Pains", the text distinguishes between three types of customer pains. List the three types of customer pains OR list two types and briefly describe each in a sentence or two

1. Undesired outcomes, problems and characteristics 2. Obstacles → things that prevent customers from even getting started with a job or that slow them down 3. Risks → what could go wrong and have important negative consequences

The article discusses three key criteria which can be used to help choose a legal form of organization. Name two of the three.

1. Who will the investors and owners be? 2. What are the capital requirements and cash flow characteristics of the business likely to be? 3. What is the time frame for the life of the business?

In addition to "Strategic Orientation", there were five additional critical dimensions of business practice as defined by Stevenson. List the five additional dimensions

1. commitment to resources 2. commitment to opportunity 3. control of resources 4. management structure 5. compensation/reward policy

The BMC text distinguishes between two broad classes of business model cost structures. Define each "broad class" in a sentence or two.

1. cost driven = minimize costs when possible, low cost VP, extensive outsourcing 2. value driven = premium VP, high degree of personalized service

The text discusses that a business model can involve two different types of revenue streams. What are the two types?

1. transaction revenues = one time payments 2. recurring revenues = ongoing payments

The article discusses how blue ocean strategy represents a "reconstructionist view of strategy". Briefly describe what the authors mean by a "reconstructionist view of strategy"?

=the view that market boundaries and industry structure aren't given and can be reconstructed by the actions and beliefs of industry players The aim is to create new rules of the game by breaking the existing value/cost trade-off and thereby creating a blue ocean People with this view recognize that structure and market boundaries exist only in managers' minds, so they don't let those limit their thinking

The "Dual Aspect" explains that every transaction affects at least two items in the basic accounting equation and preserves the equation's equality. What is the fundamental accounting equation?

Assets = Liabilities + Stockholders' Equity

As defined in the text, what is a "Call to Action"? How is a "call to action" used (i.e. why is it discussed in the text)?

Call to Action = something that prompts a subject to perform an action Used in an experiment to test one or more hypotheses and produces evidence of what works and what doesn't work

What is convertible preferred stock? What type of investor typically gets convertible preferred stock? How does convertible preferred stock differ from common stock?

Convertible preferred stock is a type of stock that during a company liquidity event can either redeem at face value PR convert to common stock to receive a pre-negotiated share of a company.

The "Business Model Canvas" consists of nine basic building blocks. Sketch the canvas and label each of the nine blocks. For each labeled block, describe it in a sentence or two. (9 points).

Cost structure → all the costs incurred to create and operate your business model Revenue streams → the cash generated from specific customer segments, can be seen as the heart of the business model Customer segments → the groups of people or organizations your company aims to reach/serve Customer relationships → the types of relationships (ranging from personal to automated) your company creates with a customer segment Channels → how your company communicates with customers to deliver value Value proposition → the bundle of products and services your company offers to create value for customers (solve problems, satisfy needs) Key activities → the most important things a company must do in order to operate the business model Key resources → the most important assets a company must have in order to run the business model Key partners → the network of suppliers and partners essential to the success and operation of the business model

List the 2 equations for "Current Investors' Ownership" and "Previous Investors' Ownership

Current investors' ownership = investment amount / post-money valuation Previous investors' ownership = pre-money valuation / post-money valuation

As discussed in the article, what are some of the primary differences between "debt" and "equity" fundraising? How are the motivations of debt and equity financiers different? Give an example of a debt investor and an example of an equity investor as discussed in the reading.

Debt financiers —> lend a fixed sum of money for a specified period at a given interest rate (i.e. traditional banks) Look to invest in ventures with a steady and predictable cash flow and avoid risky opportunities to get the interest payments Equity financiers —> receive a long-term ownership stake in a venture in exchange for capital (i.e. venture capitalists, angel and strategic investors) Look to invest in promising ventures that may be highly risky and also focus on sectors that they have expertise in so they can gain exposure to new products that could benefit them in the future

The article discusses the pressures that pull a firm towards the entrepreneurial range and the pressures that pull a firm to be more administrative than entrepreneurial. List two of the "pressures" listed in the article and indicate if they're a pressure to be more entrepreneurial or administrative in your answer.

ENTREPRENEURIAL --> rapidly changing tech, competition, short decision windows ADMINISTRATIVE --> social contracts, risk reduction, industry structures

When describing "customer gains", the text distinguishes between four types. List the four types of customer gains OR list two types and briefly describe each in a sentence or two.

Expected gains → basic gains customers expect from a solution even if it could work without them (i.e. iPhone release caused people to expect smartphones to be designed nicely) Desired gains → gains that go beyond customer expectations but would love to have (i.e. smartphones to be seamlessly integrated with other devices) Unexpected gains → go beyond customer expectations and desires (i.e. touch screens and app store) Required gains → without a solution, it wouldn't work (i.e. smartphone)

True / False: in the article, Prof. Stevenson argues that entrepreneurship can only be practiced by startups and not well established firms. In a few sentences, describe Prof. Stevenson's reasoning to justify his position

FALSE. it's an approach to mgmt that can be applied in startup situation as well as more established businesses

The text discusses "pricing mechanisms" when discussing revenue streams. What are the two types of pricing mechanisms discussed in the text? Describe each in a sentence or two and cite an example for each

Fixed - predefined prices based on static variables Example: List price of individual products in a store like apple - they sell all their products at fixed prices, consumers can't go into a store and negotiate the price Dynamic - prices change based on market conditions Example: Yield management - depends on inventory and time of purchase (like hotel rooms, flights)

The BMC text discusses four characteristics of "cost structures". List three of the four and define in a sentence.

Fixed costs → costs remain the same despite volumes (i.e. rent, salary) Variable costs → costs can change depending on volumes Economies of scale → cost advantages a business enjoys as output expands Economies of scope → cost advantages due to a larger scope of operation

As a small child, Prof. Wilson liked to play with toys. Prof. Wilson grew up with his mother, father, and older brother in a small town in Maryland. Imagine if Mattel has developed a new rocket-propelled grenade launcher toy designed to launch small rock projectiles ideal to shoot and destroy empty soda cans and milk jugs. Prof. Wilson was a violent child and would love to blow things up with a Mattel RPG toy. Using the six stakeholders' framework from question #1, apply it to this business-to-consumer (B2C) application and list four stakeholders and cite specific examples (e.g. Prof. Wilson) for each for the given scenario. Explain your reasoning if necessary

Influencer = Profesor Wilson Economic Buyers = The parents Decision Makers = The parents End Users = Professor Wilson and his brother

The book discusses that some business models work only with a combination of several value propositions and customer segments. Name one of the two common types of multiple fits discussed in the text, and describe in a few sentences. Cite an example of a company that needs the multiple fit that you discuss

Intermediary → when a business sells a product/service through an intermediary it effectively needs to cater to 2 customers - the end customer and the intermediary itself Example: Haier - sells home appliances and electronics to households globally through retailers such as Walmart Platform → function only when 2 or more actors interact and draw value within the same interdependent business model. Exists only when all sides are present in the model Example: Airbnb - needs a two-sided VP to cater to "renters" (ie: people who are renting homes) and "sellers" (ie: people who are selling their homes out to buyers

According to the article, what are the four common forms of intellectual property (IP)? For each of the forms, list the approximate length of time of exclusivity and the common use (i.e. what does it cover).

Patents Exclusivity → limited to 20 years from the date of first application for plant and utility patents, and 14 years for design patents. Common use → protect commercial and industrial products; provides the inventor with a legal barrier that prevents others from making, using, selling, offering for sale, or importing the same invention Copyrights Exclusivity → authors life + 70 years (95 from publication) Common use → protect works of authorship (creative works) -- tangibly fixed expressions of literary, graphic, audiovisual, or other ideas Trademarks (brand names, service marks, trade names) Exclusivity → indefinite time limit, until abandoned or generic Common use → gives the right to prevent others from using confusingly similar marks for related goods/services in territory where priority is established Trade secrets Exclusivity → no time limit on protection Common use → gives the right to exclude others from using trade secrets if learned improperly Trade secrets = any ideas, know-how, compilations of information or routines that are: used in one's business, not generally known, the source of a competitive advantage Example: formula for coca cola

How are pre-money and post-money valuations linked? Hint: this can be given by a simple equation.

Pre-money valuation + investment amount = post-money valuation

The article discusses a framework for startup crowdfunding. The framework breaks the startup stage into three phases: Pre-startup, Startup, and Growth. According to the article, what is the optimal type of crowdfunding for each stage? You DO NOT need to explain why each is best, simply list the best type for each! Hint: question #2 above lists the three types of crowdfunding!

Pre-startup: donation crowdfunding Startup: lending crowdfunding Growth:equity crowdfunding

Sketch and label the "Value Proposition Canvas". After labeling each, please provide a few sentences describing each of the label quadrants / "pie" sections.

Products & services → a list of what your company offers Gain creations → what your company does to create the outcomes (gains) customers want to see Pain relievers → the ways your company reduces the pains of customers Customer jobs → what customers are trying to get done in work or life Customer gains → the outcomes customers want to see Customer pains → anything that annoys customers before, during, or after a job, or that gets in the way of getting a job done

Fill-in-the-blank question: In the article, Prof. Stevenson discussed strategic orientation as a continuum from "__________" to "___________" as the level of controlled resources increased.

Promoter → opportunity driven Trustee → Resource driven

Define the terms "red oceans" and "blue oceans" according to Kim & Mauborgne.

Red oceans = all the industries in existence today (aka the market space); industry boundaries are defined and accepted, and the competitive rules of the game are known Blue oceans = all the industries not in existence today (aka the unknown market space); untapped market space, demand creation, and the opportunity for highly profitable growth

What is an "S (or Subchapter S) Corporation" and how does it differ from a "C (or ordinary)" Corporation?

S Corporation = a creature of the law which is afforded the tax status of a partnership, but the protection from legal liability of a corporation DIFFERS by the tax policy - S corp has the same tax status as a partnership (taxed once at the individual level) while C corps are taxed at both the individual and entity levels.

In the testing process figure, according to the book, why is the "step" 4, i.e. necessary? That is, to some, it initially may seem redundant to step #2 above, but it isn't. Explain.

Step 4 is more specific in that it prioritizes the tests within the prioritized hypotheses. It's important to run the quick and cheap tests first when there's the most uncertainty before you move on to the more detailed tests that produce reliable outcomes with growing certainty.

What is a "strategy canvas"? How is a "strategy canvas" to be used? What does the horizontal axis (i.e. "x-axis") represent on the strategy canvas? What does the vertical axis (i.e. "y-axis") represent on the strategy canvas? What is the "line" connecting the dots on the strategy canvas called and what does it stand for?

Strategy canvas = A diagnostic and action framework for building a compelling blue ocean strategy. USE → captures the current state of play in the known market space Horizontal X axis → captures the range of factors the industry competes on and invests in Vertical Y axis → captures the offering level that buyers receive across all of these key competing factors VALUE CURVE: a graphic depiction of a company's relative performance across its industry's factors of competition

What are the three core financial statements? Briefly define the purpose of each statement (i.e. what is the gist of each statement). Indicate for each statement if it is for a point in time or a period of time.

The Balance Sheet = portrays the financial position of a company by showing what the company owns and what it owes at the report date POINT IN TIME Assets = all the goods and property owned by the company, and uncollected amounts due (receivables) to the company from others Always presented first Current assets - assets including cash and those that will be turned into cash within a year from the B/S date (listed in order of liquidity or amount of time it takes to convert them to cash) Cash and cash equivalents (money on deposit in the bank, cash on hand, treasury bills) Marketable securities (excess/idle cash not needed immediately, trading securities, held to maturity securities, available for sale securities) Other assets Liabilities = all debts and amounts owed (payables) to outside parties and lenders Shareholders' equity = represents the shareholders' ownership interests in the company - what the company's assets would be worth after all claims upon those assets were paid Comes from capital contribution from the stockholders (owners) and from the net income that is retained after dividends are paid to stockholders (retained earnings) The Income Statement = shows whether a company's operations have resulted in a profit or a loss PERIOD OF TIME Statement of Cash Flows = reports on the company's cash movements during the period(s) separating them by operating, investing, and financing activities PERIOD OF TIME

The following table was in the reading. Initially, the founding team owns 80% of the equity, but by the end of two rounds of financing the team only owns 51%. Are the founders better off after the two rounds of fundraising? Why or why not?

The founders are better off because they have increased the value of their share from $1 million to $10.2 million

Define "Entrepreneurship" according to Stevenson

The pursuit of opportunity without regard to resources currently controlled

According to Osterwalder & Pigneur, what is the definition of a "business model"?

The rationale of how an organization creates, delivers, and captures value

What is the goal of an industry analysis?

To understand how profits are distributed among market participants

What is an "up round" and a "down round"?

Up round = the value of a venture increases between financing events Down round = the value of a venture decreases between financing events

What do we mean by venture capital? Briefly describe a venture capital firm, it's investment strategy, etc.

VC firms invest in new ventures using funds raised from limited partners (pension funds, endowments, wealthy individuals) Investment strategy → Make enough investments to increase their chances of funding a "home run" (impressive success) — since more than 1⁄2 of investments in a portfolio won't yield any returns Extensive control rights compared to angel investors (seat on a venture's board, covenants preventing major undertakings without their approval, capacity to replace an entrepreneur as CEO)

The article discusses that "strategy is a firm's answer to two fundamental questions". What are the two questions?

Where should we compete? How should we compete?

What is a partnership?

a business entity that consist of 2 or more owners

According to the text, Steve Blank coined the term "Earlyvangelist". What is an "Earlyvangelist"? The book lists five traits of an Earlyvangelist. List three of the five traits.

a customer who is willing and able to take a risk on a new product or service Traits: 1. Has a problem or need 2. Aware of having a problem 3. Actively looking for a solution 4. Has put together solution out of piece parts 5. Has or can acquire a budget

The article discusses the purpose of strategy is to create a "competitive advantage". What is competitive advantage?

a firm's ability to create a large gap between the amount its customers are willing to pay and the costs it incurs.

What is a limited partnership?

a partnership that has both limited and general partners; a hybrid form of organization General partner → assumes management responsibility and unlimited liability for the business and must have at least 1% interest in profits and losses May be a corporation -- if so, must have a net worth of $250k or 10% of total capitalization of the partnership, whichever is less Limited partner → has no voice in management and is legally liable only for the amount of capital contribution plus any other debt specifically accepted Profits and losses may be allocated differently from each other

What is a sole proprietorship? (SP)

a person who undertakes a business without any of the formalities associated with other forms of organization; the individual and the business are one and the same for tax and legal liability purposes

Fill-in-the-blank-question: In the article, Prof. Stevenson defines "Entrepreneurship as a _______________ Phenomenon"

behavioral

What are strategic investors? Give some characteristics and discuss their motivations, etc.

corporations that invest in startups for strategic rather than purely financial reasons Motivations are strategic (i.e. gaining exposure to a new product is important to the firm's core operations) in addition to financial

Fill-in-the-blank question: In the article, Prof. Stevenson discusses each critical dimension varying from the "____________ domain" to the "__________ domain" along the continuum.

entrepreneurial, administrative

Who are angel investors? Give some characteristics and discuss their motivations, etc.

individuals or groups of individuals who invest their own money in startup ventures Examples: local business leaders, wealthy individuals, former entrepreneurs May have existing professional relationships with the entrepreneurs Offer expertise but provide less structure than a VC MOTIVATED by economic returns, but also are often past entrepreneurs with successful exits and wealthy who just want to work with new entrepreneurs to repeat the experience and thrills (invest out of an altruistic desire to give back by helping entrepreneurs start their own companies)

What does "LLC" stand for?

limited liability company

Define "barriers to entry" in a sentence or two. The article lists 10 barriers to entry. Please list four of the 10 and describe each listed in a sentence or two, ideally citing an example or rationale for each

obstacles preventing new competitors to successfully enter the market. Economies of scale → the decline in the cost of production per unit as the volume grows (example: Ford and GM - both huge companies, can produce cars at cheaper prices than a new firm) Strong brand identity → customers are loyal to the existing brand and firm because the company has spent a lot of money on advertising/marketing to create brand loyalty (example: coca cola) Proprietary knowledge Capital requirements/ Start-up costs → Keep new firms from entering the industry (example: energy industry has super high startup costs - building a nuclear power plant or oil rig) Availability of substitutes → when there are other products out there just like yours for a better price or with more qualities/benefits it's hard to compete and enter (example: AirBnb is a substitute for traditional hotels) Intense competition → Hard to compete with already established, profitable companies (example: beverage industry has lots of competition which makes it harder for new companies to come in and be profitable comparatively)

Define "strategy" as given in the article

the integrated set of choices that positions the business in its industry so as to generate superior financial returns over the long run

What is crowdfunding?

the pooling of resources by many individuals to contribute to or invest in private companies and projects

What is "intellectual property"?

those rights which result from the physical manifestation of original thought, either naturally or in compliance with statute

What does the term "bootstrapping" mean when referring to a startup?

to achieve early cash flow and become profitable by drawing on personal resources (savings, small loans, credit cards, retained earnings), without giving up an equity to investors)