Lecture 8
30th October 2012

I’ve had a quiet week at work so one lunchtime I sat with a coffee and re-read each of the earlier lecture summaries.  As I read, it occurred to me (of course biased by my own preferences and experience) that this course requires students to make themselves vulnerable, to take the risk of engaging at a very personal level.  My sense is that this is not something that is typically asked of MBA students, and I am again filled with respect for the many who have embraced the process so wholeheartedly.

And as tonight’s lecture got underway, it became apparent that the students are not alone in making themselves vulnerable.

Listening to the Customer – The View from Within

David had invited Jim Frederickson, Deputy Dean, Faculty, to ‘listen to the customer’.  Melbourne Business School is currently restructuring its MBA program and the Entrepreneurship subject is to be reconfigured, possibly compressed into a more intense course (which may not allow the students to experience the process of defining and launching a business).  Jim’s goal was to understand the student view on how an ideal course may be delivered and, in particular, at what point the students achieved a change in mindset.

A diversity of views followed…

  • Longer is better, engaging with a 12 month process would be ideal;
  • Using the frameworks is important – perhaps these can be learned in advance of the course?
  • Three separate weeks, delivered at monthly intervals;
  • We learn through doing – I cannot see how the course could be compressed;
  • We need 3 – 6 months to repeatedly test our hypotheses and refine our thinking;
  • Six to seven weeks ideally;
  • Six weeks of learning followed by on-going mentoring;
  • A four to five week course would force us to iterate more quickly – which goes to the essence of what we are learning;

It’s a fascinating conversation, well worth a look…

A spirited discussion with no clear consensus.  I admired Jim’s willingness to listen with what felt like a truly open mind.  My guess is that not too many universities really listen to their customers.  Full marks to Jim and I await with interest the outcome.

Start Ups are Taking Shape

Five teams presented their business models this evening.  As I listen I recall the early student presentations and am impressed by the ease with which the students now take control of the room, the professionalism of their presentation materials and the confidence with which they deliver.

MaxMyRate has focused on engaging potential suppliers and on sourcing their technology platform and applications.  They had originally ‘costed’ the development of their offering through a ‘corporate lens’, arriving at a cost of around $150,000.  They have since discovered that by being a little resourceful, they can actually develop a Minimum Viable Product (MVP) for a little as $2000!!!

Their next task is to estimate the cost of acquiring a customer.

Ugotwot have held discussions with students at Swinburne, LaTrobe and Melbourne Universities and have a leaning towards a smart phone application as their primary delivery channel due to ease of use.  And whilst ease of use is expected to result in more listings, the smart phone app represents a more expensive route to market – quite a trade-off!

A couple of interesting suggestions from the floor : using applications ties you to a particular platform, a mobile optimised web site may be a better approach; and “Top Coder” – the worlds largest competitive community for software development and digital creation –  may be a possible source of developers.

I am reminded yet again of the highly supportive and collaborative nature of the group.  This is not a competition – this is a group of students who seem genuinely concerned about the success of their peers.

Drone Zone  presented an excellent assessment of their initiative across multiple industry sectors.  The real estate segment emerged strongly, confirming the target market to be sellers of premium residential properties.  The team has conducted an on-line survey of buyers and sellers, their analysis revealing a strong correlation between property value and perceived value of low altitude aerial footage.

I am impressed by the fact that the team has actually purchased a low cost drone and captured some footage.  The key learning – it’s not as easy as it seems!!  Good data for the financial model as success may require the sourcing of a specialist (read ‘expensive’) skill set.

IT as a Utility  have had an interesting week.  One of their goals is to remove complexity from IT solutions in order to deliver a service ‘over the wire’.  However in order to do this, they need to drive innovation in the value chain.

They’ve made the important observation that they need to target larger organisations with larger spend in order to be viable and have proposed an interesting growth pivot : they will allow customers to trade in their existing IT infrastructure as a core component of the acquisition strategy.

And (in my opinion) they’ve made a particularly significant discovery : 51% of those surveyed prefer multiple vendors, reflecting what I believe to be a widespread reluctance to become dependent on a single vendor.  As a long time participant in the IT industry I have not seen too many examples of enduring partnerships.  The buyer is concerned that by committing to a long term relationship they will lose any leverage they may have over the supplier.   So these deals become transactional and fail to capture the value that a long term arrangement has the potential to deliver.  Perhaps there is an opportunity to design more innovative partnering relationships?

Positive Energy Places described their Minimum Viable Product – a refurbished building that operates in an energy positive manner.  Their initial view of the world was that ‘if we build it they will come’ however they did not!  A survey of tenants revealed that the reason they stayed was the appeal of sharing a building with like minded people.  A range of negative observations on building functionality was noted, with the team currently addressing these.

A question from the floor relating to electric cars – the team is currently in discussions with the City of Melbourne to convert existing car spaces to electric car spaces.

Take a look at the Start Ups pages to see the student presentations.

Would you give them your money?

Tonight’s session has a focus on the financing of businesses.  With this in mind, David set about dispelling the myth that a Venture Capitalist (VC) will be excited by your business plan and will be highly enthusiastic to give you vast sums of money!

His advice : do not bring investors in for their money.  Rather, you need relationships, mentoring and experience.  Far better to bring in an entrepreneur who is able to back you.  You are the constant, in a business that may change.  It is important therefore that you understand your role, the value you create and at what point you might exit.

Very few have the experience and capability to take a business the full distance.

And with those words, David invites the students to engage in a practical exercise : imagine you had $2 million to invest in a company.  What information would help shape your decision?  This is what the students would ask…

  • what’s your experience?
  • who are the high fliers on your management team
  • how much have you sold so far and is the money in your pocket?
  • what’s your vision and do you have an exit strategy?
  • what percentage of the business are you willing to give up?
  • why do you need the money and how do you proposed to use it?
  • what are the envisaged risks and how do you plan to mitigate?
  • what is the customer problem you are seeking to solve?
  • who else has invested in you?
  • will I get a 100x return on my investment?

And just as I think this is a great set of questions, David jumps on them!!  It seems this is not the reality for most ventures, particularly in Australia.  Generally entrepreneurs put their hands in their own pockets, making multiple modest investments, or seek the support of Angel investors who make a difference above and beyond mere money.

I guess the media perpetuates the myth by showcasing the exceptional stories.  But what I am learning is that stories like Google and Facebook are indeed the exception.  It seems that most entrepreneurial successes are a product of modestly funded resourcefulness and tenacity.

UniSquare : Where Theory Becomes Reality

This evening’s guest speaker is David Mah, founder of UniSquare.me.  David is a post graduate Engineering student who studied Entrepreneurship (as part of his Engineering Degree) with David Austin last year.  David’s colleagues Nigel Ang and Richard Liman are with him.

They have come to share their story, in particular the lessons they have learned, and to invite the students to challenge their ideas.

UniSquare’s mission is to create an open university community to connect students around common interests.  And whilst the mission has remained constant, the execution has undergone several iterations over the 13 months since inception.

David describes his initial scope in ‘land of dreams’ terms – it was unrealistically huge.  Further, when he presented his idea to potential users he received negative feedback.  And he failed to listen, convinced that his idea was ‘awesome’.

After speaking to students, he began to better understand their needs, and to descope the offering.  Using PowerPoint (at no cost) to communicate their ideas, the team focused on Events, Student Deals and a Student Life Magazine.

With several iterations behind them, the team entered and won the Melbourne Accelerator Program Competition, netting a cash prize of $20,000 and the use of an office within the University of Melbourne’s Engineering School.

And now to lessons learned, seven in all:

1. It’s Never the ‘Right’ Time to Start

There is always a myriad of reasons why timing is less than ideal.  But David decided to be proactive and to make it the right time.

2. Focus, Focus, Focus

A common message, however David has some additional advice: if you are too focused you risk losing sight of the bigger picture.  In David’s view,  80% of your effort should be on developing your solution, and 20% on scanning the environment, maintaining an awareness of the market place, changes, new opportunities, being open to alternatives.

3. Manage Your Energy, Not Your Time

An important distinction, to be applied each and every day!

4. It’s Okay to Fail, but do it Quickly (and Cheaply)

According to David, you fail most of the time.  He recommends a book by Seth Goddin ‘The Dip’ (which I have also read and recommend) which helps the reader discern when to persevere, when to let go.

5. Create a Sustainable Business

No doubt through experience, David has learnt to take great care not to burn out his resources, himself, his team, his money.  In essence, it’s not a sprint, it’s a marathon!

6. The Importance of Community

For today’s generation, the need to participate is greater than the desire to consume.  UniSquare is all about creating a sense of community.  David refers to Richard Branson : you have to run your business like a family, working together to create something special.  In reality, UniSquare’s product is community.

7. Have Fun!

David closes with an important message : never forget what you are trying to achieve.

A quick Q&A session follows, as we are running out of time…

Q: Are universities involved?

A: Initially they were hostile however now that they understand what we are doing, and that we do not pose a threat, they are supportive.

Q: Have you contemplated an exit strategy?

A: We did examine possible exit strategies at the outset, but we believe we are the natural owners of the company for now.

Q: Are you replicating Facebook?

A: No, we have a university focus.  We are seeking to bring quality content of university life to one place.  You are not limited to who you know, and if you are new to uni you are not lost.

Q: Can you describe the evolution of your site?

A: We had seven tabs, each focusing on a different vertical. Given our limited resources, we could not do well in all areas.  So we focused on one, and have now expanded to three.

Q:  How do you plan to grow?

A : We are currently testing the waters in Melbourne.  We believe that when we get it right, we will be in a position to replicate in other states.

As their presentation concludes, I realise that these young men are simply remarkable.  They have completed the Entrepreneurship course and are now applying, with great discipline and focus, what they have learned.

For a moment I recall my high school mathematics classes where we started by learning the theory, we see theory illustrated with a worked example, and then it all makes sense!

Tonight we are privileged to see an extraordinary worked example, and for me at least, it all makes sense.  These guys are indeed entrepreneurs.


2 Responses to “Lecture 08”

  1. 1 David Nelson November 8, 2012 at 4:29 am

    Great synopsis Jane. Enjoying reading these post lecture to get a reminder of the night.

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