ENT3003 Exam 4

\___ of content should be about audience, \___ you

90%, 10%

% of women in Vietnam, Panama, Qatar, Madagascar, Thailand, Angola, and Indonesia being equal to or exceeding their...

male counterparts

3 primary stakeholder attributes

Power
Legitimacy
Urgency

4 Ps

product, price, promotion, place

7 Ps

product, price, promotion, place, people, packaging, and positioning

10 mistakes to avoid with building website

Inaccessibility
Difficult to find contact info
Overusing "wow" factor
Slow load times
No search engine exposure
Long text
Poor navigation
No monitoring
Not updating
Not linking to sm

70% of Twitter users expect response from brand within...

1 hour

93% of communication is nonverbal:

55% facial expression
38% tone of voice
7% words

1854 Cycling Case Discussion

Brandale Randolph, named after first anti-slavery protest
Employees formally incarcerated women as master bike mechanics, makes positive impact
Loses job in 2008 financial crash
Launches non-profit Project Poverty
Launches 1854 Cycling
Goes through several product iterations
Settles on electrics bikes for law enforcement
Not for profit
Decision to start was based on circumstances in Framingham
Corporate social responsibility vs. social entrepreneurship Selling vs. social impact
Stakeholders Formally incarcerated women Employees not involved in business
Questions Social mission? Fair consistent employment Connect with sustainable development goals? 8: Decent Work and economic growth Articulate story Has greater purpose

2017 most active angel groups

Keiretsu Forum
Houston Angel Network
Y Combinator

Accredited investors

earn income of \>$200k or net worth of \>$1M

American Research and Development (ARD)

professional structure created by George Doriot known for investment in Digital Equipment Company (DEC)

Angel investor

investors who use own money to provide funds for startups

Angel investor bullets

Worth \>$1M
Invests $25k - $100k in personal funds
Seed/early-stage
Informal due diligence

Angel investors look for...

opportunities in startups that return 10x their investment in 5 years

Are independent contractors good?

Yes, but less control and DO NOT MISCLASSIFY

Are VCs interested in seed funding?

no

Avoid investment as long as possible to...

give business time to grow

B Lab

ensures standards of social and environmental performance, accountability, and transparency

Banks expect entrepreneurs to have:

Capital
Collateral
Capacity
Credit rating

Benefit corporation (B-corp)

certified by nonprofit B Lab, not subject to obligations by other corps

Brand name approaches

Stake your claim
Make it a metaphor
Adopt customer's attitude
Leverage labels
Describe it literally

Brand strategy

long-term plan to develop successful brand

Branding

process of creating name, term, design, or symbol that identifies product that differentiates it from others

Branding questions:

What is the primary goal of your company?
What are the best features and benefits of your products or services?
What are your customers and prospective clients already saying about you and your company?
What sorts of qualities do you want them to associate with your company?

branding Steps

Choose a name
Design a logo
Spread the word
Know your customer
Become your brand
Write a tagline
Always deliver
Be consistent

Buyback

opportunity to buy back VC firm's stock with premium

C corporation

separate legal entity created by state government and owned by unlimited shareholders

C corporation cons

double taxation (but in startup corporate tax is eliminated)

C corporation pros

transferable ownership, not time-consuming

Can all lawyers handle small businesses?

No, not all lawyers can handle small businesses and startups bc they're different than established companies

Community fund

goal is to invest in economic development and job creation in impoverished areas

Compensation in form of equity has 2 legal issues:

1. Risks noncompliance with security laws
2. Income tax is triggered \= unexpected tax bill

Conklin's defining characteristics of wicked problems

Problem isn't understood until solution is made
No stopping rule
Not right or wrong
Novel and unique
One shot operation
No alternative solutions

Convertible debt

short-term loan that can be turned into equity when future financing is acquired

Convertible debt Advantages

Removes need for valuation
Investors get discount
You are major stockholder

Convertible debt Disadvantages

Early lenders don't want risk
Debt accumulation

Copyright

form of protection provided to the creators of original works in the areas of literature, music, drama, choreography, art, motion pictures, sound recordings, and architecture

Corporate angels

former business execs looking to use savings or income; controlling

Corporate social responsibility (CSR)

efforts made by corporations to address company's effects on environmental and social well-being to promote positive change

Corporate social responsibility (CSR) bullets

Still has goal of profit
More lenient legal penalties
Engages customers
Leads to real innovations
Decreases costs
Increases public image
Brings people together
Ex: Ikea

Dangerous stakeholder

power, urgency

Debt financing

borrowing money to start business, paid back in interest

Definitive stakeholder

power, urgency, legitimacy

Demanding stakeholder

urgency

Dependent stakeholder

urgency, legitimacy

Discretionary stakeholder

legitimacy

Dominant stakeholder

power, legitimacy

Dormant stakeholder

power (unused)

Due diligence

rigorous process that evaluates investment opportunity prior to finalizing deal

Early-stage financing

larger amounts of funds provided for companies that have a team in place and product tested/piloted, but little revenue

Earned-income activities

sale of products that are used as source of revenue generation

Eat my Words:

creates catchy brand names

Enterprising nonprofits

both venture mission and market impact are for social purposes (ex: Goodwill)

Enthusiast angels

independent wealthy retired entrepreneurs or execs

Entrepreneurial angels

successfully operated own business, steady flow of income

Entrepreneurial marketing

set of processes adopted by entrepreneurs based on new and unconventional marketing practices to gain traction and attention in competitive markets; chasing reputation, credibility, and buzz

Entrepreneurial marketing bullets

Investment of time, energy, creativity, commitment
Main focus is on customer
Goal is to meet and satisfy customer needs
Long-term customer relationship
Dialogue marketing and participation
Reaches underserved, niche markets
Direct to customers

Equity financing

sale of shares of stock in exchange for cash

Example of IP trap

Robert Kearns, inventor of windshield wiper, used Chrysler and Ford for copying patented tech and got $40 million in compensation when he could have made a lot more if he just patented himself

Exception

Complete control, lots of money

Exit strategies

1. IPO
2. Mergers and acquisitions
3. Buyback

Experienced investors generally only invest in...

C corps

Failure

Little money, little control

Fair use

meant to be copied and used for noncommercial purpose

First impression avoidances:

Slouching
Avoiding eye contact
Frowning
Technical jargon
Reading slides
Speaking too fast/slow
Untidy
Gesturing too much

Founders' agreement

short, less technical, clear agreement between founders on key issues Not legally binding

General partnership

2+ people

General partnership bullets

Pass-through taxation: each partner reports profits and losses on individual tax returns
Best to have formal agreement
Each partner still personally liable

GirlTrek

health movement with goal to improve well-being of AA women through walking

Global IP Theft costs...

$225 to $600 billion yearly

Good site builders

Wix, Duda, Squarespace

Grain Surfboards

Applies boatbuilding techniques to make hollow wooden boards
Offers workshops and shares content on sm, where fans spread ideas

Guerilla marketing

low-budget strategy focusing on personally interacting with target group by promoting products through surprise and other means

Guerilla marketing examples

Interactive poster campaigns, car ads, t-shirts, street branding, flash mobs, costumes

Hackathons

events where software and hardware developers intensively collaborate to generate new ideas and inventions; automatically own IP but disclosing has risks

How investors value startups

Your experience and past successes
How many users
Distribution channel
Industry popularity

how long is financial support by venture philanthropists provided for?

3-5 years

How many VC firms are in U.S.?

1,000

Hybrid model of social entrepreneurship

organization with purpose that equally emphasizes economic and social goals; does not fit into four-part typology

In 1979...

a rule allowed pension funds to invest in VCs, opening doors

In 1990s...

many investors put money into startup Internet companies, but they failed

In short, investors look for:

Great teams
Big markets
Unique ideas

Initial public offering (IPO)

first opportunity to sell stocks on market to be bought by public

Intellectual property (IP)

intangible personal property created by human intelligence like ideas, inventions, and logos

Intellectual property (IP) bullets

Includes copyright, trademark, trade secret, and patents
Increases valuation and protection
Not straightforward — rights may belong to someone else

IP protection tips

- Do not disclose to public
- file provisional patent application before idea goes public (gives 12 months)
- build unique markers, like thumbprint to reveal if someone copied
- license innovation to larger company to profit through royalties

Iris Scott, artist

Used sm via Facebook and Instagram to share her art
Sold as low as $50 and tried finger painting
Now up to $45k worth

It helps to connect with people in...

similar market with large following

Kevin Kelly, cofounder of Wired magazine says building a lasting, sustainable business is based on...

1,000 true fans

Key to good content

quality

King/Queen

Complete control, little money

Limited liability company (LLC)

combines pass-through taxation with limited liability and no eligibility

Limited liability company (LLC) bullets

Ownership agreements advised
Replaces many other business types

Limited liability partnership (LLP)

in exchange for registering with state and paying annual fee, gets limited liability

Limited liability partnership (LLP) bullets

Partners not protected from committing wrongful acts
Avoids classifying partners as employees

Long tail theory

focus is shifting from mainstream products from big brands to wide variety of smaller niche markets

Marketing

showing how product meets customer needs, fair pricing, promoting products innovatively, implementing delivery, and maintaining customer relationships

Marketing mix

framework that defines brand and differentiates it from rest

Marketing trends

Virtual reality Ex: TOMS shoes
Artificial intelligence Ex: Alexa, Chatbots
Honesty Ex: Domino's
Influencer marketing Ex: Pedigree's "Buy a bag, give a bowl"
Experiential marketing Ex: Glenfiddich (whiskey company)
Marketing through education