Frameworks for Startup Success with MIT's Paul Cheek

5:10PM Nov 6, 2023

Speakers:

Keywords:

entrepreneurs

customers

business

question

entrepreneurship

metrics

market

build

entrepreneurial venture

organization

great

people

programs

team

product

peter

end users

talking

edp

set

Businesses emerge.

That's great. Now just thinking as you were describing that not a lot of people are equally concerned about the threats as well as the opportunities that some of these new tools might create your own startup ocean works is very much in the responsible kind of area, really sort of clean tech, and so forth. But how do you how do you think about what's the responsibility that entrepreneurs have as they're thinking about these new opportunities to also not only be chasing after kind of what's technologically possible, but also thinking about you mentioned impact about what kinds of impacts you have, and how to think about that from a sort of responsible standpoint?

Yeah, it's a great question and something that you know, requires entrepreneurs to do what sometimes we're not quite as good at, right. We're just, you know, we're thinking on how do we move as quickly as possible? And I believe in many cases, this requires that we take a step back, we take a step back and we consider what are the implications for the technology that we are employing to have an impact because that impact can turn negative quite quickly. Right. So taking a step back and instead of going full force full steam ahead, considering, you know, is this a positive impact? Is this a positive impact in the world around us? Or does this have the potential to do something that is that is negative so I think entrepreneurs have great opportunity in front of them, but they also have potential challenges that they might not already be aware of. And so it really does take careful consideration and rigorous analysis to make sure that they're employing it for good.

Thank you, and I'm sure we'll be talking more about that as well. But while I'm just looking through the other questions that are coming in, what I think a lot of your work, and a lot of the teaching in the Entrepreneurship Center at MIT really emphasizes the need for customer centricity for understanding customers needs, what problem can you solve for customers and how do you create and capture the value around that so what what can you share, from your experience and from all of the ventures that you've helped to mentor at now, about approaches that are most effective for helping to identify and prioritize customer needs and customer segments? What should people know about that? Yeah,

yeah, it's a great question. And, and, you know, it's one of those things that you can you can do and you can do right and you know, doing it right. Investing the time in understanding those customers. That's something that can totally change the trajectory of a business. So So Peter, I think this is a great question, and I'd say there's a little bit of two parts. One part is about market segmentation and one parts about really understanding the needs and the pain points of customers. Market segmentation, something like I said, like you can employ generative AI to do that, that could be a really powerful way to go and segment your market and find that focus early on. You know, we always say look, and especially myself as software, we build some technology, who's the potential user there could be? Tons of potential users for this basic technology. And so, you know, if we're to look at that, how do we make sure that we actually get it in the hands of a group and, and perhaps we can come back to this topic, but we can segment the market by looking at different industries. We can look at it in terms of different end users. Their potential uses some of the complementary products that they might need the size of the market. We can evaluate, you know, our new idea in a variety of different market segments to figure out where do we find focus? And if we're able to do that, we'll build a product that serves one individual group of end users. And that will be really, really powerful. That will be our our beachhead, that will be our gateway to the additional market segments that we can go after to expand our business to go and solve a large, large problem. But finding that focus early on it's just so important. You know, when we think about that, you know, one example right, if we're gonna go and serve the education market, that's super high level. And one of the things that I work with a lot of entrepreneurs to look at, okay, how do we break that down? How do we go deeper? How do we find real focus and specificity? And we could say the education market, but that compared to FinTech or healthcare, how do we break education doubt? You know, we might think about the different types of education. Are we talking about formal education in formal education? Within formal education? Are we talking about K 12? Or are we talking about undergraduate graduate? Are we talking about public versus private educational institutions? And, you know, again, who are we talking about in terms of end users within those organizations? Are we talking about teachers? Are we talking about guidance counselors, are we talking about administrators? Staff, there's a variety of different segments that we can look at here. And the need starts with finding focus in those in those lists of market segments. In terms of really becoming a customer centric organization, Peter, you know, that all comes back to our ability to get to know the end users in that market segment that we've defined, I always say, as well as we know, some of our best friends. If you truly understand your customers and their demographics, their psychographics you're going to have an ability to make decisions on the fly about what would be best for them, who we're really building our business for. And you know, the thing that I've seen in building my businesses is that the better we get to know our end users, the better kind of historical data set we build as entrepreneurs. Now, historical data set if we're a large organization, we've got a lot of data about our customers what they want, how they want to receive value. And we can make decisions based on that institutional knowledge and the historical dataset. But as entrepreneurs we're starting from the ground up we don't necessarily have all of that. And so we have to build up that data set for ourselves by getting to know our customers through this process of what we call primary market research, primary market research. It's something you know, you could go out and talk to a bunch of people or run a survey, but there is there's a structured, rigorous approach. To conducting primary market research to get as much information as possible about our customers or end users in that target market, so that we can build products that will serve their needs, that they will buy in the process that they prefer, at a price point that makes sense for them. And that's where this all starts it's you know, the first question that we look at in discipline entrepreneurship in our courses in our programs, is this question, who is the customer? And sometimes it seems so obvious, and yet we don't have enough specificity. So primary market research is something we talked about as a process that we can do rigorously but that we have to start from a qualitative perspective, not going out and running some big survey, rather, instead going and talking to individuals interviewing them. And it's not just interviewing that you know, we look at a variety of different approaches to primary market research, qualitative primary market research that we have to bucket together. We don't want to just interview people because sometimes what people say is not how they will act when they're putting the situation that we imagine them in, how they how they say they will act versus how they act or sometimes two different things. So our inquiry based approach to primary market research says let's do some interviews. Let's do some observation. Let's do some immersion, going and doing the things ourselves as if we were the end user, so that we have as many data points as possible in our newfound historical dataset as entrepreneurs. So these are the these are the actions that early entrepreneurs in the journey should be taking to get to know their customers, that's gonna allow them to make the best decisions on the fly as they're building the business and applying that business plan out in the real world. So it comes back to starting with that market segment, Peter, finding that really specific market segment that is the beachhead market and running the primary market research process. To get to know these customers extremely well.

Grades you mentioned in the end of that something about making decisions. Yeah. The question is, how do people know that they're making, if not the right at least maybe even a call the best, at least good decisions. We all are pretty familiar, but maybe reprise them for us with some of the typical financial metrics that that oftentimes people think about. But is there is there a broader set of ways of thinking about and measuring impact and success and in fact, Lee Alvarez Alvarado Benson in the thread asks, Are we attempting to use generative AI that is, again, to create different kinds of impact metrics?

Oh, great question. Great question. Yeah. And you know, we can certainly look at the financial metrics. Absolutely. Right. And those are going to apply across the board. Anybody can look at them. But one of the things that in what we call startup tactics, we look at it it's it's literally the first tactic is setting goals, setting goals and looking at the metrics for what we are looking to achieve. And these are not always impact metrics, but impact metrics should be included within. You know, if we're thinking about the future vision state that we have of the world, as entrepreneurs. We have to break that down. We can't go from zero to future vision state of the world overnight. It's going to be a long process to get there. And so what we always encourage entrepreneurs to do is to build in structure for themselves. In a large organization structure is often handed to you, right? You're given goals and metrics for the organization that you are working towards. Now, if we were to think about a new organization, there's no structure there's no metrics and so we as entrepreneurs have to build that ourselves. We have to build the structure and that starts with the future vision state, but then it looks okay. If we want to work towards that. What do we need to accomplish? What are our objectives in the next 3060 90 days a year, whatever that might be. We break it down into smaller chunks and for each of the things that we want to achieve, we have to know what the indicators are that we will we've done that, that we've hit that and for each of those, you know, you look at your team and you've got to figure out who's responsible for each element of these overall objectives. And we have to track our progress towards them. And that's where the metrics come in. For each of our goals and objectives. We should have metrics that attach that attach that give us that indication of whether or not we've achieved what we set out to that allows us as a team to reevaluate at any point in the process to say, we're not hitting this objective or this metric we need to revise or we need to be doing something differently. And they tend to those objectives. And those metrics should be the impact metrics. And I don't want to say that there's one impact metric that we should all be going towards. I think that's going to be different on a case by case business, case by case basis for each new entrepreneurial venture. Whether that's a new startup or within an existing organization, a theme that seems to keep coming up new startup or existing organization. And I think you know, one thing I want to make sure that we emphasize here, Peters entrepreneurship is about more than startups. It's an we see this in all of our courses. And programs. Entrepreneurship is something that exists in every organization. We're all entrepreneurs in, in some sense, right? It's about doing more than is reasonable with the resources that we have control of and these structured goals are what helped us to do that. And it all does tie to these metrics, but I also you know, remind people that with the two most precious resources that entrepreneurs have time and money, whenever we have more time or more money or less time or more less money, right, whether we just raised a big round of funding, or we just hired some new people onto the team and we've got some more time or perhaps you know, the teams downsize and we don't have as much time we have to reevaluate those goals and those metrics that we're working towards need to change. Can we use generative AI to figure out what some of those metrics might be? Absolutely. Right. You know, one of the most interesting things is you can go in and literally say, we're a new business. We're working in the sustainability space. And we're trying to think about what the right impact metrics would be for our business. And it will give you ideas, does that mean that those are the exact right metrics for you and your business? Not necessarily, but it's a starting point. It's a first draft of what your metrics might be, and you can continue to poke and prod and not just ask of generative AI, what should our impact metrics be? But you can take those first draft impact metrics, and you can socialize them, with your team, with advisors, with other entrepreneurs, with investors, whoever, whoever it might be, to figure out what are the right impact metrics for you? I don't think we'll find all the right answers but we'll get a starting point so that we can ultimately wind up landing with the right metrics.

As you're thinking about all of those ideas when you're advising companies, one of the questions that often comes to the forefront is about scaling. Should you be looking to quickly grow globally for example, and should you be dry you know, really trying to build a customer base even before you've necessarily perfected your product or your offering to do you have an overriding philosophy around those questions? Yes,

yes, I do. I do. You know, and I think this is something that you see quite often and that we see in the venture capital market right now. Less general desire to invest in in growth or you know, Blitzscaling and that sort of thing, right, my general philosophy philosophy is that we should have that plan of where we start our beachhead market and where we are to go leveraging the existing assets that we've built in entering that beachhead market. We should have a structured plan of what is the next market we will go into what's the market after that? And a general guide towards our vision. But, you know, we don't want to just over invest in growth. We don't wanna just go to a new country. We want to leverage what we've already done. If we have customers in one segment in one country, we might want to look at just the next adjacent market, right? Instead of saying, oh my gosh, we've got a new idea for a new product. We've got all these new customers we can go after, well, that might sound appealing in terms of business growth. It doesn't necessarily leverage the assets that we already have. And so that's the thing that I always caution entrepreneurs on. We don't want to grow just to grow. We should know why we're doing it. What is our goal? It does kind of come back to those metrics Peter that we were just talking about. And so having a structured approach to doing that and not jumping too far, not taking two steps. Instead looking at what's the next step in front of us. That's what I really emphasize.

Right and working towards and just as to sort of a follow up question. To that, I think, which is, what's your advice to companies when you're entrepreneurs when you're advising them about how important having a fixed Northstar metric or OKR is right from the outset?

Yeah, another great question and something that we explore in our courses and programs extensively. You know, one of the things about any new entrepreneurial venture is that things are constantly changing. It's a very, very iterative process. So yes, while I do think you know, we should have OKRs or whatever goal setting method is right for, you know, the specific organization. You have to consider first, what is the time horizon? What is the time horizon for these goals and for these metrics that we're looking at, the goals will change based on what you learn from customers doing that primary market research period that we were talking about. And so if we look at it, right, it's not going to be just one metric. We're likely looking at a variety of metrics. And if we were to have a Northstar metric, that would probably change but if you've set OKRs, for example, as one goal setting method or approach, we might say at first that we want to look at it over the course of you know, the next two weeks, instead of what a larger organization might do, which is look at it over the course of perhaps a quarter or even a year. We're looking at it in shorter time horizons, that allows us to react to revise based on what we're learning and how the business is changing, you know, in that current moment, so I think it's really important to not set time horizons that are too long with these goals, and to be ready to revise them and you know, we set a goal and we think that's what's right, but to also be okay amongst the team that, you know, maybe this was not the right goal to set, and we need to we need to revise it right here right now instead of just going with it because that's what we had initially set requires flexibility I think is the biggest thing. And how do you know if you're on track? Well, the research shows that those teams that set goals and objectives and who host regular meetings together to look at their progress towards those goals are the ones that are most effective at building a business. And so I think the key is to aligning as a team who owns what, and then checking in with each other on a regular basis to make sure that we are on track and if not, we need to revise, we either need to revise those goals, or we need to look at what are we doing on a daily basis. That's taking away from our ability to hit those goals. You know, this kind of comes back to our daily to do lists as entrepreneurs are there things on the to do list that don't contribute towards those goals? And if so, maybe we should pass them off the to do list and and skip them altogether. Because we're entrepreneurs, we're on a mission and we need to be extremely disciplined about how we invest our time giving that it is one of our most precious resources, like we talked about earlier, Peter.

Thank you. And I'm just reading through and please, everyone keep the questions coming. There were some great ones coming in Killeen Becker. As asking a related question, I think one of the key metrics presumably should be sales. If we want to have a business we need to identify and connect with customers. And so appeal, Kalina is asking if we've got any suggestions for effective processes for early stage startups to find these potential customers, particularly in a very technology forward kind of emergent technology field like generative AI, where people might not understand what the nature of either the opportunity or the threats to their business is. So what have you seen work best for people at that early stage to find customers? Great

question. Coleen. And you know, this is something that we do we look at in depth in detail in our courses. And I think, you know, in large part, it starts with what we call the watering hole, or watering holes. And we do talk extensively about what are virtual watering holes? Where can we find a group a homogenous group of our potential customers or end users in that target beachhead market? And in those watering holes, you can find all the people who are potential customers, and if you're looking for those who might be open to emerging technologies, you might identify those individuals who are asking questions about this, you know, and one watering hole, not a virtual watering hole. But you know, let's say a Trade Association Conference, right? You can look at who's going to which sessions focused on emerging technologies. And right there, it potentially in the room, you have all those individuals who might be more open to these emerging technologies, as it might support their business. And if you can identify those individuals, you're in a great place, but what I would also say is you're going to learn a lot from the people who are open to the emerging technologies and the people who are not necessarily thinking about the emerging technologies. And so in those watering holes, if you can find people who match the characteristics of your target end user, they're going to be great to conduct primary market research with as well. And many of the folks you conduct primary market research with can turn in to your first customers. And so you know, that's the thing that that I would really recommend. It's first identifying that virtual watering hole, going and making one on one connections within the virtual or in person watering hole, and ultimately seeing where that leads. You. Even if they don't become customers, you will be able to extract insights from your conversations with them. And that's one of the things that I think will be most important, regardless of whether they are explicitly interested in these emerging technologies and for closing deals you know, I feel like this could be a whole LinkedIn live in and of itself, and certainly something that we talk about in in our courses and in our programs. The number one thing that, you know, I would come back to as thematic with this conversation, Peter, is, you know, to close deals, we've got to find those individuals who are most similar, who most match our target end user who can value extract value from our proposition. And if we find those individuals and we can truly create value for them. closing deals should be simpler, right? It's not trying to convince somebody to use a product and to get the value we think they want if it's not actually going to help them. So you know, that's like the highest level of you know, closing deals, but in a new entrepreneurial venture that is so important, not trying to sell something to somebody who doesn't necessarily need it.

So this is clearly a crucial skill set. For yourself as a founder or as an entrepreneur and I'm to have on the team Tom Moorhead. If we can find that question was asking a little earlier. What other key skills or capabilities do you think are vital to have yourself as a founder or to make sure that you're early to your team as you're building out? Your adventure?

Yeah, this is interesting. Thanks, Tom. Thanks for the question. And, you know, I think this is something that, you know, we do look at when we're thinking about the team and the skill sets that we need on this team. Part of it is, you know, the ability to build structure for people who are coming into a new organization that does not yet have structure. But when we look at the goals and we look at what skills do we need to bring onto the team, we have to look at the goals or the objectives that we're trying to hit that we don't necessarily have the skill set to be able to do. And so part of this comes back to looking at the gaps, right, what are the gaps we have on our team, and how do we fill those what are the skill sets that we need to be able to hit the objective? The other thing I would say is when we talk about hiring an early t, we oftentimes look for individuals who have a specialty, but who can also operate as generalists, right. For example, myself, my specialty, I would say is engineering, software engineering, but my ability to run some of the marketing to do some of the it to do some of the sales opts to do some of the HR when need be right. The ability to work across any functional area is super important. It's something that, you know, I explore in depth in my new book. You know, one of the things that I asked everybody talks about founder led sales and and, you know, coming back to the question, you know, founders should be able to sell, they think they need to be able to sell, because they're always selling that is their number one job, whether it's to a new recruit, to come onto the team to an investor or to our customers. But one of the things that I think about a lot is in the early days of any new entrepreneurial venture startup or an existing organization. We can't just do the sales. It's it founder led sales, absolutely, but I believe its founder led everything. What do I mean by that? In the early stages of a business, we've got a small team, we're not going to be able to have one person designated as our recruiter, we're not gonna be able to have one person designated as our accountant. The founding team needs to be able to have these generalist skill sets to be able to pick up any of that. And so we think about founder led everything and the fact that you know, each functional role has a different hat. Peter, I think I'm going to get a hat that has all the a bunch of hats that have all the different functional roles on them. They're all gonna be different different colors will bring them into EDP or one to one of the programs and I believe that entrepreneurs need to be able to wear all these hats at once. Picture that 15 hats on my head, we'll see if we can pull that together. But the the need to be able to do that and to do that just just enough, right? We don't have to be expert recruiters as an entrepreneur, but we have to be able to do just enough in recruiting to be able to find those people to bring onto our team. So that's really what it comes back to is this ability to switch between functional roles and be just good enough at them to be able to figure it out and to get it done until the point where the venture has enough traction to be able to acquire additional money or additional time like raising money to pay individuals to fill those seats. So you know, that's the challenge of starting a new business we have so much to do. But the ability to learn these different skill sets is just so important.

You mentioned there your forthcoming book, Disciplined Entrepreneurship startup tactics, I think is the title. That's what else should we will be looking forward to in that book. I'm sure there are some not only groundbreaking but transformational ideas in that so if you if you publish it well that you can you share some some preview insights into what we should be looking forward to in that book

are most certainly most certainly so. Both discipline entrepreneurship, the revised and updated edition and discipline, entrepreneurship startup tactics come out April 2, mark your calendar period. It's going to be great and we're really excited about it because one of the things that I've noticed and it does kind of come together with my tactics course is my belief is that we've kind of left entrepreneurs hanging in some regard. entrepreneurship education is very strong and business planning. I've got an idea or a technology or a problem that I want to solve, and we can teach people how to turn that into a business plan. But if we got a business plan, that alone is not enough, right? We need to be able to turn that into a business. So learning all of those different functional skills is a necessity. And there's a way to do that in order of operations if you will, that can optimize for success. The thing Peter in all of our courses all of our programs that we're focused on is educating entrepreneurs to increase their odds of success. I feel like we've talked about this before Peter, right. Entrepreneurship, the risk involved, we can increase the odds of success by taking a rigorous structured, disciplined approach to building a new business. And so startup tactics looks at each of those functional roles in the order of operations in which we should do that to build our new business. It builds on those first principles of discipline entrepreneurship. And what it does is it goes through four stages. So we look first at setting the foundations and that's you know, it looks at goal setting. It looks at metrics and KPIs and the systems that we should use to build a new business to track our progress. So that comes back to one of the questions that we had here in the chat. The second stage is market testing. This looks at things like primary market research Peter, which we talked about earlier. It looks at a really rigorous data informed approach to do that. It looks at building startup assets or collateral, right building the assets that we need to go part business out to the world in our market testing. And that looks at some early marketing and sales tactics that we can employ to extremely efficiently from a capital and time perspective. Go and put our value prop out in the world and test it. And lastly, the sales right? Go and actually start selling to people, right. It's like, how do you close deals? Well, that's what we look at in the book and in the course. And then the third is product development. I said come back with customers and then we'll build the product. Let's not build the product and over invest there until we know that we've got a line of people waiting down the street to use it. And then we go into product design user testing, and we do look at actually doing some of the early engineering, right or at least the ability to communicate as to how that engineering will happen. And once we have product we come back with customers, we come back with product. Then we're on to the fourth stage. And that stage is resource acquisition. This looks at things like legal how to incorporate the different legal documentation that we'll need. It looks at Finance, Building a financial plan, building the pitch deck. All before we go out and we fundraise and we start hiring. And that is the resource acquisition, fundraising for more money and hiring for more time. And that's what the book covers. It covers it in detail and comes with tons of additional materials like worksheets, and workbooks that can help entrepreneurs not just learn and gain the knowledge but actually go and do and put this into practice and build their business. Take that business plan into a successful venture. You know, that can be their career, you know, we can go out and create our own careers which is just so amazing.

That sounds fantastic. I'm sure we're all looking forward to getting our hands on a copy in April. You talked a few times there about not only what's in the book, but how that's all already based on things that you've been teaching in your vast array of courses here at MIT. Some of those are in our domain with the executive education. That's the entrepreneurship development program. This Disciplined Entrepreneurship Program. The first of those is an on campus. really intensive experience. I see we have a URL on the screen that people could could look at that. This was an entrepreneurship thanks to COVID we started offering that as a live online zoom format that has been incredibly popular and successful as well. But could you share with with people that are watching a little bit about what is the kind of experience that you and the Trust Center team create for learners in these different formats of programs? You know, what can they expect? What what do they get out of it you think? Most Valuable most important has most impact for them as individuals?

Absolutely, Peter, these courses these programs, they are fast paced, high energy and they really allow anybody to kind of step into life of you know, entrepreneurship, whether you're an existing entrepreneur, whether you want to be an entrepreneur, whether you work in a large organization. It allows you to kind of step back and dive into the most rigorous structured process to starting new entrepreneurial ventures. So you know, in our different formats, we do that both online in person here in Cambridge at MIT. These programs, they will take you through this discipline entrepreneurship framework. They'll take you through it both through cases and examples, but we also put you in the driver's seat you know, in EDP, which is an extremely fast paced high intensity program one week long. You start on Sunday evening with generally maybe no idea maybe no team, maybe you're coming in with an idea already. And by the end of the week on Friday, you have a comprehensive business plan, and one that's been battle tested. You know, we've put you through a number of coaching and mentoring sessions outside of the daily lectures to help you gain the knowledge. We put you in with entrepreneurs with alums of the program with folks who've been there who've done that, including our wonderful team here at the Martin Trust Center. For MIT Entrepreneurship. So it's never a dull moment in d p, or EDP. There's always a lot happening. And you know, Peter, you asked asked about, you know, what participants get out of it. You know, I would say absolutely, you know, you gain the knowledge, right? You gain knowledge of this most structured process to go and build a new business. You also gain the network. This is one of the most powerful things and we see this in every cohort of these programs. The network of individuals who come together, they learn that common we call it the common operating system, the common language, you learn that you have people who you can always go back to when you're starting a business in the future. These networks, this community of EDP and DDP Olam. It's incredibly strong. And you know, I still remember folks going back to that group of individuals when they were conducting market research for a business they were building years later. So it's it's not just the knowledge but it's also the community and you know, in some cases, businesses even spin out of these programs, which is very exciting for us to see. But one of the things Peter that you said to me during our last program, was that it's incredible to watch participants who come into these programs, and then go right back out into the real world, because they're with us for such a short period of time, and yet they're able to gain so much and apply it immediately. The ability to apply it immediately is what's so interesting, and I just think if that has been one of the best perks of the program, is you can take it right into your business and I was just emailing with one of the former participants and you know, they're out there, taking what they learned and dropping it right into the new entrepreneurial venture that they're starting. And you know, it's the same is true both with the entrepreneur building the new business from the ground up, and there was a group of folks doing it within a large organization and they're able to take all this back with them.

That's very helpful. Thank you for describing that. You know, this is one of the challenges I think, if people have been asking about in various ways in the thread is that it goes back to the question of, you've got essentially an experiential product. How do you give customers or potential customers the access to that experience to understand how you could be creating value for them and Courtney shared with me Windsor, toe has asked how do you connect the dots on innovations when all the pieces don't come together in a sort of predictable or controlled timeframe? So, yes, this really relates to tech entrepreneurship and maybe your own personal experience in that space, as well.

Ah, no, certainly. And that's a great question and it's something it's something that, you know, reminds me of a student who I had a number of years ago, you know, he, he learned the process with us. And then he came back and he said, I've been doing all this research, I've got a new business I want to build I'm gonna apply the process that I learned from you all, to build this business and you know, when all of the pieces haven't yet come together, which is certainly the case for him. He's looking at a very long time horizon because it's, it's it's hard tech, you know, for him, it's a matter of organizing the pieces in an iterative fashion in the plan, because so much is yet to happen. But in the meantime, to make sure that the core value proposition does truly resonate with the end user. So while we might not have the entire product or solution built just yet, that's okay. Instead, what we can do is we can take that value prop and socialize that that can be done through primary market research, more advanced forms of primary market research, but it can also be done with one of the things we talked about in tactics and peer which we actually first developed through some of our sessions within larger programs, such as EDP, which is the mousetrap model, the mousetrap model that we explore. In all of our programs, GDP and GDP are looking at how do we test this value prop with the real world? How do we collect real world data that the people who we believe want something really want it? Which that's the data we need to build a conviction? To say, Yes, we're going to move forward with this. We're going to keep trying to put those pieces of the innovation together. Because if we don't have something that people want, nobody's ever gonna pay us for it. And so we have to validate that upfront as we continue putting the different pieces that may not be controlled, or within our control together to build this entrepreneurial venture. So I think that's a great question and you know, some of it is just making sure that we're incorporating the pieces as they come together into the larger efficient into the larger plan.

Umar Latif asked something which I think would be a great follow on to that. How long would would it or should it typically take in sort of elapsed time to get to to that point where you've actually got customers and a product or service that is mature enough to have it out in the market? And if I could add to that actually, you know, we often talk about in the case of serial entrepreneurs and entrepreneurs learning that skill set that set of capabilities that not every venture, at least in its first iteration will be that wild success that you would hope it to be. Many people the word used to be pivot, if there's new vocabulary these days, but they iterate their their venture but there's also a question of you know, how long is too long? When should you sort of recognize that it's time to call that one quits and move on to the next opportunity?

Yeah, absolutely. Great questions, great questions. And you know, how long should it take you to have your target end user in your target market and to have a pox out in that market and feel confident that you've nailed it? We always say nail it and then scale it to the adjacent markets. How long should it take? It really does depend on the business right? I think it's just it's too hard to give one general answer to that because you might be talking about building you know, a small piece of software that you should be able to do, hopefully, within, you know, a couple of years. Now, if you're talking about deep tech, hard tech life sciences, these businesses where the time horizon is much longer to get into market. You could be talking about seven to 10 years. So it does depend on the type of business and I wouldn't generalize that, you know, and yes, Peter, entrepreneurs still pivot. It's absolutely still very much so a thing and we need to be pivoting small pivots and sometimes bigger pivots. And, you know, many entrepreneurs who I've worked with, you know, they've gone out they've built a business and they said, Look, we're gonna pivot because it's not the business is not performing in the exact way we were looking for. So we're gonna kind of uproot it and start over and that can sometimes be a necessity, how long until you say, you know, we've got to, we've got to call it or we've got to make a more serious pivot. It's hard to say it's hard to say because sometimes you you have those indicators that there's traction coming. But there does come a point in time where it's not expanding to the extent that you want to and that's where you've got to have the right group of advisors, mentors, coaches, whoever it might be around you or potentially the board, to say, you know, X business is in a position where this is not, this is not growing, this is not going the direction we need it to. And sometimes entrepreneurs need that critical feedback. You know, it's it's feedback that's going to help the entrepreneur make the right decision. And when you're in the weeds, building the business, sometimes it's not as easy. And so, you know, even in the course of EDP Peter, over the course of that one week, people are making pivots all week long, sometimes on a nightly basis. And in many cases, it's It's Sunday night, it's been two hours they've already pivoted and that's okay. That's a good thing. You know, I'd say you know, if we come back to the original question, you know, I you know, if you've nailed it, and what's the timeframe for that? You should have a group of really committed customers who all have similar characteristics you've got, you can serve them all with the same product. They're all gonna buy it in the same way and they're talking about it with each other. Other people are showing up to buy your product, who you've never had an interaction with, who you've never marketed directly to, because there's hearing about it from this group of existing customers who are all similar and they talk to each other. So that's really one of the indicators to determine that we've nailed it.

Very interested by that last point. You're one of the things that kills so many not only startups, but businesses and changes over time is the cost of customer acquisition. earn those customers could you say a bit about you have any good salutary stories or more importantly advice to people how do they think about the cost of customer acquisition and what they can do to manage it? Or

yes, this is a great question. And, again, a topic we could spend a whole LinkedIn live talking about. It's an interesting one because you know, cost of customer acquisition by definition should over the course of time go down as you build the business, you build efficiencies, you learn more about your customers, and you're able to optimize everything that is sales and marketing within your organization. And you know, we look at how exactly to calculate this in the courses. The thing is, is how do we optimize it and what are we comfortable with upfront for a cost of customer acquisition? It's going to be higher probably than we're comfortable. With in the early days. You know, one of the things and this comes back to that mousetrap model is we might need to spend a little bit more to find such narrow targeting at that initial group of end users, and that's okay. But cost of customer acquisition generally is going up, you know, at a macro level, it's becoming more costly to reach the customers that we need to. And so with that in mind, we've got to get creative. We've got to think about how are we going to differentiate from the competition when products are, you know, in many cases becoming commoditized? How are we going to level up our go to market strategy to get a cost of customer acquisition that makes this an interesting business? And you know, one of the things that I feel like is most often missed is the cost of customer acquisition, the lifetime value might not look great upfront, and in many cases, it just won't. When you're building a new venture. You want to have one that's really solid, but in the early days when you're learning, it's better to have some data rather than no data. But sometimes that initial data is not as appealing as you might want to see for a business. That's a you're further along in the lifecycle. And so sharing that early data can sometimes be daunting. But what's important is that if we share that early cost of customer acquisition lifetime value data, we also share our plan to get that to a really healthy ratio that indicates that this is a long term viable and sustainable business from a financial perspective. And so our ability to say here's where it is. Now. Here's where we know we can get it. Here are the experiments that we're going to run to get it there. That's the narrative that's so important when we look at the extremely early metrics for any new entrepreneurial venture to get to a point where those metrics do give us as entrepreneurs and of course everybody around us the conviction to keep moving forward.

Thank you, let me just scan to see if there's any more questions while we're, I think starting to wrap up. So please, if you've got any burning question, now, it'd be the time to ask it because we'll be wrapping up soon. So please do I think we have a note here on the screen. If you've still got a question for Paul. Now's the time to ask it. But in the meantime, Paul, perhaps you could. You've mentioned a few times, sort of the potential contrast or similarities between entrepreneurs and entrepreneurship in the startup space versus entrepreneurial behaviors. In established organizations. What are the main similarities and differences and maybe look at that through the lens of the people that you see coming in to programs like EDP and Disciplined Entrepreneurship?

Yeah. You know, it's, it's such a good question. And like I said, entrepreneurship is more than just startups. We need entrepreneurs everywhere. We need them. In large corporate organizations. We need them in academia, nonprofits, and all these different places. It is different though, right? And we teach a process that can be applied within a new organization or an existing organization. The process in many cases is the same, but sometimes the challenges or constraints are different, right? For any new organization. We don't necessarily have funding to start, right. We don't have existing customers. We have those as assets within a larger organization. But sometimes there are things that slow us down within a larger organization. The thing that I would say is that many of the companies that we know and love today, Peter, many of those companies likely will not exist in the same form as we know them. In 5060 7080 90 100 years from now. Things will happen and we were just talking with a group last night about this here in Cambridge. You know, the businesses might not be here in 100 years, as they exist today. But that's what necessitates entrepreneurship within entrepreneurship to look at how do we how do we how do we change this organization? Where should we be innovating within to make sure that even if it doesn't look the same in 100 years, it still exists? And we have tons of examples that we look at there. And you know, for most organizations, the number one thing that needs to exist within for entrepreneurship to be successful, is culture the culture that allows for some level of failure experimentation, I would say, right, the notion that within a larger organization, you can go and try something and, you know, if it doesn't work, you're not gonna be penalized, you're still gonna have a job, right? That you can be entrepreneurial within that organization working on a new project or working on a new value prop or targeting a new customer segment, and be successful in doing so. But at the end of the day, assuming that culture exists, with all the constraints and assets in mind, the process remains largely the same. Starting with the question of who is the customer? What are our goals? And how do we achieve that future vision state for this organization? You know, being an entrepreneur within an existing organization can be frustrating, but being an entrepreneur in general can be frustrating. It's about having that spirit as well. You know, the spirit to keep moving forward when sometimes we're not looking at the most obvious answer, but you know, we're thinking about about the long game within an existing organization. It's so important.

Thank you. So as I asked, and we got some questions, let me put them to you. And maybe we can do a closing quickfire round just let's do it. And so following on from the last point that you made, are when Mishra asks about the core team and developing trust, you mentioned that in the context also, I think, a large organization so you know, your what's your quickfire answer for how do you evaluate the people that you're considering to engage in your business, whether it's inside a large company or a startup?

Yeah, absolutely. You know, we always say the ideas the most overrated part of any new entrepreneurial venture, it's the team that is the most important how do you evaluate the team? Well, you've got to work on say we see try before you buy, you got to work on some projects together and get into the weeds together, and see how each individual on the team and the team as a whole performs when faced with some sort of a setback when some of the primary market research reveals that the initial plan won't work. We have to see how that team continues to to operate and does it remain a high performing team? That's the thing I would say, you know, we've got to try out these co founder relationships, and we've got to go through the process that will give us a lot of indications of whether this is the right team to move forward with.

Excellent advice. Maximiliano pronto asks, How do you know when to pull the cord and he means in particular when it's enough for investment?

When it's enough for investment

and is your venture ready to be seeking investors? Oh,

great question. And you know, one of the most common questions I get is all we need to go raise money, how should we do it? And the response I always give is, well, what traction do you have right now to warrant somebody investing in the business? So you know, when is it ready? You know, you could say at any point in time, but my my recommendation is to always build as much traction as possible before you go out to fundraise. Because that's going to make sure that you get the best deal as an entrepreneur as well. It's going to make your process as easy as possible, meaning you invest less time in fundraising, you invest more time in building your business. Yeah.

That's great. Andrew Silverman, what steps in the customer discovery phase would you like to take less time and effort so Where's where's the biggest process improvement opportunity in your book?

Oh my gosh, well, in the customer discovery phase, you know, while I would love for primary market research specifically interviews to take less time, there is so much value to be extracted from them. And those are the unique insights that set any new business apart from all of those businesses that can go get market data. While I wish it was more efficient, and in some ways it can be running a series of interviews, setting them up finding the people setting them up actually conducting the interviews, and then doing the analysis of the notes and a conversation that happened to feed into a larger set of insights. It takes a long time. It's well worth it. Do I wish it were faster? Yes, I absolutely do.

Thank you. And this is probably the last question we have time for and I think it's a great one. Constantine resouces. Let me paraphrase is saying, Well, this is lots of great discussion about offense. What about defense? How do you determine whether you've actually got a defensible position? He puts it as a strong moat. And how do you sustain that competitive differentiation?

Yeah, I love that. I love that. And you know, we always say you can't spend too much time watching the competitors because then you're not spending enough time focused on building your business. But you know, how do you evaluate your moat? Well, you've got to look at it and figure out, Is this something that the competitors are doing? Is this something that they're taking advantage of? How are they progressing? How are they growing? So we do need to look outward just a little bit, while also making sure that we're moving forward as a business but we always do come back to the core. The core is your moat that exists for the long term. We say it's unique, it's important and it grows over time. And that's the one to really focus on because that's going to be the thing that you know, in time, a moat might might dry up, for example, but the core is something that exists forever. So making sure to find focus there is extremely important and that's the process we look at.

Oh, I'm so sad that we're just about out of time at the top of the hour. Thank you so much for this high paced and incredibly informative session that we've just been together on behalf of all the people that had been watching and we'll watch and the fantastic answers that you gave to so many of those questions. It's really a thrill to get to do