As I’ve noted in previous postings, metro Boston offers a wealth of resources for the budding entrepreneur, for example:
- business plan contests like MIT’s 100K and Harvard’s New Venture Competition;
- incubators like Healthbox, Venture Development Center, and Mass Challenge (see my post, “Accelo-rama”);
- social networking sites like Greenhorn Connect;
- mentoring and advising groups like BU’s Kindle and MIT’s Venture Mentoring Service (VMS); and
- angel investment groups like Launchpad and Mass Medical Angels to get board members and test a pitch.
But where does the start-up wannabe find a digestible resource, one that provides the basic nuts and bolts of venture formation and is accessible and user-friendly? I am not a particularly good source, not having been an entrepreneur myself, and don’t recommend the slow route I took, picking up the basics through association and osmosis from my fellow mentors in the VMS. But if someone wanted a crash course into the mechanics, pitfalls, and fun of starting a company, where would I send her/him?
Fortunately, there is a well-thought-out and thorough introduction in the form of a short course given at MIT each year during its January intersession (Independent Activities Period). Called “Nuts and Bolts of New Ventures,” it is conducted by Joe Hadzima (founder of IPVision, VMS mentor, and Sloan School lecturer, [JH Bio]) who started it in 1990, has been improved each year, is attended by about 250 students, and, in keeping with MIT’s tradition of trying to educate everyone who wants to be educated, has a lot of useful material online (IAP site and Open Courseware site). While not the same as participating in the class, reading the online materials and checking out the resources are a good start for anyone thinking about starting-up (non-MIT people can participate as non-credit “listeners” by signing up online if there is space after MIT students have been accommodated).
The course is taught in six sessions, and here is sketch of each to provide an idea of content and value:
1) Introduction to business plan writing, marketing, and sales: while the connection of planning and sales may seem abrupt to some, a primary theme of the course is “if you don’t have a paying customers, you don’t have a company.” This session uses the 1997 business plan for the start-up, the Virtual Ink Corporation whose lead product was a whiteboard transcription capture system. The company was acquired by Newell Rubbermaid in 2006 and is the basis for their Mimio division.
2) Business models and financial projections: this section covers the broad categories of ways in which a company creates and delivers value to generates sustainable revenue and how to quantify (or attempt to quantify) it; there are also a set of templates for the projections.
3) Negotiation skills, people, and organization: as noted by the course organizers, “most ventures which fail do so because of people issues, not technology, market, or funding issues.” For example, the associated presentation (given Joost Bonsen) notes these Team Challenges and Failure Modes:
• Agreeing on how to disagree
• Founders percentage stakes
• Unrealistic expectations
• Assessing talent from other domains of expertise
• Character surprises.
And for those of you who may be starting no/low profit ventures and questioning the course’s applicability to your interests, I note that Joost is the instructor for an MIT seminar called Development Ventures which covers “founding, financing, and building entrepreneurial ventures targeting developing countries, emerging markets, and underserved consumers everywhere” (Media Lab venture classes).
4) Refining, presenting, and funding your venture idea: entrepreneurs are always in sell mode whether to prospective employees, customers, investors, or to a skeptical spouse so how to present her/his venture is critical. Following the “How to Make a Pitch” presentation is difficult without hearing the narration, but the presenter, local IT entrepreneur and investor, Stephen Pearse, includes several good and bad examples. I noted that this year’s course’s funding panel included the usual suspects (angels and VCs) and also an entrepreneur who raised $3 million on Kickstarter for a 3-D printer company (Formlabs project). While the resources appended to this section get into the weeds of venture funding and quickly become overwhelming, they can be skimmed and yield benefit, if only to provide the lesson that money comes at a cost and the terms are as important as amount.
5) Legal issues: I like the lead-ins for this session: “how to avoid going to jail without passing Go” and “what you always wanted to know about the law but were afraid to ask/pay for.” This session is given by Joe and is a course in itself. His presentation is organized chronologically (what knowledge is needed when founding versus later when funding) and includes a wealth of information on patents which may be less relevant to no/low profit ventures which are oriented more toward attracting other companies into a product or geographical area rather than excluding them as competitors. Also not addressed is the maze of legal challenges faced by companies aiming to operate overseas, a few of which I’ve seen during mentoring and for which I am looking for a resource.
6) Pitfalls and plan execution: the speaker for this session is Yonald Chery, and, from what I can tell from his presentation, he focuses on his experience as one of the founders of Virtual Ink. While the Virtual Ink story is representative of success in launching an engineering-based company, I think it is less relevant to the many ways start-ups can fail or succeed in other product or service models.
So for entrepreneurs starting technology-based companies aiming at products or services for global health, especially in under-served areas, the course offers a solid introduction to the basics of starting-up. Some of my caveats are that it tends to emphasize patents and professional (VC) funding and lacks information on entering foreign markets. Maybe I can persuade Joe to add a session on social venturing with an emphasis on global health next year.