The Next Great Entrepreneurial Opportunity: How to Identify Market White Space

What Startup Will You Build? How to Identify Market White Space

http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/

David Teten Partner, ff Venture Capital ffvc.com // @ffvc teten.com // @dteten November 14, 2013

© 2013 David Teten. More at ffvc.com and teten.com

Don’t Take Notes!

Download detailed slides and see the video at:

ffvc.com/market-research


•  Founder Institute New York (three times) •  Harvard Club of New York Tech & Entrepreneurship Group •  Harvard Graduate School of Arts & Sciences Business Club / Harvard

Graduate School Council •  Limmud NY / Limmud FSU •  National University of Singapore Techno Venture Forum (Entrepeneurship

Centre) •  New York Business Expo •  OCE Discovery (Canadian innovation conference) •  Princeton University Keller Center •  Thought Leaders in Business series (Yale Club of New York) •  Womensphere (twice)

Past Audiences for This Presentation


Intro Tools Signals Network Next Steps

•  Next Steps

•  Growing Your “Network 2.0”

•  Signals of Potential Customers

•  Tool of the Trade

•  Introduction

http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com


Investment Search Process (# Companies)

Angel groups using Gust

(2010)[i] ff Venture Capital

(2012)[ii] Typical

entrepreneur Profiled initially 20,850 NA ~3-6 Target Selected 1,315 ~1,700 ~3 Met 1,047 ~1,000 - Due diligence 577 ~18 2

Invested/launched 541 ~15 1

Deals as % targeted companies

33.5% (2.1% of

submissions)

0.8% 33%

[i] Available at http://angelsoft.net/a/venture-valuation , as of twelve months ending March 17, 2010. [ii] David Teten. © 2013 David Teten. More at ffvc.com and teten.com


Idea Search Process

Brainstorm/Source

Research

Filter/Judge

Execute Lean

Refine/Pivot

today’s focus

ffvc.com/pitch/

leanstartup.com


ff Venture Capital (ffvc.com)

•  Early-stage technology venture capital fund •  Founded 1999, with over 180 investments in over 70 companies •  20 employees in Manhattan and Hoboken •  First investments typically $100-$500K at valuations of <$5m pre-money •  Follow on in later rounds for best-performing startups •  Prominent investments include:

Cornerstone OnDemand (IPO); Quigo Technologies (sold to AOL for reported $340m); Indiegogo; Klout; 500px; HowAboutWe


ff Venture Capital: Over 180 investments in over 70 companies

Investments as of July 17, 2013 Only logos of active companies whose investment from ff VC is publicly disclosed are shown.


David Teten (teten.com) •  Partner, ff Venture Capital, early-stage technology venture capital fund •  Founder and Chairman, Harvard Business School Angels of New York . Co-founded

Venture Capital Access Program, introducing women and minority entrepreneurs to Harvard-affiliated angels

•  Lead author, The Virtual Handshake: Opening Doors and Closing Deals Online (TheVirtualHandshake.com)

•  Lead author of first-ever research study on best practices in private equity/venture capital deal origination

•  Lead author of first-ever research study on best practices of venture capitalists in increasing portfolio company value through operational support

•  Harvard MBA 1998, Yale BA, both with honors. •  @dteten



Harvard Business School Angels of Greater New York (HBSAlumniAngels.com/NY) •  Second largest angel group in tri-state area. •  Members are Harvard affiliates from all industries. •  We invest in companies regardless of any Harvard affiliation. •  $52K average individual check size per company per angel. •  Launched Venture Capital Access Program, focused on helping women

and minority investors raise capital from our network.



Info is private Inspired by Robert Bruner, Applied Mergers & Acquisitions, page 186

Info is public

Sweet spot of highest returns

Customers pay high prices

Customers pay low prices

Few competitors Many competitors

Why Private Information About Opportunities Is More Valuable



* http://innovation.utdallas.edu/documents/OpportunityEvaluation.pdf . Photo: http:/www.flickr.com/photos/nasonurb/3372990703/

Sources of Entrepreneurial Ideas

It is far easier to identify entrepreneurial opportunities in areas where you have expertise

•  Prior knowledge •  >70% of founder’s businesses

have roots in their last job •  Alertness •  Pattern recognition •  Active search



Peter Drucker’s Sources of Innovation Opportunity (1 of 7)

Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/24975643

First four are within the enterprise --- essentially symptoms: Unexpected success, failure or outside event




The incongruity between reality as it actually is and reality as it is assumed to be, or as it “ought to be”






Innovation based on process need




Changes in industry structure or market structure that catch others unaware






Demographics (population changes)





Changes in perception, mood and meaning





New knowledge, both scientific and nonscientific


Signals Network Next Steps Intro Tools


•  Next Steps




•  Introduction


Identify opportunities with four major techniques:

Based on Bruner, Robert F., Applied Mergers and Acquisitions. New York: John Wiley & Sons, 2004. Page 90.

Listen to markets (“top down”)

Listen to firms (“bottom up”)

Start with Data (“inside out”) Observe a pattern of attractive performance in a certain sector, e.g., past successful investments by your competitors.

Analyze performance results for sectors of the market, then drill down to the most attractive companies.

Analyze performance of individual companies, and seek to identify common causal patterns

Start with ideas (“outside in”) Start with a theme you believe in, e.g., the aging of Western populations.

Investigate the implications of your theme on your industries of interest.

Investigate the implications of your theme on your companies of interest.



Market mapping is a powerful way to identify white space. Sample Market Mapping Approach

# Stage Example from Klout.com 1 Choose industries and geographies of initial interest Lean entrepreneur in US.

2 Define your proprietary point of view. Thesis: People will care about their influence on social media networks, just as they care about their dress/appearance in face-to-face networks.

3 Translate into investment theme for specific industries and/or geographies of interest.

Expect growth of analytics companies analyzing social media influence.

4 List major players in target industries/geographies, and how each will be impacted by investment themes.

Recruiters and marketers will use social media influence as a filter for identifying candidates with whom they want to work.

5 Iteratively improve market map based on feedback from industry

Discuss elements of the market map with key sector players through industry forums and mass media.

6 Determine which activities along the value chain offer the highest return (typically the proprietary ones).

A large database of information about social media influence is difficult to build and can be branded.

7 Identify areas of future growth. People will care about their influence in niche markets, e.g., who are the influencers in the fashion industry.

8 Assess fit with your strategy. Examine how people are using the product.

9 Regularly update the market map based on market feedback and lessons from investment prospects.

Get smarter.



Grossly Simplified Entrepreneur’s Market Map: Social Networking, mid 2005

This chart is purely illustrative and is not intended to be exhaustive.

Geography

Target Market

US Europe LatAm

Business

Dating

Social

LinkedIn Xing

Facebook myspace

Orkut

Match.com Plentyoffish



Other Sample Market Maps

Quality

Products

Customer Segment

Distribution Channel

Contextual info about each company to Include •  Management strength •  Product strength •  Client desirability •  Financial returns



http://flickr.com/photos/neilt/2517652/sizes/o/

Google Search Hacks

•  Filetype:pdf

•  Filetype:ppt

•  Filetype:doc

•  Books.Google.com

•  Site: [proven site]

eDonkey—search hard drives



•  Often available free for students

•  Public libraries also often offer free access

•  D&B •  Hoovers •  Factiva •  LexisNexis

Major Research Databases

© 2013 David Teten. More at ffvc.com and teten.com http://www.flickr.com/photos/kodomut/3728718035/sizes/l/


http://www.flickr.com/photos/kodomut/3728718035/sizes/l/

Wall Street Research

•  Charles Schwab account



•  Slideshare – presentation slides from conferences/events

•  Scribd, Docstoc, Edocr – general •  Wepapers – focus on students •  Twidox – focus on academics •  Archive.org – Web archives

http://www.flickr.com/photos/sookie/94778946/

Online Document Repositories/Marketplace for files, publications, presentations, and whitepapers



Free Social Media Monitoring Tool: Bottlenose*

* ff Venture Capital portfolio company © 2013 David Teten. More at ffvc.com and teten.com


•  Astragy •  Attaain •  Compete •  Rivalmap •  Socialtalk •  SpyFu •  Tracked •  Workstreamer

Tools for Tracking Competitors



•  Prestige

•  Open doors

•  Education

•  Substantive experience

•  Target marketing

http://www.flickr.com/photos/uaeincredible/3333223048/sizes/o/

How to Woo Interns



•  Business School

http://flickr.com/photos/foundphotoslj/1134148114/

Intern Sources in New York

–  Columbia Business School Small Business Consulting Program

–  Insite NY –  Levin Institute JumpStart –  NYU EEX

•  InternMatch.com •  Colleges •  Student Special Interest Groups •  IIM Ahmedabad Forum for

Industry Interaction © 2013 David Teten. More at ffvc.com and teten.com


http://www.flickr.com/photos/extraketchup/748452643/sizes/o/

•  Adword buys •  Google Docs (Surveys) •  Surveymonkey •  Polldaddy

Polling




•  Next Steps




•  Introduction


•  Observe customers in action •  In-depth interviews •  Snowball sampling

•  Ask for referrals to potential buyers to build a sample

•  Online surveys •  Bleeding-edge users`

Customers

http://www.flickr.com/photos/superrabbit/319538167/ © 2013 David Teten. More at ffvc.com and teten.com


Analyze search engine traffic

Source: Jeff Stewart http://500px.com/photo/6878052

•  What phrasing do people use to describe their problem? •  Use Google Adwords Keyword Tool



Vary your launch pages, and always collect emails



Source: Jeff Stewart. Interaxon and Indiegogo are both ff Venture Capital portfolio companies.

Cash is a market signal



Source: Jeff Stewart

Ship early



•  CB Insights •  Crunchbase •  Techcrunch •  Mashable •  Mercurynews.com/vc •  Venturebeat

Identify (and probably avoid) the sectors attracting VC funding


Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity

Intro Tools


•  Next Steps




•  Introduction


Intro Tools

http://www.flickr.com/photos/23439761@N03/3258313816/sizes/l/

Social media allows you to convert cold calls to warm calls



Intro Tools

Network Valuation Formula

= D * ∑ (Chn*Con *Rn* Sn*In)

Ch = Character Co = Your Firm’s Competence R = Relevance of the contact S = Strength of your relationship I = Information N = Number of people D = Diversity

N

n=1 David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online (www.TheVirtualHandshake.com) © 2013 David Teten. More at ffvc.com and teten.com


Intro Tools

Biography analysis software allows you to search by common affinity and more effective subsequent outreach.

•  Boardex •  Identified* •  Klout* •  LinkedIn •  Saleforce Data.com •  Pipl •  ZoomInfo

Leading Providers of Biography Analysis Data

* ff Venture Capital portfolio company © 2013 David Teten. More at ffvc.com and teten.com


Intro Tools

http://flickr.com/photos/h-k-d/2898797929/sizes/o/

Learn from People Who’ve Been There

•  Ex-employees •  Customers who’ve analyzed market vendors

(BestVendor.com)



Intro Tools

Organizing / Speaking at Events

http://www.flickr.com/photos/programmerman/2315566040/sizes/l/

•  Alumni organizations



Intro Tools

How to Get People to Return Your Calls

•  WIIFM •  Affinity •  Information •  Others' Credibility •  Ego Boost

http://www.nus.edu.sg/oam/studentprofiles.html © 2013 David Teten. More at ffvc.com and teten.com


Intro Tools

Online meets Offline



Intro Tools

Effective analysts are data hounds

Data source Selected technology for inserting data into CRM Business Cards

ScanBizCards, Cardscan, CardMunch, Cardshark, IRIScan, Neatco, Plustek

Emails Contact Capture, eGrabber, EverContact, Gwabbit Cloud Plaxo, LinkedIn CRM Salesforce, Act

Tools for Assimilating Data into Your Contact Relationship Management (CRM) System



Intro Tools

•  IERG Online •  Executive Forum •  INMobile •  Sermo

Platforms •  LinkedIn •  Xing •  Google Groups •  Yahoo Groups •  Zintro

Sample Gated Communities for Executives



Intro Tools

Sample Gated Communities for Investors


Early-Stage Private Mid-Market Private Public

AngelList Assoc for Corporate Growth Albourne Village Caplinked Axial FT Alphaville Longroom FundersClub IntraLinks (MergerID,

PE-Nexus) Sum Zero

Gust MergerMarket Value Investors Club SecondMarket


Intro Tools


Take One Step

http://flickr.com/photos/extranoise/169187125/sizes/l/

•  By technology •  By industry •  By geography •  By personal

characteristics •  By market



•  Next Steps




•  Introduction


http://innovation.utdallas.edu/documents/OpportunityEvaluation.pdf

Further resources •  Baron, R.A. Opportunity Recognition as Pattern Recognition. Academy of

Management Perspectives. Feb 2006 •  Drucker, P.F. 1993. Innovation & Entrepreneurship. HarperBusiness. New York. •  Bhide, A. 1996. The Questions Every Entrepreneur Must Answer. Harvard Business

Review. Nov-Dec 1996. •  Gourville, J.T. 2006. Eager Sellers, Stony Buyers: Understanding the Psychology of

New Product Adoption. HBR June 2006 •  Teten, David, and Allen, Scott 2005. The Virtual Handshake: Opening Doors and

Closing Deals Online. AMACOM, 2005. Free copy at TheVirtualHandshake.com •  The Institute for Innovation & Entrepreneurship at UT Dallas:

http://innovation.utdallas.edu •  ff Venture Capital Business Plans Requirements:

http://ffvc.com/resources/business-plan/



Any questions ?

slides at ffvc.com/market-research

Sign up for our mailing lists at ffvc.com and teten.com

@ffvc @dteten



Appendix: Additional Slides from Presentation in Singapore

http://www.flickr.com/photos/90664717@N00/380336885/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com

Definition of Market Research

http://www.marketresearchworld.net/index.php?Itemid=38&id=14&option=com_content&task=view . http://www.flickr.com/photos/niosh/2492013803/

•  Market Research is the systematic, objective collection and analysis of data about a particular target market, competition, and/or environment.

•  Always incorporates some form of data collection, whether it be primary or secondary research.


Market Research Process

1: Define Marketing Problems and Opportunities 2: Set Objectives, Budget, and Timetables 3: Select Research Types, Methods, and Techniques 4: Design Research Instruments 5: Collect Data 6: Organize and Analyze the Data 7: Present and Use Market Research Findings


Why Do Market Research

•  A survey of small business managers in Texas revealed that 84% of those who conducted formal marketing research projects in the past three years felt that the information obtained was worth the money spent.

•  Overall, 58% said that they were able to incorporate the research findings into their decisionmaking process.

•  Only 6% reported that they were not able to implement the results.

http://extn.msu.montana.edu/communitydevelopment/pubs/mt9013.pdf © 2013 David Teten. More at ffvc.com and teten.com

Darren Luo (NUS), http://flickr.com/photos/foundphotoslj/1134148114/

Intern Sources in Singapore

Universities: •  NUS Business School Career Services: http://bit.ly/9GOqAb •  NUS Career Services Center: www.nus.edu.sg/osa/career/employer/index.html •  NUS Overseas Colleges (NOC) www.overseas.nus.edu.sg/

!  The ilead Program: www.nus.edu.sg/nec/ee/ilead/index.html !  NOC Alumni: www.nocalumni.org/site/index.php

•  NTU Business School: www.nbs.ntu.edu.sg/careerservices/index.asp •  NTU Career Services Center: www.nbs.ntu.edu.sg/careerservices/index.asp •  SMU: www.smu.edu.sg/students/career_services/for_employer/recruit.asp •  Singapore Institute of Management: www.sim.edu.sg Polytechnics •  Singapore Polytechnic: http://bit.ly/aPGxwu

•  Entrepreneurship IAP: www.sp.edu.sg/wps/portal/vp-spws/spws.i.entrepreneurshipinsp.itp •  Temasek Polytechnic: www.tp.edu.sg/home/global/glo_sip.htm •  Ngee Ann Polytechnic: www.np.edu.sg/ss/internship/Pages/local.aspx •  Nanyang Polytechnic: www.nyp.edu.sg/aboutNYP/job_opportunities_for_employers.html •  Republic Polytechnic: www.rp.sg/iep/employer/


Darren Luo (NUS), http://flickr.com/photos/foundphotoslj/1134148114/

Intern Sources in Singapore

•  jobs.triplepoint.asia/jobs

•  www.singapore-interns.com

•  singaporeinternship.com

•  originsingapore.com

•  internsg.com

•  IIM Ahmedabad Forum for Industry Interaction


Date post:	23-Sep-2014
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