27/03/22 THE UNIVERSITY OF WAIKATO - TE WHARE WANANGA O WAIKATO 1 Waikato Management School Research Seminar Series Entrepreneurial Marketing Learning from high- potential ventures Professor Joe Lassiter
19/04/23THE UNIVERSITY OF WAIKATO - TE WHARE WANANGA O WAIKATO
1
Waikato Management School Research Seminar Series
Entrepreneurial Marketing
Learning from high-potential ventures
Professor Joe Lassiter
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 2
Entrepreneurial Marketing -
by
Joseph B. Lassiter, III
Harvard Business School
Soldiers Field StationBoston, MA 02163
Learning from High Potential Ventures
Copyright @ 2005, President & Fellows of Harvard College
April 19, 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 4
What is “EntrepreneurialMarketing”?
• What is “Marketing”?
• What is “Entrepreneurship”?
• What is “Entrepreneurial Marketing”?
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 5
Marketing
• HBS Working Definition:
The creation of value for a firm’s chosen customers with a firm’s scarce resources
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 6
Entrepreneurship
• HBS Working Definition:
The relentless pursuit of opportunity beyond the constraints of the tangible resources currently controlled
• A complete process for pursuing opportunity from identification to harvesting
• A way of managing
Howard Stevenson
April 19, 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 7
Entrepreneurial Management Framework
• The critical elements
• The concept of FIT
• The concept of dynamic FIT management
– People
– Opportunity
– Context
– Deal
Bill Sahlman
April 19, 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 8
Entrepreneurial Marketing—An Emerging Definition
• The RELENTLESS PURSUIT of the CUSTOMERS and PARTNERS necessary for the PEOPLE leading the firm :
• A process for gathering the information needed for DECISION MAKING over time
• A process for getting commitment to ACTION in the face of inadequate information
– to SELECT their BUSINESS opportunities
– to SELL their PRODUCTS and SERVICES
– to OBTAIN the FUTURE resources they desire
Lassiter
April 19, 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 9
Lassiter
PARTNERSPARTNERS
PEOPLEPEOPLE
CUSTOMERS &END-USERS
CUSTOMERS &END-USERS
PRODUCTS & SERVICES
PRODUCTS & SERVICES
The Core Framework for Entrepreneurial Marketing
April 19, 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 10
A Dynamic Framework for Entrepreneurial Marketing
PRODUCTS & SERVICES
PRODUCTS & SERVICES
PARTNERSPARTNERS
PEOPLEPEOPLE
CHANGE (GOOD AND BAD NEWS)
ANTICIPATIONANTICIPATION RESPONSERESPONSEEXPERIMENTS
ITERATIONLEARNING
CUSTOMERS &END-USERS
CUSTOMERS &END-USERS
Lassiter building on Sahlman
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 11
Courtesy of
Teel Lassiter, age 9
Weston Country School, Grade 3
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 12
Entrepreneurial Marketing—The Bias in my Sample
• I have focused on high-potential ventures (defined as those that seek to add the greater of $50 million in new business or 2x current sales in five or fewer years. These tend to be start-ups and buy-outs.
• The companies tend to be technology or consumer oriented.
• We explore these through an Entrepreneurial Marketing Course Project. Then we write HBS cases. From late Sept. through mid-December, MBA teams of 2 to 3 students spend 80 to 120 hours on a sales/ marketing project defined with entrepreneurs pursuing high-potential ventures. Let me know by e-mail in mid-August ([email protected]) if you should qualify for the list. It seems to cost you $2K to $3K in out-of-pocket student expenses….though one team used $100K effectively! Be careful, these projects are fun--and seductive!
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 13
Projects Field Studies
Sponsors Cases
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 14
Cu
stom
ers
Products
High-Potential
Old
New
Old New
Yes
No
The Lessons in My Sample
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Venture Capital and the Internet
VC Investments in Internet Companies
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1993 1994 1995 1996 1997 1998 1999 2000
Num
ber of Rounds
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Am
ount ($
millions)
# Rounds Amount ($ mil.)
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 18
The Essential Challenge — Determining the Nature of Adoption
TIME
CUSTOMER ORDERS
TIME
CUSTOMER ORDERS
A Smooth, Flowing Glide or……. A Ragged, Bumpy Ride….How do customers become aware? Why do they buy? What drives the dynamics of the game?
?
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 19
Product Categories, Product Life Cycles andCustomer Adoption a la Moore
PRODUCT SALES (New &
Re-Orders)
TIME
Product 1 Product 2
• Who influences whom?
• Who references whom?
• Who buys for what reason?
• What is the “whole product”?
•What is the “minimum” product?
• Which partner helps bridge the gap?
•What is the “minimum” customer base?
NO. OF NEW CUSTOMERS
TIME
Innovators & Early Adopters
Early Majority
Late Majority
Laggards
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
Total Sales
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 20
Customer Adoption Models Visionaries and Pragmatists are Individuals.. not Firms.. not Segments
NO. OF NEW
CUSTOMERS
TIME
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
Lassiter building on Moore
Pragmatists Endure Pain, Demand Proof, Only Buy
“Whole Products” and Calculate Economic Payback
Visionaries Crave Advantage ,Accept Promises, Buy Prototypes
and Demand Development Control
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 21
Launch with the Visionaries…Then Invade a Single “Beachhead” of Pragmatist Customers in a Mainstream Segment, Meet 100% of their “Whole Product” Requirements….and Then Cross
PRODUCT SALES (New &
Re-Orders)
TIME
Product 1 Product 2
• Who influences whom?
• Who references whom?
• Who buys for what reason?
• What is the “whole product”?
•What is the “minimum” product?
• Which partner helps bridge the gap?
•What is the “minimum” customer base?
NO. OF NEW
CUSTOMERS
TIME
Innovators & Early Adopters
Early Majority
Late Majority
Laggards
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
Total Sales
Lassiter building on Moore
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 22
Applying Lessons from Moore
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 23
High-Potential Ventures Narrow the Chasm By Betting on the Future and Then “Reverse Engineering” to the Present
NO. OF NEW
CUSTOMERS
TIME
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
Lassiter building on Moore
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 24
Narrow the Chasm By Anticipating Where “Panic Will Breakout” Among the “Desirable” Pragmatists
NO. OF NEW
CUSTOMERS
TIME
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
1 Which events will cause “mission-critical systems” to break?2. Regulatory/Trade Shifts? 3. Capital Markets?4. Mergers & Acquisitions?5. Customer Requirements?6. Assembling the Specific “Proof” and “Whole Product” Partners?7. Hyper-competition?8. Which Visionaries are the “Desirable” Pragmatists watching?
Lassiter building on Moore
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 25
Narrow the Chasm By Knowing How to Bring “Dreams” to the “Relevant” Visionaries
NO. OF NEW
CUSTOMERS
TIME
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
1. Understanding our Unique Value2. Capital Markets?3. Staging the Investment?4. Assembling the Specific “Proof” and “Whole Product” Partners?5. Knowing where the Visionaries are located TODAY!6. Knowing what the Visionaries are seeking TODAY!7. Crafting and Packaging the Dream
Lassiter building on Moore
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 26
Crossing the Chasm at This “Narrowest” Point By Portfolio Selection or Placing Your Bet
Pressure to Cost of “Whole Ability Total Adopt Product” to Execute
Segm
ent/
Ap
plic
atio
nC
har
acte
rist
ics
Lassiter
A
B
C
D
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 27
High-Performance Ventures Cross this “Narrowest” Chasm By “Reverse Engineering” the Product Roadmaps, Assembling the Needed People and Partners, and Filling Any Remaining Gap with Cash….Then Cross
NO. OF NEW
CUSTOMERS
TIME
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
1. Who watches Who?2. What have they done in the past??3. Who do they “Know”?4. Who do we “Know”?5. Assembling the Needed “ Proof”?6. Assembling the “Whole Product”?7 Raising the Cash…….Filling the
Chasm with $$$$$$
Lassiter building on Moore
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 28
High-Potential Ventures Become High-Performance Ventures By Linking Specific Visionaries, Pragmatists, and Segments
NO. OF NEW
CUSTOMERS
TIME
Moore’s Chasm
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Visionaries Pragmatists
1. Who are the “Known” Visionaries2. Who are the “Known” Pragmatists 3. Where are they NOW?4. Who “Knows” who?5. Who do we “Know”?6. Which Industries are
attracting/recruiting Visionaries?7. Who are the Partners used to assemble
“Whole Products” for the Pragmatists in that Industry ?
Lassiter building on Moore
Segments, Applications & Even Individual Firms Are Usually “Horizontals” in the World of Adoption
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 29
Where Did You Get Them Shells?
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 30
Customer Adoption in Evolving Markets
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
Time
PerfectEarly Adopter
PerfectPragmatist
Mainstay Buyer
Laggard or Underserved
Buyers
MarketSoftHelicosSycamoreWebSpectiveOrange Imagineering?
Bluefin RoboticsMyTeamSurface LogixEntropiaMillennial Net
• End-user habits tend to be fluid/evolving
• Company’s habits tend to be fluid/evolving
• The Product-Customer link is dominated by either the product or the customer
• The Channel is secondary, but important
• Guerilla vs. Gorilla marketing -- you can’t outspend them
• The venture that can and does recruit the best People can will
• The venture that recruits really powerful Partners can win.
When in Evolving Markets ...No.of New Customers
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 31
Customer Adoption in Established Markets
Sources: Moore (1991), Crossing the Chasm and Moore (1995), Inside the Tornado
No. of New Customers
Time
Perfect Early Adopter
PerfectPragmatist
Mainstay Buyer
Laggard or Underserved
Buyer
DiscoverWhyJuice GuysOrange Imagineering
Boston BeerSteinwayRelayHealth
• End-user habits tend to be entrenched
• Company’s habits tend to be entrenched
• The Product-Customer link is dominated by the Channel
• The Channel is the customer - satisfy them and they will satisfy the end-user
• Guerilla vs. Gorilla marketing -- you still can’t outspend them
• The ventures with powerful networks have a chance to win
• The ventures that recruit powerful Partners have a chance to win.
When in Established Markets ...
Boston BeerSteinway
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 32Lassiter
PARTNERSPARTNERS
PEOPLEPEOPLE
CUSTOMERS &END-USERS
CUSTOMERS &END-USERS
PRODUCTS & SERVICES
PRODUCTS & SERVICES
The Questions Asked in Entrepreneurial Marketing
Who has specific, relevant expertise?Who works in the venture?Who advises the venture?Who invests in the venture?
Who has sold to who in the past?Who knows and is known in the channel?Who knows and is known in the industry?
Who knows and is known by end-users?Who knows and is known by buyers?Who can supply specific “whole product” expertise?Which partners have the most to gain or lose?
Who has specific, relevant expertise?Who has the leading position in the industry?Who can supply specific “whole product” advantages?Who has the most to add to you or a competitor?
What exactly is our product benefit relative to the customer’s alternative?Which customers will buy it now?
Have our people worked with the the necessary partners in the past ?What have the potential partners done in the past?
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 33
The Essential Judgment — Anticipating the Pattern of Adoption
TIME
ORDERS
TIME
ORDERS
Never a Smooth, Flowing Glide ….Always a Jagged, Uncertain Ride even on a Trail Cautiously Scouted by an Experienced and Proven Guide!
?
Lassiter
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 34
So, What is “EntrepreneurialMarketing”?
• It is “Reverse Engineering” with Your Goal Matched to Your Model of Adoption yielding:
Product Roadmap
Customer Roadmap
Partner Roadmap
People Roadmap
• Moving in Anticipation and Evolving Against the Realities of Your Venture & Your Rolodex
Lassiter
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 35
$6.8 $9.9 $13.1$17.7
$49.0
$93.8
$34.6
$19.4
2056
3034
6100
4510
250921741896
1313
$0
$25
$50
$75
$100
1995 1996 1997 1998 1999 2000 2001 2002
0
1,000
2,000
3,000
4,000
5,000
6,000
Amount Invested ($B) Number of Deals
Am
oun
t In
vest
ed (
$Bil
lion
s) Nu
mb
er of Deals
Venture Investing Returns to Earth…But It is Still CrazyVenture Investing Returns to Earth…But It is Still Crazy Venture Investing Returns to Earth…But It is Still CrazyVenture Investing Returns to Earth…But It is Still Crazy
Source: VentureOne
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 36
Remember
• There has never been a time in recorded history when the supply of capital did not overwhelm the supply of opportunity
• Musical chairs -B2X, Infra, Optics, Biotech….
• Smart money, dumb money and lots of money
• Divergence from the mean, mean goes negative
• Technology, deregulation, globalization ..and demographic change
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 39
On Who Has the Power:
“In the end, it all comes back to consumers.”
Bill Gates
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 40
On What Is the Reward:
“I don’t make pictures just to make money. I make money to make more pictures.”
Walt Disney
19 April 2023© THE UNIVERSITY OF WAIKATO • TE WHARE WANANGA O WAIKATO 41
A Word of Caution and a Warrantee:
“We don’t know where all this is going to lead, but we will have fun finding out-- together. Call if we can help.”
Joe Lassiter
19/04/23THE UNIVERSITY OF WAIKATO - TE WHARE WANANGA O WAIKATO
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1. Wealth Creation for New Zealand å 18 May 2005
2. Social & Sustainable Developmentå 21 September 2005
3. Entrepreneurial Marketing å TONIGHT - Learning from high-potential ventures
Waikato Management School 2005 Research Seminar Series
19/04/23THE UNIVERSITY OF WAIKATO - TE WHARE WANANGA O WAIKATO
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Waikato Management School Research Seminar Series
Entrepreneurial Marketing
Learning from high-potential ventures
Professor Joe [email protected]