Vasilis Macroudis and Guerilla office

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This Thursday we had an extra guest lecturer in our class, entrepreneur Vasilis Macroudis.

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Vasilis has been doing startup for most of his life and wanted to share some of his experiences with us. Here is some of his thoughts.

Three important keys to successful entrepreneurship

  1. Think of it as a project. Use milestones, the pyramids was not built in a day.
  2. Communication. Take every opportunity to talk to people about our idea. To get feedback and understand your target market is vital.
  3. Be lucky. Every breakthrough project needs a stroke of luck. Make sure you are able to seize every opportunity. If you meet Bill Gates in an elevator tomorrow, would you have anything to say? – “the harder I practice the luckier I get”.

Only work on projects that matter to you. – “If you don’t care about cats in Guatemala, maybe you should not create a startup about that.”

“You want them to buy, you don’t want to sell” – Always strive to create an appealing product.

Vasilis is currently engaged in forming a new start-up community known as Guerilla Office. Where members setup makeshift offices once a week in public areas such as coffee shops and hotel lobbies utilizing that the only things an entrepreneur needs is a place to sit, free wifi and a power outlet.

guerilla office

http://guerillaoffice.com/

Thank you Vasilis for an engaging 15 minute lecture.

Key partnerships and dependencies – how do you know if it is a trap or not?

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We came across an interesting subject the other day in class; the importance of partnerships when forming a business model vs. not being dependent on one single actor.

The issue presented and that has been vividly studied in media is the massive enterprise Amazon that has disrupted the sales of book sales for firms like Barnes & Noble. This has been an enormous opportunity for smaller writers to put their product in stock on the shelf of the e-commerce giant. What has happened now is that these writers are dependent on Amazon in order to sell their products; the huge retailer has a very strong bargaining power and can easily drop prices to directly compete with the smaller writers – loosing a couple of hundred thousand dollar won’t matter much if you are the biggest player.

This is a position that you do not want to find yourself and your business in. So in order to reduce the risk of dependency, is it enough to just increase the number of partnerships?

Another interesting, and very contemporary, subject is the music distribution industry. Spotify, one of the largest actors in the industry has somewhat reincarnated the idea of music distribution – but it has been around for several decades. Despite the, excuse my objectivity, louse pay-checks that has been paid out to record labels and musicians, somehow Spotify has lured big players in the music industry and millions of active users have followed their value proposition.

Now, I have had a couple of friends that have worked for Spotify here in Sweden. When asked about the future and their business model the response is this:

‘There will be a dominant player in the music distribution industry within the next 5 years. The focus of Spotify is not profitability, but “users, users, users”. Spotify must come out on top and then we can make money.’

It will be interesting to see how the dynamics between Spotify and the labels/musicians will develop, but it seems like they will be dependent on one large actor in the end and that their music won’t get a long reach without that actor. According to the history and how other markets have developed (read the book industry, mentioned above), then this is a bad sign for the musicians. Just as the consumers brought this down upon the book-wholesalers, so it will be brought down on the musicians.

I would like to discuss how musicians could work against the dominant player and, in the end, save their industry. Any thoughts anyone? 🙂

BR Ludwig Widén

Elon musk, space and big challenges

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Society faces many great challenges today, our environmental impact, depletion of resources and aging populations to mention a few. These are indeed great challenges and maybe our most important challanges, yet almost nothing is done on an individual individual level; the problem is bigger than me. This of course extends to the entrepreneurial realm, where there is a problem or a pain there is also an opportunity, but the point of entry to these areas are immense.

Elon Musk, an entrepreneur who actively develops industries which are holding us back from facing these big questions. He is co-founder of Paypal, SolarCity, Tesla and SpaceX.  If you’re interested in his story:

Elon Musk, initially a secluded kid from South Africa, shows us that the private sector and entrepreneurs can affect the big picture.

SpaceX is one of the major private actors in the Space industry (as we learned from Karin Nilsdotter during her lecture titled “How about opportunities in Space?”), and has been the source of several innovations. Innovations which often aims to lower the cost to orbit trough reusability of equipment such as rockets and space crafts. Here is Elon musk revealing a new space capsule.

My question to you, Karin Nilsdotter and Spaceport Sweden is: Do we have an Elon Musk whom will make the spaceport possible or do we even need an Elon Musk?

 

//Sverker

 

https://twitter.com/elonmusk/

Business Model Generation

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Two and a half years ago a couple of friends and the two of us read Business Model Generation by Timothy Clark, Alexander Osterwalder, Yves Pigneur.

It seemed that the purpose of the book was to convey to the masses that everyone can create and manage business models; and the Business Model Canvas (BMC) is the way to do this.

There are 9 dimensions described in BMC:

  1. Customers Segments: An organization serves one or several Customer Segments.
  2. Value Propositions: It seeks to solve customer problems and satisfy customer needs with value propositions.
  3. Channels: Value propositions are delivered to customers through communication, distribution and sales Channels.
  4. Customer Relationships: Customer relationships are established and maintained with each Customer Segment.
  5. Revenue Streams: Revenue streams result from value propositions successfully offered to customers.
  6. Key Resources: Key resources are the assets required to offer and deliver the previously described elements…
  7. Key Activities: … by performing a number of Key Activities.
  8. Key Partnerships: Some activities are outsourced and some resources are acquired outside the enterprise.
  9. Cost Structure: The business model elements result in the cost structure.

As you can imagine, the Key Resources we posses or have access to should correlate to our Key Activities, and regardless of how you want to view these two aspects, none of them would exist without the mentoring and assistance of your Key Partners.

This is the basis of your offering, but it is also the basis of your Cost Structure. What your business is good at, what means you have to achieve these and how much it will cost you add up to the center of your business model; what do you offer you customer segments, what is your Value Proposition?

So when does Revenue Streams enter the business model? There are a couple of components, as with Cost Structure, that composes Revenue Streams.

In an ideal world, a Customer Segment is a mass of people or firms that are seen as an organism. When there are different Customer Segments, and often there should be, these respond to different stimuli; you must approach them in a specific way. Your firm’s way of handling each Customer Segment should be as unique as the Customer Segment itself, and so the Customer Relationships tie your Value Proposition together with your Customer Segment.

There is also the need to reach your Customer Segments with your Value Proposition and BMC use the term Channels for this. Your Revenue Streams depend on what Customer Segments, how you have chosen to interact with these through Customer Relationships, what they are willing to pay for your Value Proposition and how your firm delivers this. This neatly ties up the BMC and creates a platform for entrepreneurs to interact with their business model and simulate changes in the business model as a result from external forces as Customer Segments or shortages of resources.

As we read this book, we did not think this was anything new. But as years have gone by, it seems like BMC is better motivated and that the authors of Business Model Generation have contributed to the masses. We believe that the framework and techniques presented in this book are, especially, suitable for agile project management methods where adaption, pivoting and sprints happen at a fast pace, the kind of management that we are here to learn and apply.

 

// Ludwig and Svesjo

Force Majeure and a new scenario

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During our last exercise with ME2603 we discussed responsibility and profit distribution in a business.

What happens to a business when it is affected by “the will of God”; Force Majeure?

First off, what is the will of God? The best translation I can come up with is something that is out of our control. It is an independent scenario, where no one can be blamed for the consequences. This could be a hurricane, snowstorm, earthquake or some other large, independent and in some sense unpredictable event.

An example:

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I have purchased a train ticket bound south from SJ (swedish railways) for this christmas. In SJ’s purchasing conditions it is stated that if a train is delayed by 30 min when arriving, then I am eligible for a 50 % refund. If it is over 60 min late, 100 % refund. But this is also dependent of force majeure.

Sadly, someone jumps in front of a train at T-centralen, 5 min before my departure and there is a pile-up; my train can’t leave.

In the end, my train is delayed by 65 min, but SJ claims that I am not eligible for a refund due to the situation being force majeure; they could not have prevented this.

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The scenario presented in the exercise was that a friend of mine took care of my business for a day, there was a storm, everything was destroyed and now I have a business I can’t make any money from. Also, I am probably knee-deep in debt because I have invested in inventory and machines.

This storm was so nasty, that there was nothing that my friend could do to prevent it causing damage to my business. Should he be held responsible for this? Would the outcome have been different if it was I in the store that day and not my friend? I don’t think that it would.

Lets assume that there is a low probability for storms like this, but that I have established my business in an area where this is known to happen. If this was the case, then shouldn’t I have included this in my risk analysis prior to starting my business and prior to setting the price on my orange juice?

It would mean that I already get paid for this low probability risk each time I sell a cup of orange juice, and therefore I shouldn’t hold my friend accountable for the damage that was caused to my business when I was out during the day.

What could be discussed is whether my friend should be held responsible for the damage or not, if he could have prevented it. How about this:

My friend closes the store for the day because I am busy elsewhere. He leaves a window open, by mistake of course, and it rains all night. When I open up the store the next day, I find that my floor is water-damaged and I will need to close the store for the next 2 weeks to get the issue taken care of. The loss of profit is $1000 and the reparation will cost $1500.

Lets assume that the reparation isn’t covered by insurance, because they claim it is my business’ fault (“drulle” in Swedish?). Should I hold my friend responsible and let him pay for 2 weeks lost profits and the costs of reparation? Should he be accountable for the loss of profit, only, or perhaps the reparation?

Please, if you have any thoughts about this, write in the comment section below!

/Ludwig Widén

Listen. Run. Spread the word.

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Okay, this summer I took a minimal step towards preparing myself for the entrepreneurship course at KTH during this fall: I decided to listen to a Swedish podcast about entrepreneurship.

This was a motivational factor for me, it got me going and discussions at the dinner table, at the barbeque and at the beach got more intense and ideas started to sprout. This was not always greeted with enthusiasm; therefore I chose to mix my energy and thoughts about entrepreneurship with exercise, both in the way of cycling and running. But I always included this podcast-series.

I would like to share the essence of these podcasts, because they are rather lengthy and the hostesses often wander off in their thoughts. The fact that these podcasts are in Swedish makes in inaccessible for some of the foreign students taking this course and so it seemed like a valid idea to grab the good stuff and write about it. For those who would rather listen to it themselves can find the link below:

https://itunes.apple.com/se/podcast/entreprenorspodden-oss-entreprenorer/id853852532?mt=2

I would like to start with sharing a paraphrased quote from this podcast, which is the first thing that comes to mind when I hear the word ‘entrepreneurship’:

‘Entrepreneurship is not only working with something which you wish would exist, but also, that you want to work with.’

I believe that this quote is especially important to the students participating in this course, and the projects that we are about to embark on – what is missing in your life, can you build a business around that and do you want to work in that business or industry?

Back to the podcast, hosted by two women has found their calling. Sophia, one of these women, works with a startup that books complete vacations; this includes flights, transfers and hotel. What is special about this business is that it is heavily reliant on information: you can specify what type of weather or temperature you desire, how your budget looks like and such – and this serves as a basis for recommended locations and hotels that would match your wants and needs. Of course there is also the possibility to just brows through different destinations.

One obvious question for Sophia and her startup is where to start and where to focus: how will her clientele book their flights, will they come with pre booked tickets and will they need complementary information – perhaps guidance is what will be the most demanding and at the same time the least profitable?

In this episode Sophia has received feedback from a number of Facebook groups where she has sought feedback on her idea (this is also an important note for when we wish to seek feedback on our own ideas!). At first glance there is inconsistency in the feedback. Instead of going into detail, let me just state that the inconsistency is priceless and provides Sophia with a new split to analyze her company, the direction they are taking and how the clienteles psyche work.

With this feedback in her baggage, and after discussions with her business advisor, she decides to change direction of her project – she pivots.

Now this is a word that we are going to hear, and use and get quite sick of from time to time. This is self-explanatory in the context, because it is to turn around your/its own axis. And that is just that: to turn around and change direction.

Okay, so this is something we need to embrace, and use to its full potential. Because, like it or not, the question of pivoting is something we need to ask ourselves whenever there is the slightest bump in the road. And hopefully, just hopefully, we can tweak our idea, to pivot our business, in order for it to align with something we want to work with and not simply something that we would wish to see in our lives.

I’ll follow up with further posts about the issues, laughs and breakthroughs presented in this podcast as the course continues, hope this has been of some value!

BR Ludwig