business studies for computer scientists, or "how to start and run a company" a course of...
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Business Studies for Business Studies for Computer Scientists,Computer Scientists,
or or"How to Start and Run a "How to Start and Run a
Company" Company"
A course of 12 lectures
Jack Lang
IntroductionIntroduction
History of Lab and spin-offs – The Cambridge Phenomenon
Programming only a small part of success
Outline SynopsisOutline Synopsis
1. So you've got an idea...
2. Money and Tools for it's management
3. Legal aspects, contracts and copyright
4. People: How to organise a team
5. Project planning and management
6. Quality, maintenance and documentation
7. Marketing and Selling
8. Growth and Exit routes
In addition to the above, four Guest Lectures will be organised
Reading listReading list
The High-tech Entrepreneur's Handbook Jack Lang
Paperback - 224 pages (2 November, 2001)
FT.COM; ISBN: 0273656155
Reading listReading listBrooks F. : The Mythical Man Month
ISBN 0201006502 Addison-Wesley
Geoffrey A MooreCrossing the Chasm
ISBN 0-8870-519-9 Harper Business 1991/5Inside the Tornado
ISBN 1-900961-58-X Capstone 1998(The Gorilla Game)
Everett M Rogers; Diffusion of Innovation, 4th Edition Free Press, New York 1995 ISBN 0-
02-926671
Eric S Raymond: The Cathedral and the BazaarISBN 1-56592-724-9 O’Reilly 1999
Townsend, R. : Up The OrganisationISBN 0340149868 Hodder Fawcett 19712nd Edition: Further Up the Organisation, now sadly out of print,
Its all Cobblers! Michael Carter ISBN 1-85252-469-3
Jeff Cox, Howard Stevens (2001)Selling the Wheel: Choosing the Best Way to Sell for You and Your
CompanyPocket Books ISBN: 0671033107
Reading list 2Reading list 2
Dyson J.R. : Accounting for Non-Accounting Students
ISBN 027360435X Pitman 3rd ed 1994
Microsoft ProjectMicrosoft Excel
Paul Manser and Simon Walker: Startups: Law and Business Handbook
Butterworth Tolley; TJG ISBN 0-754-51509-5
Buckle: Managing Software Projects ISBN 0354040677 Macmillan
Reading List 3Reading List 3
Drucker P.F: Innovation and EntrepeneurshipISBN 033294652 Pan
Weinberg, G.M.:The Psychology of Computer Programming ISBN 0442292643 Van Nostrand
William D Bygrave, EditorThe Portable MBA in EntrepreneurshipISBN 0-471-16078-4 John Wiley 2nd edition 1997
Guidelines for DirectorsISBN 090093980XInstitute of Directors
The Cambridge PhenomenonISBN 095102020 Segal Quince and Partners
Reading List 4Reading List 4Nokes: Startup.com FT/Prentice Hall ISBN 0-273-65091-
2 WallStreet.com Andrew D Klein (founder of Wit Capital);
Henry Holt ISBN 0-8050-5758-7 1998Everett M Rogers; Diffusion of Innovation, 4th Edition
Free Press, New York 1995 ISBN 0-02-926671 Paul A Samuelson, William D Nordhaus Economics 16th
Edition McGraw Hill ISBN 0-07-115542-2Klein, A.D. (1998) Wallstreet.com: fat cat investing at
the click of a mouse. New York: Henry Holt Hal Varian, Carl Shapiro(1998) Intermediate
Microeconomics: A Modern Approach W.W. Norton & Company Ltd
Information Rules: A Strategic Guide to the Network Economy (Harvard Business School Press)
ISO 9000:2000 available from http://bsonline.techindex.co.uk, as is
BS 7799-2:1999 Information security management.
1.1. So you've got an So you've got an idea...idea...
Introduction
Why are you doing it?
What is it? defining the product or service; types of company
Who needs it? an introduction to market analysis
How? Writing the business plan
Futures: some emerging areas for new computer businesses
One of you will become a One of you will become a BillionaireBillionaire
Most will be millionaires– And need to be
– Pension issue
• Say household income of £50K @ 4% -> £1.25M• Inflation for 40 year @ 3% -> x 3 ->
£3.75M• House, etc say £250K -> 750K
• Total£4.5M
You won’t save £4.5M from a salary– Trading– Starting an Enterprise
Why?Why?Why now?
• Because I can: available time and resource• Just graduated, or made redundant and nothing else to do• Brilliant idea or market opportunity
Why me? – Barriers to market entry
• What have you got to make it through?– Expertise, resource, relationships
– Barriers to competition• What stops others doing the same thing
– IPR, network effect, niche
– Unique advantages
Know yourself– Know your motivation so you can motivate
others• What counts as success?
Never a better time to Never a better time to start than NOWstart than NOW
Money– Cambridge Angels, Cambridge Capital….
Support– CEC, St Johns, Cambridge Enterprise….
Infrastructure– Banks, lawyers, accountants– Office space
People– Cambridge Network, mentors…
Government– EIS Tax relief, SMART Awards, SFLGS….– Princes Trust
Society attitude– OK to lose,
• “Better to have loved and lost than never loved at all”
“Dare to Begin” (Horace)– Nothing will be attempted if all possible objections must be overcome
(Samuel Johnson)
Why are you doing it?Why are you doing it? Wealth generation
– You need £5M by the time you retire, for a modest lifestyle
Better toys Make a difference
– Social consequences• Generation of employment• Death of the nation state
Fun or profit?– Lifestyle or high growth?
• Funding• Eventual size?
If you are not in business for fun or If you are not in business for fun or profitprofit, what are you doing there?, what are you doing there?
What is it? What is it? Technology driven / market pull
Product or service
Specialist or mass-market
Lifestyle or High-growth?
Mass Market
Bespoke
Volume
Low High
Consultancy
Cost of entry
Game
Battleship
FMCG
Movie
Car
How? Writing the business How? Writing the business planplan
Business plan describes what you want to do
BVCA Handbook KISS: Keep It Simple and Stupid! Write for the target audience
Business Plan Competitions – Cambridge £1k and Cambridge £30K– Cambridge University Entrepreneurs Society
(CUE)• www.cue.org.uk
Investment CriteriaInvestment Criteria
Global sustainable under-served market need
Strong management team Defensible technological advantage Believable Plans 60% IRR
Market NeedMarket Need Largest risk factor: everything else is process
or resource Who needs it?
• Why?– What are they doing now?– How much is it worth to them?
• How is it sold, or advertised?– Routes to market– Alliances – Branding
– Under served need• Competition• What other solutions?
– Sustainable or one-shot wonder?– Growing market
• Global potential
Who needs it? Who needs it? FAB: Features Advantages Benefits
– Feature: • This program runs really quickly
– Advantages: • Less waiting time• Uses less resources
– Benefits: • Less frustration• You can get more done• Cheaper to run
USPs: Unique Selling PointsMarket Research
Defensible technological Defensible technological advantageadvantage
IPR– Patent– Copyright– Trademark
Defensible technological leadership– against well-funded competition– Niche Market share
Strong management teamStrong management team
You can’t do it all by yourself– “Small” project >10 person-year– Team building– 1:3:10 rule
Alliances Recruit experience
– Financial Director– Sales & Marketing
Training & experience– M erchant bank/Management Consultancy – MBA
Senior TeamSenior TeamUS UK
Chair Chair Senior figure; Old wise head
Experience and contacts; Major dispute resolution; part-time
CEO Managing Director
Finding money; Investor relations; Style setting; Keeping the peace
CFO Finance Director
Accounts etc. Office management; Administration, Legals, Quality control
CTO Technical Director
Inventing new things; development
COO Production Director
Running the factory and distribution
VP Marketing
Marketing Director
Deciding what and how to sell; pricing Marcoms; Market information
VP Sales Sales Director
Selling; CRM;
Believable PlansBelievable Plans
Business Plan Development Plan Marketing plan
– Adverts, mail shots, web-sites
Sales Plans– Distribution, Direct Sales
Quality Plans Financial Projections
– Budget • 60% IRR
– Pay back financing in third year
– Cash flow
Writing the Business PlanWriting the Business Plan Executive Summary and funding requirement1. Concept 2. The Market 3.1 Global market size and need
3.2 Sustainability3.3 Competition3.4 Marketing plans
4. The Team4.1 CEO4.2 CTO4.3 CFO4.4 VP Sales and Marketing
Writing the Plan - 2Writing the Plan - 2
5. The technology and its IPR
6. Summary of plans
6.1 Development plans
6.1.1 Methodology
6.1.2 Milestones
6.2 Marketing
6.3 Sales and distribution
6.4 Quality and industry standards
7. Financials
Writing the Plan - 3Writing the Plan - 3
Appendices:
Financial model
Key staff
Letters of support
Correspondence re IPR
Full development plan
Full marketing and sales plan
Examples and brochures
Futures: some emerging Futures: some emerging areas for new computer areas for new computer
businessesbusinesses Pace of change: Factor of 2 every 2 years About 10 years from Lab to mass product We can predict the near future (10 years)
– Futures: Processor performance– Comms: 100,000 bandwidth cost reduction– Multi media and moving pix; digital TV; 3-D models– 100 Ghz, 100Gbyte, photo realistic moving graphics,
video mail, 100Mb/sec WAN, world-wide knowledge base,
– Home networks; – Wifi / WLAN – ubiquitous access
The Trillion Dollar MarketThe Trillion Dollar Market
Effect of electronic commerce Customer pull, not advertising push Merging of computing, entertainment,
communications– Games now gross more than films
Internet CommerceInternet Commerce
Works for– Established Brands– Specialist goods
60% of accesses are to adult content– Driven factor: Hidden agendas – Communities of interest– Mostly male - men look at porn, women shop– Wide age range
Don’t believe the hype– Most internet ventures not profitable unless adjunct
to existing business– Advertising model (mostly) doesn’t work– Micro payments don’t work
PredictionsPredictions
Microsoft/Intel will remain dominant– Other chip manufacturers will continue to struggle– UNIX will remain specialist– Java will be increasingly minority interest
Internet/ WWW will dominate– AOL,Compuserve, E-world, Microsoft Network will
become internet service suppliers Differentiation
– “Lean forward” or 3-foot experience• Private• e.g PC, phone, PDA,
– “Lean back” or 10-foot experience• Public• Internet TV• Passive Couch mouse; server pushed experience
More PredictionsMore Predictions
Game machines will become PC based– Continue to lead low-cost graphics technology– Networked– VR– X-box -> “Home Station”
Video-on-demand specialist market only– Hotels, airplanes, BUT Internet TV widespread
No new major applications– But see .NET
Watch Points - a personal Watch Points - a personal listlist
Internet and Digital TV Freenet (http://freenet.sourceforge.net/) Intelligent agents (e.g EPG) PDA’s/ Cell phones - what personal systems
we will all be carrying?– WAP– GPRS, 3G
Voice recognition– Wristwatch systems
Embedded and SoHo systems– Luxury cars now have more compute power on-board
than the moon lander– Home networks