Start-ups can benefit from a wide variety of financing options on the path to profitability, but how do you know which one to choose? This course explores different financing models, including bootstrapping, organic growth, debt and risk capital, and also provides a clear overview of equity financing including the key types of investors: angels, venture capital, and crowdfunding. You’ll learn about terms, and term sheets, exit modes and what exit strategy might be best for you. By the end of this course, you’ll have an understanding of what success looks like and how it can be financed. You’ll also be ready for the capstone project, in which you will get feedback on your own pitch deck, and may even be selected to pitch to investors from venture capital firms.
Greylock Partners: Joseph Ansanelli
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Entrepreneurship 4: Financing and Profitability
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Business Models and Keeping Customers
This module was designed to introduce you to some of the key activities you can do in order to reach and sustain profitability. You'll learn the most important rule of entrepreneurship, the different kinds of business models, how to determine who your best customers are and how to develop strategies to retain them. You'll also hear from a successful entrepreneur and venture capitalist from Greylock Partners, who will talk about what indicators of success his firms looks for when deciding where to invest. By the end of this module, you'll be able to use business models to create customers who will come back for more, and know what key attributes to emphasize if you want to attract investment from venture capital.
Познакомьтесь с преподавателями
Kartik HosanagarProfessor
Wharton School
Lori RosenkopfVice Dean and Director, Wharton Undergraduate Division
Simon and Midge Palley Professor of Management
David HsuRichard A. Sapp Professor of Management
The Wharton School
Laura HuangAssistant Professor
Management
Ethan MollickAssociate Professor
Associate Professor of Management- Wharton School
David BellXinmei Zhang and Yongge Dai Professor, Professor of Marketing
Marketing
Karl T. UlrichVice Dean of Entrepreneurship and Innovation
The Wharton School
Hi, I'm Lori Rosenkopf.
I'm the vice dean and director of the Wharton Undergraduate Division.
And I'm also a professor of management at the Wharton School.
We're here today for the entrepreneurship specialization and
my guest is Joseph Ansanelli.
He's a partner at Greylock Partners,
a venture capital firm, and he is a serial entrepreneur.
Joseph as an entrepreneur, as well as, an investor what would you have
to say about the importance of venture creation in economies in societies?
>> I think that if you look actually at where most of the job growth and
new valuation in companies and wealth creation that occurs.
It's typically happening in companies that are new companies.
New companies are getting started every single day,
whether they be in the tech industry or elsewhere.
And so entrepreneurship as a driver of the economy in the U.S. and around the world
is probably one of the most important sectors that we could be focused on.
>> In your own personal experience, how does that play out?
How much have you contributed to job growth or value creation alike?
Do you set targets for that, or try to measure, or quantify that at all?
>> I mean, our business as a venture capital firm is to invest money in
early technology ideas and
to drive significant increases in return on that value.
But as a byproduct of that,
what happens is all these amazing companies that get built.
I mean, ten years ago there was no Facebook, or
Workday, or Palo Alto networks, or LinkedIn.
But now today, employees across those four sets of companies,
several tens of thousands of people,
that's an amazing thing when you think about a lot of these ideas are just
a couple of people working in a coffee shop, a garage, or their homes.
Taking that initial, seed of an idea and turning into these world
renowned brands and companies and places that people work today.
>> Taking venture capital money is expensive for
entrepreneurs, and research shows that they are willing to accept
a discount to work with a prestigious venture firm.
Why are they choosing to do this rather than choosing other sources of capital?
>> I think that the top venture capital firms, it's a lot more than just money.
If it were just money, and there was no additional value, then there would be no
reason to, why take one dollar versus another dollar, they would be the same.
And I think that what you get in working with top venture capital firms,
or Greylock, or Sequoia, or other top tier firm is that,
you get the experience of the individual partner.
Who often times, has either started a company themselves, or
been an investor and seen amazing companies and knows what success is.
And it's someone that you can learn from, and I think that
the thing that makes entrepreneurship hard is, you're often very alone.
And so getting someone around the table who can help you is incredibly valuable.
And then the other thing is that we try to help accelerate the growth of the company
with, not only with experience of the individual partner, or set up partners,
that are the investors, but also the other things around helping to recruit people.
You spend a huge part of your time as an entrepreneur trying to hire
great people and build your team.
From that first hire, to that hundredth hire, to that thousandth hire, and
we help a lot with that at all levels, as well as with customers.
You have an idea, you need to hire a team, and then you need to have customers, and
so helping to connect companies with potential customers and
help promote those companies is also a lot of the value-add that we bring.
>> How much do networks matter to venture capital firms,
to you as a VC, your networks, your firm's networks,
as opposed to the networks of the entrepreneurs that you're supporting?
>> I think that we always think about, all of us, as individual partners,
what are our individual networks?
And, as we think about growing and adding people to the partnership,
it's one of the topics we talk about a lot.
Which is what's their network and is it overlapping, or is it extending?
And we try to find people that are extending the network into places that we
don't have a lot of connections or of domain expertise and whatnot, and
so, It is so much about people.
It is about making those connections between people, that having
the right set of networks and people and growing those and investing in them and
making sure that they're vibrant is a key part of our success.
>> So, you're a serial entrepreneur.
You've founded three successful companies.
Are there particular qualities that you believe are important for entrepreneurs?
Do you have them yourself?
Do you look for them as you're looking for new opportunities to fund?
>> I don't think there's one formula.
So let me start there, and if you look at successful entrepreneurs, there's
all types, all backgrounds, ethnicity's, ages, there's not one formula.
Now there's probably a formula that works well for
me in terms of the type of people that I like, to work with and invest in.
Because I think that part of the process of, you're an entrepreneur, and
you're raising money, it's, again, not just about the capital, but
it's who that person is that comes with that investment.
You want to make sure that that relationship is incredibly productive,
it doesn't necessarily have to be best friends.
There are going to be times when those discussions will be hard and
uncomfortable, etc.
But you want to make sure that there's a base level of trust and
understanding between you, either as the investor or
you as the entrepreneur, between those two people.
That there's just a very collaborative and constructive relationship.
So I'm looking for people that
have a certain set of cultural values that match a mirror of mine.
They might have different view points about how to do things, which is great.
But someone that I know I can work with, collaborate and trust.
Because the journey of entrepreneurship is never up into the right
in a straight line, I think its just myth and perception that it goes perfectly.
But there are trials and tribulations along the way and I am always looking for
people to say when it gets tough how is this person going to be to work with and
that's a key thing I always look for.
>> So you've mentored, advised many,
many people over the course of your career at this point.
Let me ask you to look in the other direction.
Who were the best mentors or advisers for you and what made them so?
>> I've been very lucky, that from very early on,
literally when I graduated, that I started to find, somewhat serendipitously,
mentors, in various things.
One person in particular is a gentleman by the name of Bob Frick.
Bob was on the board of a company I started in 1997 called Connectify.
And he had been the vice chairman and CFO of Bank of America.
And he was just this incredible mentor for
me because he had just seen so many different things.
He'd been on venture capital of the bank, he had seen expansion on the bank.
He had seen, gone through good times and bad times.
And he was then at that point on the board of several companies, large companies,
he had been on the board of Lucas Film, as well as many start ups, and
he was just a great coach to me.
And whenever I was going through a difficult decision
I would talk to him sometimes literally for hours.
And he would just always be asking me questions, always asking me questions,
he had a view, but he was always working with me to help me
think through the problem and help me get to the answer i felt good about.
And so i was very fortunate in terms of having someone with that experience,
business experiences and set life experiences, that was really valuable.
And then I've had mentors in terms of technology mentors,
when I first worked at a company called Apple there was a guy name Steve Caps.
Steve had was one of the original team that did the Mac back in 1984, right,
he wrote the Finder.
And he taught me a ton about product design, and UI design and
something that, not easily learn in a class perse.
But to be able to learn from someone who had you know done some of the seminal
things in graphical user interfaces was just a phenomenal experience.
So I am always looking for people like that that I can learn from.
>> You've spent you career founding firms and funding new ventures.
What about bigger more established firms?
Some people say that established firms can be innovative.
They call it entrepreneurship.
They call it entrepreneurial management.
Do you agree if so what can they do or do you disagree?
>> I think it is very hard for
large companies to be as innovative as an early stage startup.
And It's challenging for so many reasons,
it's not impossible, it's definitely not impossible,
but it usually requires that the leadership of that
larger company is ultimately an entrepreneur at heart.
Apple, is a great example, I mean, world's most variable company,
clearly is a place that is very entrepreneurial right.
Coming out with the iPod, the iPhone, the iPad, I mean, these were brand new
categories, huge massive markets that were incredibly innovative.
But it started because there was leadership that believed in and
invested in it.
I think it's much harder for most companies to do
that just because of the stage and state of the company.
If you look at technology companies in particular, the vast
majority of innovation for large companies comes by them acquiring companies.
Because these startups are able to break the rules and do things differently and
have a different financial model that's much more supportive of large investments.
To do things that's just much harder to do when you are a large established company
publicly traded that is focusing on your quarterly earnings.
So it's not impossible, but I think that true innovation usually happens with
a small team with a dream, and a vision, and
a mission that no one's going to get in their way and it's much easier to do that,
without any of the rest of the shackles of a large corporation are on you.
>> Let's talk about outcomes for these ventures.
So the IPO is the holy grail,
the great valuation, the going public, all these thing are what are celebrated.
Acquisition is not a bad outcome either,
although you may see it a little differently from your perch as a VC.
>> Now a firm could, also a venture could go bankrupt, or
a venture could sort of live in that nether world.
So talk to us about that from your perspective as a VC, but
then also perhaps from the perspective of an entrepreneur.
>> I think, from an investor's standpoint, obviously we're trying to
get the best and biggest return that we can get on an investment.
And sometimes the right thing is for a company to get acquired,
there's no question about that.
Either there's not enough sustainability or market opportunity for
them to be in independent publicly traded company,
because being public is just a form of financing.
You sell stock to the public and they give you money,
which you then invest in the company to grow the company.
The expectation when you're public is that you'll continue that grow, so
sometimes the company, just the market opportunity, isn't large enough.
And the best thing for the company is to be part of something else, and
that would be the same reason why an entrepreneur would sell a company.
Clearly, from a returns standpoint, the larger and the higher evaluation a company
can get, the better it is if you're the venture investor, as well as, if you're
the entrepreneur, obviously, because you end up with a larger piece of the pie.
That decision is a challenging one, in that decision, should you sell or
should you not, there are many examples of people who sold company's,
that said I should have never of done it.
And there's people that had opportunity's to sell the company's and didn't, and
wish they had.
[LAUGH] And it's very situational.
And you sort of have to believe in the long term potential of the company,
whether you can build something that is sustaining as a public entity.
>> For this specialization, we have viewers from all over the world.
All of them haven't had the opportunity to affiliate with a prominent university or
a prominent company.
What can they do to increase their networks and their exposure?
>> Well one, I think today we live in a world that is unlike ever before,
how interconnected we all are electronically is just amazing.
Today, you can get on LinkedIn, for example, and you can search for
someone who has a specific domain experience or something, and
you can reach out to them and connect with them.
And leveraging things like that to connect with people and not being afraid and
bashful, if you will, to do that.
You're not going to get 100% of the people to respond, but
you just sometimes need a few.
So leverage all these great tools that are out there for
connecting with people is the first thing.
I think another thing that's amazing is just simply how much content there is to
consume.
Today, whether it's like this or blogs and medium and other sources of content.
There's just so much rich content that you can find and consume to teach yourself.
Just be a student and be curious, and learn, and listen, and
read, it's a time like no other, it's just phenomenal.
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