Hello, I'm Mattie Braham's and welcome to a special quick
thinks episode of Think Fast, Talk Smart, the podcast.
[MUSIC] Our recent episode on entrepreneurship
received such positive feedback, not just from Think Fast Talk Smart listeners.
But also from listeners of the GSB's Grit & Growth Podcast,
that we wanted to share even more for my interview with Stefanos Xenios.
Who is not only a GSB professor, but also the faculty director of the Center for
Entrepreneurial Studies.
In the main architect of the GSBs startup garage program,
enjoy this quick thinks episode.
Where Stefanos describes the steps involved in bringing
a successful entrepreneurial venture into being.
>> So, we begin with the premise that I explained earlier that the new venture
necessitates hypothesis.
And every founder of every founding team needs to do two things,
formulate hypotheses, and then test them with real data.
It's only then when you can go to investors and can credibly seek funding,
so we structured the course around two methodologies.
One is design thinking, that has been introduced by my colleagues
here at the design school, and the other one is lean startup.
And what we recognize is that you need the design thinking methodology
to help you formulate your hypotheses.
And then you need the lean startup methodology to test the hypothesis, so
first of all, what is a hypothesis for a new venture?
A hypothesis for a new venture is who, is your customer,
what is the pain point you're going to solve, how are you going to solve it?
What is your solution, how are you going to go to the market, and
how are you going to make money?
So you need to be able to answer those five questions, so first, you need to
come up with a hypothesis of what your answers to those five questions are.
So, we begin by having our students immerse themselves in the environment
of who they think their potential customer is going to be.
We give them an assignment that lasts for four weeks, talk to as many
future customers as possible, ask them for what their pain points are.
And then at the end of this four week period,
come up with a summary description, of who is your customer?
And what is the pain point that you want to address, and on a weekly basis,
we ask our teams to tell us how many interviews they have done.
But more importantly what have they learned from those interviews,
at the end of the four week period.
The students have an answer to the question,
who is the producer customer and what is the problem they have?
Then we teach them how to use brainstorming,
to generate alternative ways of addressing that problem.
To develop low resolution prototypes,
that they bring back to their customer and get feedback.
But also to develop the business model for the venture, how you will make money,
what is your go to market strategy?
For that we use a widely popular tool called, the Business Model Canvas.
We also asked them at that point to come up with an estimate,
of what is the total market size.
And to figure out whether the market is big enough,
to justify the capital necessary to build the venture.
By the end of the fourth quarter, this is two quarter class,
by the end of the fourth quarter.
The teams are ready to make a presentation,
in which we asked them to answer the following question.
Have you found a need that is worth addressing, and do you see a viable path
forward, do you believe you can build a venture around solving that need?
The teams that decide to continue with quarter,
the winter quarter they end up designing experiments.
Experiments for their go to market strategy, experiments for
their unit economics.
Experiments for product market fit,
we asked him to develop minimum viable products.
And test them with customers, and get feedback, and
iterate based on that feedback.
We also teach them how to evaluate term sheets,
that they would get from early stage investors.
And then finally, we prepare them for a pitch presentation,
that they would give in front of investors.
And we give them some of the nuts and bolts,
of how you pitch in front of investors.
But more importantly, we tell them that what they did fall and
winter quarter was gathering the evidence.
To put together the storm that they will share with investors, and
that's brings them to the end of the quarter.
With an investor pitch in front of a group of investors.
>> Wow, so everybody you just heard in a few minutes,
what takes two academic quarters to get to launch a new venture.
I find it really interesting and
should resonate with people who listen to this podcast frequently.
That a lot of time in your model is spent really understanding the potential
customer.
And we talk a lot here in communication,
that it's critical to really understand who your audience is.
And so it's nice to see that's super important in launching a new venture.
And I liked how you ended as well with something that we often talk about,
which is, you have to be able to tell a good story.
It's not just to have the evidence, but
you have to put that evidence into a good story.
>> Yeah, great founders are great storytellers, and
they have to tell different stories, they have to tell a story to their customer.
So that they can inspire them to test and use their new products, they
have to tell a story to their employees to inspire them to take some risk.
And then they have to tell a story to investors in their board, and
God, what I found from my experience teaching startup garage.
Is the closer you can get to your customer,
the deeper you can understand your customer.
The more authentic as an entrepreneur you are about addressing the need,
the more compelling your story is going to be.
Both for customers, investors and employees.
>> So that relevance can really help make it resonate, thank you.
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>> Thanks for joining us for another episode of Think Fast Talk Smart,
the podcast.
For more information and episodes, visit gsb.stanford.edu.
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