FOUNDATIONS OF ENTREPRENEURSHIP MGMT-GB.3335.

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Professor Glenn A. Okun E-mail [email protected]

[email protected]
Office KMC 7-53

COURSE DESCRIPTION
This course seeks to explore the many dimensions of new venture creation and growth and to foster
innovation and new business formation in independent and corporate settings. The course will integrate
both an academic and practitioner view of the challenges facing entrepreneurs and investors involved in
entrepreneurial, venture capital, and private equity investment activities.

The course draws on a variety of disciplines, including management and finance, to develop
frameworks and techniques that are needed to plan, start, evaluate, and successfully operate ventures.

Course Themes
The course focuses on eight principal themes:
Defining entrepreneurship
Creating and evaluating opportunities for new ventures
Conducting due diligence
Acquiring needed resources (human and financial)
Generating sales and marketing initiatives for new ventures
Managing the growing business
Identifying and overcoming challenges in new ventures
Harvesting the venture

Course Methods
Class assignments and discussions are designed to develop the critical thinking, communication and
managerial skills necessary to successfully plan, start, operate or invest in ventures. Each class will
include discussion of readings, case analysis and group activities. Students will analyze cases with
an action orientation, for example, what steps should we take to further the development of the
venture? What are the venture’s risks and how should they be managed? How should the company
be financed? How should the deal be priced and structured? What tactics might be utilized in order
to secure a more favorable deal? We will adopt the perspective of different roles in all case discussions
(for example, the issuer versus the financier, corporate investors versus fund operators and angels).
A brief lecture and discussion of the assigned readings will follow the case analyses.
Classroom Contributions. The learning experience in a course like this one depends heavily on each
student being prepared to actively participate in every class session. We all have expectations that
will enrich the topic and direction of discussion in the course. This means that you need to be fully
acquainted with the readings and cases for a given session. Positive participation includes attendance,
active involvement in all in-class exercises and discussions, and maintenance of a classroom
demeanor that encourages the participation of others. You will be evaluated on the quantity as well
as the quality of your contribution and insights. Quality comments possess one or more of the
following attributes: (a) Contribute to moving the discussion forward; (b) Offer a different, unique
and relevant perspective on the issue; (c) Build on other comments of others; and (d) Include some
evidence or analysis of inherent tradeoffs, i.e., demonstrate reflective thinking.
Attendance Policy. Attendance at all sessions is expected. Absences will significantly impact the
class participation grade.

Laptop Policy. Laptops, cell phones and other electronic devices may not be used during class.

Written case analyses. Students will be required to prepare a written case-related analysis of “Eclipse
(A)”. This individual assignment is due on February 21 at 9 AM. It should be a maximum of 5 pages,
excluding exhibits. The case analysis papers consist of an in-depth written analysis and application
of techniques and methods to a venturing situation. The paper should address the questions assigned
in the syllabus. The case assignment will be graded for content and format. You are required to turn
in papers that conform to professional standards of organization, grammar, punctuation, spelling, and
paragraph/sentence structure. You may not discuss the case or share your work with anyone.

Late papers will receive a grade of F. Emails without attached papers or with attachments
that are unreadable by Microsoft Word will be considered to have not been submitted and
will also receive an F. An F will be quantified as a zero in the calculation of course grades.
No extensions to the deadlines will be granted.

Honor Code. Students must adhere to the MBA Honor Code. All students are obligated to report
to the instructor any suspected violations of the Code (see
http://w4.stern.nyu.edu/scorp/committee.cfm?doc_id=4797).

Student With Disabilities. If you have a qualified disability and will require academic
accommodation during this course, please contact the Moses Center for Students with Disabilities
(CSD, 998-4980) and provide me with a letter from them verifying your registration and outlining
the accommodations they recommend. If you will need to take an exam at the CSD, you must
submit a completed Exam Accommodations Form to them at least one week prior to the scheduled
exam time to be guaranteed accommodation.

Business Plan Proposal. See herein.

Delivery. Reports should be sent by email to each of the following two addresses:
[email protected] and [email protected]. Students must send two separate emails (not one in
which the other address receives a copy upon delivery). Do not compress files. Please only use Word
and Excel programs to produce and present your work. You should use a return receipt (notification)
flag option from your email system to allay fears of late delivery. This feature is available from the
email system at home.nyu.edu.

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Required Materials.

Cases and Readings Packet

The Entrepreneurial Venture (Sahlman et. al.)

Grading Plan. The course grade will be based on the following components and weights:

Classroom Contributions (including exercises): 20%

Case Report 1: 40%
Group Project: 40%

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Instructor
Glenn A. Okun is Clinical Professor of Management and Entrepreneurship at New York University
Stern School of Business where he teaches courses in entrepreneurship, private equity, venture
capital, investment management and corporate finance. Mr. Okun advises corporations on financial
and investment matters. He was President of Mitchum, Jones & Templeton, a merchant bank and
broker dealer headquartered in San Francisco, California from 1998 to 2001. He previously served
as a Director of Allen & Company Incorporated in New York. Mr. Okun invested in early and later
stage financings of private companies in various industries. He also ran a small cap emerging growth
stock hedge fund and a special situations portfolio. Mr. Okun has advised corporate clients on
mergers, acquisitions and restructurings and has underwritten public offerings and private placements
of securities. Mr. Okun began his investment career at the IBM Retirement Fund where he invested
in mezzanine private placements, real estate, public emerging growth equities and oil and gas assets.
Mr. Okun holds JD and MBA degrees from the joint degree program of Harvard University and a BA
degree from Wesleyan University.

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 SCHEDULE

February 3 Defining Entrepreneurship

Session #1
Case: “Emmet Stephenson: Profile of an Entrepreneur”
Reading: A Perspective on Entrepreneurship (Stevenson)

Question: What makes Stephenson an entrepreneur? What

entrepreneurial characteristics does he possess? Why has he
been successful?

Session #2
Case: “Magdalena Yesil”
Reading: The Road Well Traveled (Bhide)
Questions: Should Magdalena join USVP? What are the position’s
advantages and disadvantages?

February 5 Creating and evaluating opportunities for new ventures

Session #3
Case: “ICEDELIGHTS”
Questions: Evaluate the opportunity. How effectively have Paul, Mark
and Eric pursued the opportunity? What are the critical risks
faced by the business and by each of the individuals? What
are the potential rewards? Evaluate the deal structure. What
should they do?

Reading: Questions Every Entrepreneur Must Answer (Bhide)

Developing Start-up Strategies (Bhide)

February 10 Session #4
Case: “Martin Smith”
Questions: Which deal should Martin recommend that his organization
pursue? Evaluate the investment process.

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February 12 Session #5

Case: “Zipcar: Refining the Business Model”

Reading: “A Note on Business Model Analysis for the Entrepreneur”
Questions: What is the business model? How has it changed over time?
What does the data indicate about the business model’s
effectiveness? How should Chase react to the operating
results? Prepare an elevator pitch for Zipcar.

February 19 Acquiring needed resources (human and financial)

Session #6 The Entrepreneur’s Perspective

Case: “R&R”

Readings: Bootstrap Finance (Bhide)

“Deal Structure”
“The Legal Forms of Organization”

Questions: What factors created an opportunity for Bob Reiss and the
“TV Guide Game”? What risks and opportunities had to be
overcome in order to successfully pursue the venture? How
were the required resources obtained for the venture?

February 24 Conducting Due Diligence

Session #7
Case: “Eclipse (A)”
Reading: “Some Thoughts on Business Plans”

Questions: What issues require investigation after analyzing the Eclipse

business plan? How do you propose acquiring or developing
the information in order to understand the open issues and to
perform a risk assessment for the business?

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February 26 Session #8
Case: “Eclipse (B,C,D)” (to be handed out)
Reading: Venture Capital (Bagley), Chapter 13
The Entrepreneur’s Guide to Business Law (Thomson)

Questions: As a founder, how do you assess the attractiveness of having

PEP as an investor? How do you respond as the entrepreneur
to the additional analytical requests by PEP?

March 2 Group Exercise

Groups representing Eclipse and PEP will negotiate and

submit a revised draft term sheet for the financing. Your
document is due at 9PM by email.

March 4 Business Planning and the Business Model

Review “Some Thoughts on Business Plans”.

Please bring your questions to class.

March 9 Session #9
Case: “Palm Computing”
Readings: Legal Protection of Intellectual Property (Roberts)

Questions: What are Jeff’s most significant risks at this point in the
venture? What strategy should be adopted for accelerating
the development of Palm?

March 11 Session #10

Case: “Ockham Technologies: Living on the Razor’s Edge”

Reading:
Questions: Assess Jim’s effectiveness with his start-up. What board-
related considerations should be factored into the financing
decision? How should Jim handle his relationship with Mike?

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March 23 Finance for Entrepreneurs: Almost Everything a Founder
Needs to Know

Readings: “A Note on Pre and Post Money Valuations”

“A Note on Private Equity Securities”
“Valuation of Venture Capital Deals”
“A Note on Valuation in Private Equity Settings”

March 25 Session #11

Case: “Eclipse (E)”
Readings:

Questions: Compare the two offers and recommend a course of action.

Assess the firm’s fundraising effort.

March 30 Session #12

Case: “Palm Computing 2”

Readings: “Alternative Sources of Financing”
“Securities Law and Private Financing”

Questions: What is your recommendation? Evaluate each of the

proposals carefully, assessing the advantages, disadvantages
and risks of the proposals for both the business and for the
founders.

April 1 Generating sales & marketing initiatives for new ventures

Session #13
Case: “Granny’s Goodies”
Questions: How scalable is the company’s sales approach? How
effectively has the company assessed its market and
positioned Granny’s Goodies?

April 6 Session #14

Case: “Vinod Khosla and Sun Microsystems (A)”
Questions: How important is the CV order to Sun? Recommend a course
of action.

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April 8 Session #15

Case: “Beenz”

Questions: Evaluate the business model and strategy. Recommend a

course of action.

April 13 Managing the growing business

Session #16
Case: “The Johnsonville Sausage Company”
Readings: “The Five Stages of Small Business Growth”
The Challenge of Growth (Roberts)
Managing Transitions in the Growing Enterprise (Roberts)
Building the Self-Sustaining Firm (Bhide)

Questions: Evaluate Johnsonville’s alternatives. What is your

recommendation? Assess the advantages, disadvantages and
risks of the alternatives for both the business and for the
founders.

April 15 Session #17

Case: “Managing Segway’s Early Development”
Readings:

Questions: Evaluate Kamen’s approach to attracting strategic resources.

What problems do DEKA and Ginger face? What should
Kamen do about the 1999 bonuses and DEKA stock awards?

April 20 Planning for growing the business

Session #18

Case: “ThermoLase”
Readings:

Questions: Prepare a plan for the venture.

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April 22 Business Valuation for Entrepreneurs

Reading: Purchasing a Business: The Search Process (Roberts)

“A Note on Valuing Private Businesses”
“An Introduction to Cash Flow Valuation Methods”
“LBOs for Smaller Companies”

April 27 Acquisition Strategies for Growth

Session #19
Case: “Kendle International Inc.”
Reading:

Questions: What strategic choices does Kendle face? Should the firm be
sold in early 1997? Compare the sale price to the company’s
stand-alone value. Do the target acquisitions make sense?
What course of action do you suggest?

April 29 Session #20 Acquisition Strategies

Case: “Sirona”
Reading: “Technical Note on LBO Valuation (A)”
“Technical Note on LBO Valuation (B)”

Questions: Evaluate Schroeder Ventures’ pursuit of this deal. Propose

and defend, with spreadsheet models, growth and cost
reduction assumptions as well as an acquisition price.
Advocate deal terms and a transaction strategy.

Harvesting the venture

May 4 Session #21

Case: “Teleswitch (A & B)”
Readings: “A Note on the Initial Public Offering Process”
Questions: Should the firm go public? Assess the valuation approaches
used by the competing underwriters. Recommend a course of
action.

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May 6 Session #22
Case: “Nantucket Nectars”
Readings:
Questions: Recommend a course of action. Should the founders remain
independent, sell or go public? What is the value of the firm?
Structure a process for realizing value for the founders.

May 11 Session #23

Case: “Beta Golf”
Questions: Why does Beta Group exist? What is its business model?
How is innovation translated into value? What is a sensible
development plan for the technology? What are the choices
for exploiting the technology?

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 Business Plan Evaluation Project

The major assignment for the course will be a group project that involves assessing an early stage
company in which a venture capital or private equity organization might want to invest. The
objective of this group assignment is to write an evaluation of the firm’s existing business plan,
presenting your analysis of the plan and the venture concept as well as suggested revisions to the
strategy and implementation. Groups will be expected to address the following questions and issues:
• Evaluate the assigned firm and its opportunity.
• What are the strengths, weaknesses and risks of it current business plan?
• How effectively has the firm utilized its resource set to create shareholder value?
• What changes would you recommend in order to increase shareholder value?

Please present your business plan with specific information regarding the risks, required resources
and necessary deals as well as the timing involved. Describe and explain the value enhancement
that you believe that your business plan will create. Substantiate your recommendations with
analysis.

Written Report. Your report is due, by 9 AM, May 8. Each group should submit two copies of its final
report.
Late papers will receive a grade of F. Emails without attached papers or with attachments
that are unreadable by Microsoft Word will be considered to have not been submitted and
will also receive an F. An F will be quantified as a zero in the calculation of course grades.
No extensions to the deadlines will be granted.

Text. The report should not exceed 20 double-spaced typed pages with normal margins, excluding
exhibits, tables, figures, appendices, and references. The name of the firm analyzed, the names of the
team members responsible for the report preparation, the date, and the course number should be on the
fron t page.
Exhibits. Exhibits should contain specific types of analyses, such as financial ratio analyses, break-even
charts, decision tree analyses, organization charts, etc. In general, exhibits should contain any
information that is relevant, but would take up too much space if included in the body of the paper.
Exhibits should not be used as strictly an extension of textual material.
References. Footnotes should be used to acknowledge sources quoted in the text. The bibliography
should list all the sources referenced or quoted in the body of the text in alphabetical order by author.
Delivery. Reports should be sent by email to each of the following two addresses:
[email protected] and [email protected]. Students must send two separate emails (not one in
which the other address receives a copy upon delivery). Do not compress files. Please only use Word
and Excel programs to produce and present your work.

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