Strategy for Entrepreneurs

Strategy for Entrepreneurs (SFE) helps students develop better strategies for the ventures they start and the startups they will join.

The course is organized around the fact that the value of startups, at the end of the day, is that they bring new forms of competition to the market. When you build a startup, you are creating a new competitor that will serve customers who were unexcited or underserved by existing products; that will compete to raise capital with thousands of other ideas clamoring for investment; that will hire employees and work with suppliers who could have worked elsewhere; and if all goes well, you will create and capture value in ways existing firms don’t and future entrants can’t. Crucially, the competition startups bring to the market is not necessarily “zero-sum.” By identifying how you and your startup bring new forms of competition to the market—be it through breakthrough innovations, novel product experimentation, or unique business economics—this course will highlight both how to drive startup success and how startups drive economic growth, productivity, and progress.

To help students explore these ideas, the course is organized around three modules.

The first module helps students answer the question: Where should you compete? For startups to bring genuinely new forms of competition into the world, founders and early employees must discover places where such competition is needed and where a business solution is possible. Fortunately, our different backgrounds, experiences, and knowledge give each of us an edge in identifying “broken markets” where a startup might be able to bring much-needed competition. Unfortunately, our differences can also blind and hinder our efforts, leading founders to misperceive how broken a market is, mistime entry, or even identify the wrong reasons for market failure. This module explores this tension, helping students understand how to leverage their personal backgrounds to discover “broken markets” with massive startup potential while also teaching students how to best test their ideas so that they don’t end up fixated on false problems.

The second module helps students answer the following question: How should your firm compete? If the first module focuses on finding a market where competition is needed, the second module focuses on how to compete best given the selected market. The core of this module is how to design, experiment with, and pivot between less and more effective business models. In a given market, what makes a business model better or worse at driving greater valuation? What makes a business “just” a 2x business versus an outlier 50x business? How do you measure and test if your strategy reflects the actual causal drivers of your business, and how can you tell when you have a model that fails to account for the realities of competition? When and how should founders, especially given how varied our skills and backgrounds are, pivot between different business models? How do new technologies shift the kinds of strategies you can develop? How do you map your business model to financial metrics?

The final and third module focuses on later-stage startups and asks: Where should your firm compete? If the first module is focused on how you can identify broken markets, this module focuses on how firms can identify new market opportunities to broaden where they compete and create value. Similar to our personal differences, firms are different too, and in these differences lie opportunity. This final module explores how later-stage firms can build from their unique capabilities and competencies to extend the competition they create into more markets. How do you work out which market to prioritize? Does entering a new market undermine your existing advantages? How do you design experiments to test if your firm’s advantages generalize?

While each module highlights the different ways in which startups compete, the course progression also highlights an under-appreciated fact about how strategy evolves in firms. Early on, a startup’s strategy is rooted in the founder’s individual differences, backgrounds, and knowledge. With time, the strategy becomes untied from the founders and becomes, to an ever greater extent, tied to the firm. Managing this transition from founder- to firm-led strategy—especially during business model pivots—is crucial and an all too common point of failure that hold startups back.

Beyond these three modules, the course features ten new cases , numerous and diverse class guests, new in-class exercises, and assignments that will push you to write and to experiment. Developing a strategy is akin to developing a “thesis” or “hypothesis” in the sciences, and just like like with the development of a new scientific idea, strategies are improved when we write them down, get feedback on our written ideas, and then edit them to be better. However, as in science, a thesis for which you don’t gather data, build a prototype or run a test ends up being not worth much at all. As such, the course will expect you to write and test your ideas while also giving feedback to your classmates. Instead of waiting for a final project or exam, you will practice and develop your ability to build a strategy throughout the course.