Course Overview

All startup ideas start as theories. They are conjectures, hypotheses, and predictions about how a firm might make lots of money by solving a problem that the market has yet to solve. As with any new theory, knowing with one hundred percent certainty if a startup idea will work is impossible. Worse yet, a startup idea is a bet with an unknown probability of success (P) and an unknown payoff (V). When inspiration strikes, and you write down an amazing startup idea on a napkin, you don’t know if it will work, and you don’t know how much value it will generate.

A good startup strategy helps you effectively learn about your idea’s chances of success P and the value your firm might create V. The benefits of learning are twofold. First, you generate signals about your idea’s potential that can convince others—from investors to employees—to join you. Second, if you learn your idea stinks, you can iterate and pivot to a new, more promising idea.

But learning—especially about startup ideas—is challenging. Signals are biased and noisy. Designing experiments is non-trivial, and running them is expensive. Failure is hard to admit and learn from. Startup ideas are often vague and illogical. Getting to and listening to feedback is never easy. The ideas with the most potential and impact are often also the ideas that are hardest to test. And even when you learn as best as possible, your odds of minting a billion-dollar company are slim.

This course is structured to help you learn in the face of all these challenges.

Towards this end, the course is structured into five modules. The first module introduces the course and the frameworks and tools we will use throughout the semester. The second module delves into “Missing Value” to explore entrepreneurs' strategies to develop and test novel theories of value creation and capture, allowing them to notice gaps in the market that would not otherwise have been served. The third module on “Measuring Value” delves deeply into the financial considerations of theory generation and experimentation. The fourth module, “Testing Value,” involves running an actual experiment that tests your startup idea. Finally, the fifth module focuses on “Discovering Value” and how we, as human entrepreneurs struggle to learn. It features new cases, more course guests, and an Individual Progress Feedback session with me.

Course Deliverables

Beyond the required reading and in-class exercises, the course requires you to complete four written assignments and to give feedback to your peers thrice. Each assignment is cumulative and involves developing a single “Strategy For Entrepreneurs” (SFE) memo over the semester. Your first memo will be the basis for your second memo and, eventually, your final submission. The memos will follow a standardized template with a hard limit of 10 pages! The template will be shared with you in class. Alongside your memo, you will, as the semester develops, build a 5-slide deck that summarizes your memo and crystalizes what you have learned from the experiments you have run this semester. You will use this deck to share your learnings at the end of the course.

The SFE memos will help you, as you might have guessed from the name, build and develop an entrepreneurial strategy for a venture idea you have been considering or have already started. The memos aim to help you resolve the core sources of uncertainty at the heart of any entrepreneurial venture: Is my theory of value creation and capture valid? In testing whether your theory of value is correct, you will also be asked to generate signals that (in)validate your theory by running experiments during the semester.

You can find the memo, with instructions about how to use it, here.

You can find a blank memo you can copy and fill in yourself here.

The template for the deck will be shared later in the semester (start by writing, not by PowerPoint!)

If you are in my course, Strategy for Entrepreneurs, I will send a blank memo with your name to work on during the semester. This makes it easier for me to assign peer feedback partners and track progress.

Complementing the SFE memos, you will give your peers feedback on their memos three times during the course. This feedback will happen both outside of class (you will leave comments and questions in their memo Google Docs) and in class (you will sit with a peer and give real-time feedback after reading the memo beforehand). These will let you practice giving constructive feedback on each other's ideas and build stronger relationships with your peers in the course. My research shows that peer advice and improved social feedback dramatically improve startup performance and strategy development. To incentivize helpful feedback, you will be partially graded on how well your randomly assigned feedback partners perform.

The SFE memos and peer feedback exercises are due at the following times:

• 📝 SFE Memo Draft 1: Complete the first draft by Sunday 2/16 11:59pm.
• 📝 SFE Feedback 1: Complete online peer feedback by Thursday 2/20 11:59pm.

• 📝 SFE Memo Draft 2: Add experiment results to your memo by Sunday 3/09 11:59pm.
• 📝 SFE Feedback 2: Complete online peer feedback by Thursday 3/11 11:59pm.

• 📝 SFE Memo Draft 3: Updated memo & deck draft by Sunday 3/30 11:59pm.
• 📝 SFE Feedback 3: Complete online peer feedback by Thursday 4/2 11:59pm.
• 📝  Individual progress feedback with the Professor for 20 minutes between 4/4-4/23. This is a required and graded check-in; I will grade your memo and how well you leverage the office hours to improve. I will give you lots of feedback and help you chart your career and startup post-graduation.
• 📝 SFE Deck: Your 5-slide deck for final presentations is due by Wednesday 4/16 11:59pm.
• 📝 SFE Final Memo (Draft 4): Final memo is due by Sunday 4/27 11:59pm.

Course Grading

• Participation during classroom discussion.
• 25% of your course grade. In-class case discussion participation is graded in terms of how well you listen, how often you participate, and the quality of your comments.
• Your memo drafts 1, 2, and 3.
• 20% of your course grade. Graded on your arguments' quality, evidence, and how much you learned.
• Your online feedback #1, #2, and #3 and your individual progress feedback session with me.
• 30% of your course grade, with 20% from the online feedback and 10% from the individual progress session with me.
• Each online feedback session accounts for 6.6% of your grade. You will be graded on the usefulness of your comments, measured by the quality of your edits to their HBS memos, the quality of the questions you ask in their FAQs, and the observed improvements in the final project scores for the peers you are randomly assigned to give feedback to.
• Your individual progress feedback session with me will count for 10% of your grade. Beyond giving you feedback, during this session I will also evaluate how well you use our office hour meeting to discuss your progress; think of this part as great practice for when you start going to office hours with the partners at YC or Sequoia.
• Final draft of your memo (Draft 4) of your “SFE” memo and your final SFE deck & presentation.
• 25% of your course grade
• Graded similarly to the first two assignments above. It is worth noting that you can receive high grades for realizing your startup isn’t going to work or if you get stymied by one of your peers’ FAQ questions. That said, the value of startup “failure” drives learning. Good “failure” memos will reveal deep learning and meaningful insights.
• If requested, I am more than happy to provide extensive comments on your final draft and meet with you to discuss the next steps in developing your idea.

Course Norms

This class only works if we build, as a class, a shared sense of psychological safety. Dreaming up startup ideas requires generating seemingly “dumb” ideas (e.g., Airbnb’s “silly” couch-surfing origins) and also helping one another realize that sometimes our ideas are—despite our best efforts—kinda dumb (e.g. Juicero). Our goal as a community is to be frank in our assessments of a startup’s strategy and constructive in our approach. To do so, we need to feel comfortable asking each other for more evidence, critiquing each other's ideas, and pushing back against untested assumptions while making everyone feel like our class is a place where mistakes are okay, and we all can learn. If startups are all about experimentation and learning (and they are!), our classroom must also be.

MISSING VALUE: STRATEGY AS THEORY AND EVIDENCE

1. Introduction to SFE

2. Simplisafe

3. Beam

4. mPharma and Startups as Theory

February 07

This session will dive into how to write and develop your startup strategy memo. In the first 50 minutes of, class we will discuss the mPharma case to better understand how to develop an initial idea and how to test it. In the final 30 minutes, we will go over how to think about writing your memo.

mPharma DIscussion

Gregory Rockson, the CEO and co-founder of Ghana based mPharma, is at a crossroads. His Electronic Prescription Network (EPN) strategy is unravelling. A new Vendor Managed Inventory (VMI) strategy is showing promise in an early pilot, but Rockson is still concerned that this new approach might be repeating past strategic mistakes. Even if it does work, will the VMI increase the availability and reduce the cost of prescription drugs in Ghana and, eventually, across the African continent?

Required

• mPharma (A)

Assignment Questions

1. Was the EPN a promising idea? Why?
2. Will the Rockson’s new VMI strategy succeed?
3. Do you think the VMI strategy will lead pharmacists in Ghana to lower the prices they charge to patients? Why?

Startup Strategy Memo

Required

• Instructions for your “How to Develop a Strategy Strategy” Memo
• Hypothesis-Driven Entrepreneurship by Eisenmann, Ries, and Dillard (Canvas)

Optional

• Chapters 4 and 5 from Bryar and Carr - Working Backwards
• Download Chapter 4
• Download Chapter 5

Assignment Questions

1. Reflect on the startup ideas you have been pitched, read about in other courses, and read about on websites like Launch YC. What do they miss? What one tip would you give to other founders to improve the quality of their startup “theories”?

5. Lyra

February 13

Sean McBride joined Lyra in 2015 after graduating with a joint degree from HBS and HKS. Over the last seven years, McBride helped scale Lyra from the seed of an idea into a mental health venture valued at over $5 billion at its Series G in early 2022. With revenues north of a quarter of a billion dollars, the firm commanded a nearly 20x revenue multiple.

Required

• Lyra Health: Transforming Mental Health

Assignment Questions

1. What market frictions(s) in the mental health market did Ebersman and the rest of the Lyra team identify and set out to solve? Why were they not already solved?
2. Conceived as a SaaS marketplace platform connecting patients with independent providers, Lyra pivoted and brought providers onto its payroll as W-2 employees. While enabling the venture to match provider supply to patient demand, the pivot caused margins to plummet by order of magnitude, from 80% to closer to 8%. Do you think the “blended care” business model outlined on pg. 8 solves the margin problem? Why?
3. Which expansion opportunity should Lyra pursue first? Why?
1. Add non-US international coverage
2. Expand into higher acuity care
3. Target 500-1,000 person businesses
4. Sell to government health care plans

6. Proactive for Her and Testing Strategy

February 14

Achitha Jacob and her company, Proactive for Her, had come a long way since she dropped out of HBS in 2020. Her company had raised a multi-million dollar Series A round, had 20 doctors on the payroll, and now operated an offline clinic alongside the startup’s online offerings. In the next two years, Jacob’s goal was to scale her company 100x, from serving one-thousand women to one hundred thousand.

Required

• Proactive for Her case
• Skim the Seed and Series A pitch deck case supplements.

Optional

• Murray - Mothers of Invention
• Criado-Perez - Invisible Women

Assignment Questions

1. In the summer of 2020, Achitha Jacob dropped out of HBS to pursue “Proactive for Her” full-time. Do you think that was the right decision? What would have been the benefits of waiting a year? The costs? When is the right time to quit your job or coursework to start a venture?
2. Jacob’s original vision was an online first women’s health company. Her experiments with at-home diagnostics and doctor aggregator models failed to resonate with patients. How should these experiments inform Jacob’s online strategy?
3. Do the “failed” home diagnostics and doctor aggregator experiments suggest the women’s health market is perhaps less promising than Jacob and her investors like Anand Datta initially believed?
4. Given Jacob’s ambitious growth goals (see Seed and Series A deck supplements), what should be Jacob’s strategy moving forward? With limited capital and attention, should her focus be on growing the offline or online business?

SOCIAL VALUE: LEARNING FROM FEEDBACK AND ADVICE

7. Foodology

Februrary 20

Daniela Izquierdo and Juan Guillermo Azuero graduated from HBS in June 2019. Both thought they were destined for consulting, but by April 2020, they were co-founders of Foodology and were pitching their startup in HBS’s Alumni New Venture Competition.

Required

• Foodology: Creating a Virtual Restaurant Group in Latin America.
• Please pay special attention to Exhibit 1 (their New Venture Competition application) and Exhibit 6 (The feedback from New Venture Competition Judges). You can skim Appendix A.

Assignment Questions

1. Foodolody started with four brands: Breakfast oriented Brunch & Munch (California-style) and Cacerola (Colombian options) and lunch and dinner-oriented Avocalia (healthier alternatives like salads and bowls) and Burritos & Co. (Tex-Mex). Should Izquierdo have instead focused and started with just one brand? Similarly, would a food truck or a pop-up in an established restaurant have been equally effective as a launch strategy to test the value created? Why?
2. Review Exhibit 6, then:
1. Pretend you are judge “T,” please rate Foodology’s New Venture Competition application (Exhibit 1) on the four dimensions as the New Venture Competition judges, calculate a total score, and write a few sentences of comments.
2. Write down the letter of the judge you think gives the worst feedback. Put differently, which piece of feedback should Izquierdo and Azuero should ignore? Why?
3. Write down the letter of the judge you think gives the best feedback. Put differently, which piece of feedback should Izquierdo and Azuero listen to the most? Why?
3. Exhibit 2 and Appendix A highlight the many other cloud kitchen startups scaling worldwide, particularly in LATAM. Are Izquierdo and Azuero too late? Should they be worried about “first mover advantage?” Do the financial metrics in Exhibit 5 make you more or less worried?

8. Strategy Feedback Workshop #1

February 21

BRING YOUR LAPTOP TO CLASS!

During this in-class workshop, you will receive and provide in-person feedback in two teams of three people. Your feedback teammates will be drawn from a subset of your peers who read your memos before class. This workshop will let you dig deeper, providing context for your feedback, providing help to your peers, and giving you time to learn more from your classmates.

Required

• Your laptop so that you can read each others’ memos.
• Have reviewed your peers’ memos and provided feedback.

TESTING VALUE: BUILD AND EXPERIMENT

9. Building and Testing with Generative AI

February 26

TBA w/ guest Thomas Baker.

10. Build Time #1

February 27

Build and test your idea inside or outside of the classroom. We will have experts in class to help you build.

11. Build Time #2

February 28

Build and test your idea inside or outside of the classroom. We will have experts in class to help you build.

MEASURING VALUE: THE ECONOMICS OF STARTUP EXPERIMENTS

12. Framebridge

March 06

Tim O’Shaughnessy was concerned with founder and CEO Susan Tynan’s strategy. Framebridge’s annual revenue had grown about 50% from just under $16 million in 2017 to $23 million in 2018. But operating income losses had grown almost as much, rising 40% from a loss of $14 million in 2017 to a loss of $20 million in 2018.

Required

• Framebridge Case

Optional

• Framebridge Pitch Deck Supplement

Assignment Questions

1. Should Tynan double down on her existing strategy or pivot to a new business model? Why? If you think she should pivot, what should her new business model be?
2. Having decided on a strategy in the question above, what concrete changes would you make to Framebridge? For example, would you need to hire new executives? Fire existing talent? Change how the factory operates? Open stores? Change pricing? What short-term metrics would tell you that your changes are working?
3. Given your answers to 1 and 2, how will your strategy impact the economics shown in the income statement in Exhibit 10? If you added a column for 2019 in Exhibit 10 what would change and by how much? In 2020? Be specific and write down hard numbers!
4. How would you convince the board of your plan (Exhibit 6)? What would they want to hear? What evidence would they need to see?

13. Washio

March 07 Washio with guest Jordan Metzner

Jordan Metzner had been living the California dream. His Los Angeles based company, Washio, had seen monthly revenue grow from $57,000 in November 2013 to $224,000 in June 2014. The Series he raised in June of 2014 valued the company at $40 million, valuing the company at 15X annual revenue. However, just a year later Metzner was struggling to raise a Series B round and Washio was losing $860,000 a month, leaving the company just months of runway.

Required

• Washio (A) case
• Three short (B) cases that provide helpful scenario analysis.

Optional

• You can also find an optional but very useful reading here on Finance for startups.

Assignment Questions

1. Should Washio raise prices? By how much? Use exhibits in the (A) case along with the scenarios in the (B1) case to quantify your argument.
2. Should Washio cut costs? Where and by how much? Use exhibits in the (A) case along with the scenarios in the (B2) case to quantify your argument.
3. Should Washio vertically integrate? Use exhibits in the (A) case along with the scenarios in the (B3) case to quantify your argument.
4. Review the P&L (Exhibits 1 and 8) and cash flows (Exhibit 7). If you had a time machine, what date would you travel back to? What would you tell Metzner to do?

14. Ethena

March 12 Ethena

Required

• Ethena case
• Case supplements 1 and 3 (Pre-seed and Series A decks)
• Bill Gurley - All Revenue is Not Created Equal: The Keys to the 10X Revenue Club

Optional

• Ethena case supplement 2 (Seed stage deck)
• When a VC Passes, And Is Wrong: Real Talk Between Me and Ethena’s CEO Roxanne Petraeus
• Moore - Crossing the Chasm

Assignment Questions

1. Why was Petraeus able to recognize the opportunity present in the compliance training market? How similar is the strategy outlined by Petraeus and Solmssen in their pre-seed (Supplement 1) and Series A (Supplement 3) pitch decks? What do the similarities and differences reveal about the promise of this startup idea?
2. Review Gullov-Singh’s analysis of the mid-market opportunity. Are you convinced that targeting the mid-market would enable the team to “cross the chasm” and scale the business? Why?
3. Should Ethena focus on enterprise sales? Why is it better or worse to compete for enterprise rather than mid-market customers?
1. If you think they shouldn’t target enterprise, what experiments or data would convince you otherwise? Be specific.
2. If you think Ethena should focus on enterprise, is Petraeus still the right person to lead Ethena?
4. Read Bill Gurley’s All Revenue is Not Created Equal: The Keys to the 10X Revenue Club. Is the Ethena business model closer to a 1x or 10x valuation-to-annual-revenue business? Why? Do you think enterprise or mid-market segment will drive greater multiples long term?

15. Strategy Feedback Workshop #2

March 13

BRING YOUR LAPTOP TO CLASS!

During this in-class workshop, you will receive and provide in-person feedback in two teams of three people. Your feedback teammates will be drawn from a subset of your peers who read your memos before class. This workshop will let you dig deeper, providing context for your feedback, providing help to your peers, and giving you time to learn more from your classmates.

Required

• Your laptop so that you can read each others’ memos.
• Have reviewed your peers’ memos and provided feedback, most importantly FAQ questions.

16. Build Time #3

February 14

Build and test your idea outside of the classroom.

17. The Bessemer Memos

March 27

This session will dive deeper into how others interpret your startup idea. How do they interpret your theory of value? What makes them believe you experiments? Towards this end, you will read actual investment memos penned by Bessemer Venture Partners (BVP). I have masked the company names to create a tad more suspense in our discussion of the memos. After delving into the memos, you will get a chance to write your own brief memos as part of an in class exercise where you will pitch your startup idea to your peers who will then pen a brief Bessemer style investment memo.

Required

• WorkDeal Memo
• CamCo Memo

Assignment Questions

1. Cowan, Cham, and Kurzweil recommend an investment of $200k CamCo. Do you agree with them? If you do, would you invest $1mm?
2. Fisher, Levine, and Reshef recommend buying ~17.5% of WorkDeal for an investment of $3.5mm. Do you agree? How does the Outcomes Table on page 7 influence your decision?
3. Please be prepared to give a two-minute elevator pitch of your startup idea to your peers. This will be verbal pitch, no slides or handouts, just you talking about your idea.

18. Primetime Partners

March 28

A new case on Primetime Partners with guest Abby Levy.

DISCOVERING VALUE: HOW FOUNDERS LEARN

19. TBA

April 02

TBA

20. Strategy Feedback Workshop #3

April 03

BRING YOUR LAPTOP TO CLASS!

During this in-class workshop, you will receive and provide in-person feedback in two teams of three people. Your feedback teammates will be drawn from a subset of your peers who read your memos before class. This workshop will let you dig deeper, providing context for your feedback, providing help to your peers, and giving you time to learn more from your classmates.

Required

• Your laptop so that you can read each others’ memos.
• Have reviewed your peers’ memos and provided feedback, most importantly FAQ questions.

21. Individual progress feedback with the Professor

April 04

Individual progress feedback session with the Professor for 20 minutes between 4/4 through 4/23. This is a required and graded check-in; I will grade your memo and how well you leverage the office hours to improve. I will give you lots of feedback! We will book feedback “office hours” during and outside the allotted class time to fit everyone in. You don’t need to meet with me every week (not enough hours in the week!), but you do need to meet me at least once.

22. TBA

April 10

TBA

23. Individual progress feedback with the Professor

April 11

Individual progress feedback session with the Professor for 20 minutes between 4/4 through 4/23. This is a required and graded check-in; I will grade your memo and how well you leverage the office hours to improve. I will give you lots of feedback! We will book feedback “office hours” during and outside the allotted class time to fit everyone in. You don’t need to meet with me every week (not enough hours in the week!), but you do need to meet me at least once.

24. Skylight

April 16

Skylight with guest Michael Segal

TBA

25. Final Presentations I

April 17

26. Final Presentations II

April 18

27. Individual progress feedback with the Professor

April 23

Individual progress feedback session with the Professor for 20 minutes between 4/4 through 4/23. This is a required and graded check-in; I will grade your memo and how well you leverage the office hours to improve. I will give you lots of feedback! We will book feedback “office hours” during and outside the allotted class time to fit everyone in. You don’t need to meet with me every week (not enough hours in the week!), but you do need to meet me at least once.

28. Submit final “Startup Strategy” write up

April 27