MANAGEMENT SCIENCE & ENGINEERING 273
TECHNOLOGY VENTURE FORMATION

Course Overview

Course Objective

The course uses a fast-paced and comprehensive learning environment to develop entrepreneurial skills for the successful formation and growth of technology companies.

Course Description

This course focuses on how technology ventures are created. The key factors of startup formulation are identified and evaluated through lectures and case studies that provide real-life opportunities for analysis, planning, and decision-making. The course brings in many successful entrepreneurs as guests. The strength of the course derives from intense study, preparation, and participation by those students with a strong interest in this subject.

A primary objective of the course is to identify the basic decisions that an entrepreneur faces. These include management and technology selection, product and process design, R&D investment, market analysis, marketing mix, positioning, product launch timing, financing, team development, and general management of operations.

The course is organized to reflect the steps required when starting a company. Concept generation and opportunity evaluation, financial and legal issues, team formation, and leadership are treated through both detailed analysis of specific cases and discussion of specific skills.

Most of the written and 'living' cases are integrative. They provide examples of good or poor fits in critical segments of technology ventures and startup strategies. Distinguished guests further enhance learning by sharing first-hand experience on new enterprise analysis and strategic thinking.

The course has no midterm or final exam. Instead, a technology-related written Business Plan and corresponding oral presentation are required. Teams of four join together to propose creation of a venture whose product idea comes from either personal creativity or one associated with an existing company. The 'product' can be a product, service, or hybrid of the two. A key requirement is its potential for high growth. The proposed venture must require third party funding or investment. Note that venture capital is not a requirement for your business; other forms of third-party financing are just as acceptable.

Class Participants

Class participants are graduate students with technical or non-technical backgrounds who have a career goal of becoming tomorrow's leaders as entrepreneurs, intrapreneurs (entrepreneurs within established firms), venture capitalists, investment bankers, management consultants, or senior functional executives in highly innovative and rapidly changing firms. Co-terminal students must have completed all requirements for their bachelor's degree. Admission preference is given to engineering students who are graduating (with top priority given to MS&E majors). Sorry, no auditors can be accommodated in the course.

Prerequisites:

There are no formal prerequisite courses for MS&E273. However, a working knowledge of accounting, finance and marketing is highly desired. This is typically satisfied by taking the following courses or their equivalents:

MS&E 140, E 60, MS&E 269, MS&E 270, MS&E 271, MS&E 272, E 145, ECON 90.

Accounting is especially important -- please take it before or simultaneously with MS&E 273 if at all possible. In addition, knowledge of organizational behavior (MS&E 180, MS&E 280 or their equivalents) could prove useful. Work experience is a definite plus!

Admission

All students requesting admission to MS&E 273 must fill out and print the Enrollment Form available on the class website anytime before the first class session, and hand in the completed enrollment application form in the first class session. Teams that are already formed to work around a specific business idea should clearly indicate that, and hand in their applications together. However, please note that interdisciplinary teams have produced superior business plans in past years, so we generally do not accept a team where all individuals come from the same department (e.g. all MS&E or all GSB).

The admission decision will also be based on the discussion of the NOVA Software case in the first class, which will be available on the website beforehand. Admission decisions will be posted on the class website within the first week of the quarter..

Required readings

The course reader are available online at HBS Online. The following three books are available at the Stanford Bookstore.

• MS&E Technology Venture Formation Course Reader (electronic),
  Blank, Lyons, Maclean - Fall 2007. (HBS Online)
• Technology Ventures: From Idea to Enterprise (2nd edition), Richard Dorf and Thomas Byers, McGraw-Hill Science, 2006.
• The Four Steps to the Epiphany, Steve Blank, Cafe Press, 2005.
• Business Plans that Work: A guide for Small Business, Jeffry Timmons, Andrew Zacharakis, & Stephen Spinelli, McGraw-Hill, 2004.

Optional:

• New Venture Creation: Entrepreneurship for the 21st Century
  Jeffry A. Timmons and Stephen Spinelli - 6th edition (2003) McGraw-Hill Higher Education
• The Entrepreneur's Guide to Business Law
  Constance E. Bagley and Craig E. Dauchy - 2nd edition (2002) South-Western Pub
• The Art of the Start
  Guy Kawasaki - 1st edition (2004) Portfolio Hardcover

Grading

The final grade is determined as follows:

• 25% Class Participation and Gate Presentations 1, 2 and 3
• 25% Written Business Plan
• 50% Oral Presentation of Business Plan

Classroom Participation

Class participation includes on-time attendance, the business plan milestones, and in-class participation. On-time attendance is crucial because the course only meets once a week.

The grading of in-class participation is difficult because of an element of subjectivity not present in grading written assignments. Nevertheless, it is a vital part of the course. Most students feel comfortable in speaking up with thoughtful comments and questions, but some do not, and we wish to be fair to everyone. We will not be grading on 'air time,' but rather on the quality of the question or comment.

We strongly encourage you to discuss each case in a study group in advance. It is best if your study group is the same as your business plan team. Note that there are no rights or wrongs in entrepreneurship, only choices. Some pitfalls can be avoided and there are ways of optimizing the probability of success. Participating in classroom discussion, freely and without fear, is strongly urged. No opinion is held in disregard, and only through active discussion can we arrive at some sense of reasonable action. As moderators, our role is to keep this effort moving toward a logical conclusion or decision.