Disciplined Entrepreneurship: 24 Steps to a Successful Startup

Praise for Disciplined Entrepreneurship "Entrepreneurship is not only a mindset but a skill set. The 24 Steps presents a practical step–by–step process to channel the creative spirit to maximize the chances of success and ultimate impact." —Mitch Kapor, founder, Lotus Development Corporation "Entrepreneurship is a learned skill which can be honed through crisp execution. This book can help every entrepreneur dramatically increase the likelihood of success by providing step–by–step guidance on how to approach starting a new business. I recommend it to all ambitious entrepreneurs." —Doug Leone, Managing Partner, Sequoia Capital "While the spirit of entrepreneurship is often about serendipity, the execution is not. This book takes you through a systematic approach to significantly increase your odds of succeeding in making a world–changing and sustainable company." —Joi Ito, Director, MIT Media Lab "While I am not a big fan of business plans, I am a big fan of the business planning process. This book provides an invaluable comprehensive framework for innovation–driven entrepreneurs to execute the business planning process." —Brad Feld, Managing Director of the Foundry Group, co–founder of TechStars, and creator of the Startup Revolution book series

PREFACE xiii ACKNOWLEDGMENTS xv INTRODUCTION 1 SIX THEMES OF THE 24 STEPS 11 STEP 0 Getting Started 15 STEP 1 Market Segmentation 23 STEP 2 Select a Beachhead Market 41 STEP 3 Build an End User Profile 49 STEP 4 Calculate the Total Addressable Market (TAM) Size for the Beachhead Market 57 STEP 5 Profile the Persona for the Beachhead Market 69 STEP 6 Full Life Cycle Use Case 83 STEP 7 High–Level Product Specification 91 STEP 8 Quantify the Value Proposition 103 STEP 9 Identify Your Next 10 Customers 113 STEP 10 Define Your Core 121 STEP 11 Chart Your Competitive Position 131 STEP 12 Determine the Customer’s Decision–Making Unit (DMU) 139 STEP 13 Map the Process to Acquire a Paying Customer 149 STEP 14 Calculate the Total Addressable Market Size for Follow–on Markets 157 STEP 15 Design a Business Model 163 STEP 16 Set Your Pricing Framework 173 STEP 17 Calculate the Lifetime Value (LTV) of an Acquired Customer 181 STEP 18 Map the Sales Process to Acquire a Customer 195 STEP 19 Calculate the Cost of Customer Acquisition (COCA) 203 STEP 20 Identify Key Assumptions 219 STEP 21 Test Key Assumptions 225 STEP 22 Define the Minimum Viable Business Product (MVBP) 235 STEP 23 Show That “The Dogs Will Eat the Dog Food” 245 STEP 24 Develop a Product Plan 253 POSTLUDE: A BUSINESS IS MORE THAN 24 STEPS 261 GLOSSARY 263 ABOUT THE AUTHOR 265 INDEX 267

Bill Aulet is the managing director of the Martin Trust Center for MIT Entrepreneurship as well as a senior lecturer at the MIT Sloan School of Management. Prior to joining MIT, he had a 25-year track record of success in business, from his start at IBM to his experience as a serial entrepreneur. He started and ran Cambridge Decision Dynamics and SensAble Technologies. He works around the world with entrepreneurs, small companies, large companies, and governments to promote innovation-driven entrepreneurship.