NYU Stern School of Business

Undergraduate College

MGMT-UB.0085.001 (C50.0085): PATTERNS OF ENTREPRENEURSHIP

Fall 2011

Instructor Details

Okun, Glenn

gokun@stern.nyu.edu

By appointment

KMC 7-53


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.

 

Course Meetings

TR, 11:00am to 12:15pm

Tisch T-UC19


Final Exam:

Schedule exceptions
    Class will not meet on:
    Class will meet on:

 

Course Description and Learning Goals

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 September 23 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.

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: gokun@stern.nyu.edu and gokun@optonline.net.  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.

 

Course Outline

September 6        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?

September 8           Session #2                              

                                    Case:               “Magdalena Yesil”

                                    Reading:          The Road Well Traveled (Bhide)

                                                                                    Questions:       Should Magdalena join USVP?  What are the position’s advantages and disadvantages?

 

September 13      Creating and evaluating opportunities for new ventures

Session #3                              

                                    Case:               “ILinc”

                                    Reading:          Writing a Business Plan:  The Basics

September 15      Session #4      

                                    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)

September 20      The Venture Capitalists

                             Session #5       The Institutional Investment Decision

                                    Case:               “Yale University Investments Office: July 2000”

                                                                                    Questions:       How has Yale selected, compensated and controlled private equity fund managers?  Compare the approach with the approach used in other asset classes.  How has Yale determined the timing of investing in this asset class?  What are the risks in Swensen’s private equity strategy?

                          September 22      Session #6      

                                    Case:               “Martin Smith

                                    Questions:       Which deal should Martin recommend that his organization

                        pursue?     Evaluate the investment process.

 

September 27        Conducting Due Diligence: The Investor’s Perspective

Session #7      

                                    Case:               “Eclipse (A)”

                                    Reading:          “Some Thoughts onBusiness Plans”

 

Questions:       What issues require investigation after analyzing the 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?

September 29        Session #8      

              Case:               Eclipse (B,C,D)” (to be handed out)

                                                                                    Reading:          Venture Capital (Bagley), Chapter 13 from The Entrepreneur’s Guide to Business Law (Thomson)

                                  Questions:       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?

October 4                                          Session #9

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.

 

October 6                                          Business Planning

Session #10    

                                                                                      Review “Some Thoughts on Business Plans”.  Please bring your questions to class.

October 13                                       Gadget Assessment Day

Session #11

                                    Groups            will evaluate technologies and determine their commercial viability.              

                                                                  

October 18                                       Evaluating the Plan: the Entrepreneur’s Perspective

Session #12    

                                    Case:               “The Knot

Questions:       What is the nature of the opportunity?  Evaluate the the team, the business model and the risk reward ratio.  How much money should be raised?  Describe the target investor, valuation and use of funds.

 

October 20           The Business Model

Session #13                            

              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.

 

October 25                                       Gadget Assessment Day

Session #14

                                    Groups            will evaluate products and devise business models.

 

October 27           Acquiring needed resources (human and financial)

Session #15     The Entrepreneur’s Perspective

                                    Case:               “R&R”

Readings:        Bootstrap Finance (Bhide)                 

                        “Deal Structure”

                                                            “The LegalForms 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?

November 1                  Session #16   

              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?

November 3                     Session #17    

              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?

 

November 8                  Finance for Entrepreneurs: Almost Everything a Founder Needs to Know

                             Financial statement prep for business plans

Session #18

                                    Case:                           “Truckitnow”

                                    Reading:                      Building Your Pro-Forma Financial Statements

                                                                        Note on Financial Forecasting

 

November 10       Finance for Entrepreneurs: Almost Everything a Founder Needs to Know

Session #19

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”

November 15       Session #20    

 

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.

November 17       Challenges to Growth    

                             Session #21

              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?

                                 

November 22         Session #22

              Case:               “Vinod Khosla and Sun Microsystems (A)”

Questions:       How important is the CV order to Sun?   Recommend a course of action.

 

November 29       Session #23   

Case:               “Beenz”

Questions:       Evaluate the business model and strategy.   Recommend a course of action.

December 1         

                                 Session #24    

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.

 

December 6                    Session #25    

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?

 

December 8                    Acquisition Strategies for Growth

                   Session #26    

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”

December 13                 

                             Session #27

Case:               “Allen Lane”

Reading:         

 

Questions:       What is your offer?  Why?

             

December 15        Harvesting the venture

                             Session #28

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.

 

Required Course Materials

Required Materials.  

Cases and Readings Packet

The Entrepreneurial Venture (Sahlman et. al.)

 

Assessment Components

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

Classroom Contributions (including exercises):                                  20%

Case Report 1:                                                                                                30%

Group Project:                                                                                     50%

 

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 towrite 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:

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 research and analysis.

Written Report.Your report is due, by 9 AM, December 10.  Late papers will receive a grade of F. Each group should submit two copies of its final report. 

Text. The report should not exceed20 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: gokun@stern.nyu.edu and gokun@optonline.net.  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.

 

Group Projects

Guidelines for Group Projects

Business activities involve group effort. Consequently, learning how to work effectively in a group is a critical part of your business education.

Every member is expected to carry an equal share of the group’s workload. As such, it is in your interest to be involved in all aspects of the project. Even if you divide the work rather than work on each piece together, you are still responsible for each part. The group project will be graded as a whole:   its different components will not be graded separately. Your exams may contain questions that are based on aspects of your group projects.

It is recommended that each group establish ground rules early in the process to facilitate your joint work including a problem-solving process for handling conflicts. In the infrequent case where you believe that a group member is not carrying out his or her fair share of work, you are urged not to permit problems to develop to a point where they become serious. If you cannot resolve conflicts internally after your best efforts, they should be brought to my attention and I will work with you to find a resolution.

You will be asked to complete a peer evaluation form to evaluate the contribution of each of your group members (including your own contribution) at the conclusion of each project. If there is consensus that a group member did not contribute a fair share of work to the project, I will consider this feedback during grading.

 

Grading

At NYU Stern we seek to teach challenging courses that allow students to demonstrate their mastery of the subject matter.  In general, students in undergraduate core courses can expect a grading distribution where: 

Note that while the School uses these ranges  as a guide, the actual distribution for this course and your own grade will depend upon how well  you actually perform in this course.

 

Re-Grading

The process of assigning grades is intended to be one of unbiased evaluation. Students are encouraged to respect the integrity and authority of the professor’s grading system and are discouraged from pursuing arbitrary challenges to it.

If you believe an inadvertent error has been made in the grading of an individual assignment or in assessing an overall course grade, a request to have the grade re-evaluated may be submitted. You must submit such requests in writing to me within 7 days of receiving the grade, including a brief written statement of why you believe that an error in grading has been made.

 

Professional Responsibilities For This Course

Attendance

 

Participation

In-class contribution is a significant part of your grade and an important part of our shared learning experience. Your active participation helps me to evaluate your overall performance.
You can excel in this area if you come to class on time and contribute to the course by:

 

Assignments

 

Classroom Norms

 

Stern Policies

General Behavior
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior.  Students who fail to do so may be asked to leave the classroom. 

 

Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. 

 

Course Evaluations
Course evaluations are important to us and to students who come after you.  Please complete them thoughtfully.

 

Academic Integrity

Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:

The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:

Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505

To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin.  Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications.  Additionally, your document will become part of the Turnitin database.

 

Recording of Classes

Your class may be recorded for educational purposes

 

Students with Disabilities

If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) 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.

 

Printer Friendly Version