Chapter 15 Focus to Dominate with Less

Question 1

What is the proof of your planning in a venture?

Answer 1

The proof of your planning is in your take off.

Question 2

What is necessary to control a venture with limited resources?

Answer 2

Use skills to launch, monitor, adjust, and succeed.

Question 3

What type of ventures do VCs typically seek?

Answer 3

High-growth ventures with evident potential for growth.

Question 4

What is the average age of a venture when VCs get involved?

Answer 4

About four years.

Question 5

What percentage of VC investments are made after the early stage?

Answer 5

About 96 percent to 98 percent.

Question 6

Why do VCs prefer ventures to focus on one market?

Answer 6

To dominate that market before diversifying.

Question 7

What is a key strategy for VCs in terms of market focus?

Answer 7

Concentrate resources to dominate an attractive, fast-growing market.

Question 8

What type of business models do VCs like?

Answer 8

Direct-to-consumer models.

Question 9

Why do VCs prefer direct-to-consumer models over B2B?

Answer 9

They want fast success and high annual returns.

Question 10

What is a significant disadvantage of indirect channels for ventures?

Answer 10

Higher investment on channel development and lower gross margins.

Question 11

What do VCs expect from ventures in terms of industry dominance?

Answer 11

To lead the industry and achieve the highest valuations.

Question 12

What do VCs accept in order to keep ventures growing?

Answer 12

Negative cash flows.

Question 13

What is the capital-smart method for entrepreneurs?

Answer 13

Launch and grow with limited amounts of cash.

Question 14

What are the key skills billion-dollar entrepreneurs acquire?

Answer 14

• Sales/Marketing
• Financial Management

Question 15

What are the four strategies finance-smart entrepreneurs use?

Answer 15

• Focus to dominate with less
• Sell direct and own the market
• Pace to lead the industry
• Adjust to take off with limited cash

Question 16

What is a major reason for business failure according to the text?

Answer 16

Not focusing on the right product-segment combination.

Question 17

What did Jack Welch emphasize for businesses at GE?

Answer 17

Each business should be a leader in its market.

Question 18

Why should entrepreneurs focus on one product and segment initially?

Answer 18

To dominate the segment before expanding into other markets.

Question 19

What is the cost of equity at the start of a venture?

Answer 19

Could be as high as 80 percent to 100 percent per year.

Question 20

What is the risk of diversifying too early for an entrepreneur?

Answer 20

It can lead to losing focus and resources on multiple fronts.

Question 21

What percentage of first movers dominate their segment?

Answer 21

Only 11 percent.

Question 22

What must first movers do to win?

Answer 22

Build an insurmountable lead and execute everything correctly.

Question 23

What strategy did Craig Swanson and his partner use for Definity Health?

Answer 23

Focused on large, self-insured employers.

Question 24

What does focusing on the right customers help entrepreneurs achieve?

Answer 24

It helps in optimizing product, marketing, sales, and operations strategies.

Question 25

What is a common strategy for entrepreneurs with limited resources?

Answer 25

Focus on dominating the target market before expanding to others. ## Footnote This approach allows for better management of resources and time.

Question 26

What percentage of first movers dominate their segment?

Answer 26

11 percent. ## Footnote First movers can struggle unless they build an insurmountable lead.

Question 27

What can followers do after a first mover establishes a strategy?

Answer 27

Analyze the strategy and improve on the product or service. ## Footnote Followers may have more capital to enhance their offerings.

Question 28

Who is an example of a successful entrepreneur who dominated a market before expanding?

Answer 28

Sam Walton of Walmart. ## Footnote Walton established dominance in rural Arkansas before expanding nationwide.

Question 29

What is necessary for a venture to dominate a market?

Answer 29

Focus on specific needs of the key customer segment and implement a superior strategy. ## Footnote This ensures better service than competitors.

Question 30

How did Horst Rechelbacher build Aveda's market presence?

Answer 30

By focusing on a unique and exclusive distribution system. ## Footnote He trained beauticians to promote and sell his organic products.

Question 31

What advantage did Rechelbacher gain from vertical integration?

Answer 31

Control over all aspects of production and sales. ## Footnote This model allowed him to optimize distribution and customer experience.

Question 32

What strategy did Rechelbacher use to engage his distributors?

Answer 32

Helped them open beauty schools and stores in high-visibility locations. ## Footnote This approach increased product promotion and sales.

Question 33

What unique claim did Aveda make in the salon industry?

Answer 33

It was the only company with proprietary products and a training center. ## Footnote Aveda also had a mass-distribution infrastructure.

Question 34

What market did Steve Shank of Capella focus on?

Answer 34

Graduate degrees. ## Footnote This was a strategic choice to differentiate from competitors strong in undergraduate education.

Question 35

What was the benefit of Capella's focus on graduate programs?

Answer 35

Higher quality and competence demanded from teachers. ## Footnote This focus helped Capella build a leader in long-distance education.

Question 36

What is the conclusion regarding business focus for entrepreneurs?

Answer 36

Focus on competitive advantage and dominate one segment before diversifying. ## Footnote This strategy ensures better long-term stability and revenue.

Question 37

What should entrepreneurs consider when choosing a market segment?

Answer 37

The segment that offers the fastest revenues and best long-term advantage. ## Footnote Dominating an initial segment provides a strong base for expansion.

Question 38

What is a notable example of focus before diversification by Mark Zuckerberg?

Answer 38

Focusing on top-ranked universities before expanding to others. ## Footnote This strategy helped Facebook build its initial user base.

Question 39

How did Steve Jobs approach product focus?

Answer 39

Focused on the iPod before expanding to the iPhone and iPad. ## Footnote This strategy allowed for a strong brand presence in multiple categories.

Question 40

What was Bill Gates's initial focus in business?

Answer 40

Making his operating system the standard for PCs. ## Footnote This focus laid the groundwork for expanding into other products.

Question 41

True or False: Entrepreneurs typically focus while corporations diversify.

Answer 41

True. ## Footnote This highlights the different strategies employed by businesses at different stages.