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PwC Up front | Issue 5 | Harnessing technology

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Up front Summer 2014 51 A tale of two dot-coms An effective entrepreneurial strategy is grounded in the insight that for any given idea, there are multiple go-to-market options. Consider the case of Peapod LLC and Webvan. Both of these 1990s U.S. dot-com ventures were based on the same idea – online grocery shopping – but they had fundamentally different visions about how to translate it into a commercial reality. Peapod collaborated with supermarkets, thereby reducing not only its competition but also its cost of goods. By contrast, Webvan tried to compete directly with supermarkets by developing a soup-to-nuts solution that cut out the existing players entirely. The demise of Webvan was striking: more than $1-billion (U.S.) spent on a business plan that gained the company little customer traction and a reputation as the epitome of dot-com excess after it went bankrupt in 2001. Yet it wasn't the idea behind Webvan that was unviable. The much smaller Peapod focused on creating value – conserving customers' time – and developed a profitable business in co-operation with Koninklijke Ahold N.V., the European conglomerate that owns U.S. chain The Stop & Shop Supermarket Co. When launching a start-up, don't commit to your first business plan – write two and then choose one! Insights | Technology Up front Summer 2014 51 The choice is yours Our work holds a key message for would-be Canadian entrepreneurs: when launching a start- up, don't commit to your first business plan – write two and then choose one! Consider several business models that would allow you to bring your idea to market. All too often, our research shows that entrepreneurs become quickly enamoured with the first viable model they can identify instead of meaningfully developing the one that does justice to their idea (and the opportunity cost of their time). For example, some entrepreneurs, smitten by the idea of "disruption," try to shoehorn ideas that would best be commercialized through co-operation with industry players into a strategy that requires competition with those incumbents. The converse can occur too: industry-changing ideas fall flat because attempts to commercialize them through existing channels suffer organizational resistance or lack of follow-through. The implications don't end with how you relate to existing industry players. Depending on your core entrepreneurial strategy choices, you'll make different decisions about the customers you choose, how you leverage technology, and the way you build your team and your venture. Each strategy requires a distinctive set of resources and capabilities; your choice will end up changing the company you build. Change of plans At the University of Toronto's Creative Destruction Lab, start-up Bionym Inc. spent years trying to license its sensor technology, which allows identification of users from their heartbeat signatures. Bionym knew this technology had applications for security but also for more mundane things like ensuring that the lights come on when you get home. To the company, licensing was its only option. However, as it turned out, incumbents in the industry couldn't quite see this vision. So Bionym undertook a strategy to build a device, the Nymi bracelet, which today is gathering great momentum as a product that may free us of passwords altogether. Bionym could end up in the arms of an incumbent, but none of this would have happened if the entrepreneurs at the heart of it hadn't considered and implemented a Plan B. For every gem of entrepreneurial insight, there are a variety of choices about how to proceed. By taking the time to develop meaningful choices, entrepreneurs can more quickly come to terms with how they will create and capture value, and how they will build the type of company their idea deserves. Uf

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