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New Enterprises · Lecture 4 of 12 · 2:40

Lecture 4: Three Ways to Start a Company

Three Ways to Start a Company on YouTube

Study guide

What this lecture covers

This short lecture describes the three types of people Aulet sees walking into MIT's entrepreneurship center: those who start from a technology, those who start from a known market problem, and those who start from a personal passion to found a company. It explains the trade-offs of each starting point.

Watching this helps you recognize which starting point applies to your own idea, and understand why passion alone is not enough to start a company.

Key ideas

  • Technology push: starting with a technology and looking for a market to apply it to; gives an inherent competitive advantage but can be a hard search for the right market.
  • Market pull: starting from a known industry problem without yet having the specific solution; lower market risk, but no built-in competitive advantage.
  • Passion: wanting to be an entrepreneur, control your own destiny, and have an impact, without yet having a technology or market idea.
  • Passion is not sufficient alone: people motivated purely by passion need to join a team built around a technology or a market idea to actually start a company.
  • Team formation: passionate founders typically migrate into a team that already has a technology or an idea.

Before you watch

  • Watch the earlier lectures on entrepreneurship and innovation types for context on the course's vocabulary, though this lecture can stand on its own.

Check your understanding

  1. What is the key difference between technology push and market pull as starting points?
  2. Why does technology push give a founder a competitive advantage that market pull does not?
  3. According to the lecture, why is passion alone not enough to start a company?
  4. Which of the three starting points would apply to a founder who has worked in an industry and identified an unsolved problem?

Vocabulary

technology push (noun)
Starting a company with a technology first, then searching for a market to use it in.
Technology push gives a founder an early competitive advantage.
market pull (noun)
Starting a company from a known problem in a market, before having a specific solution.
Market pull reduces the risk of picking the wrong market.
passion (noun)
A strong personal desire or enthusiasm to do something.
Passion alone isn't enough to start a successful company.
competitive advantage (noun)
Something that lets a company do better than its rivals.
Owning a unique technology can give a real competitive advantage.
market risk (noun)
The danger that a chosen market won't actually want or support your product.
Market pull founders face lower market risk than technology push founders.
founder (noun)
A person who starts a new company.
A passionate founder often needs to join a team with a real idea.
control your own destiny (phrase)
To be in charge of your own future and decisions.
Many people start companies because they want to control their own destiny.
impact (noun)
A significant effect on people or the world.
Founders often want their work to have a real impact.
starting point (noun)
The initial place or idea from which something begins.
Aulet describes three different starting points for founders.
trade-off (noun)
A balance between two good things, where getting more of one means less of the other.
Each starting point comes with its own trade-offs.
migrate (verb)
To move gradually from one place, group, or situation to another.
Passionate founders often migrate into a team with a real idea.
sufficient (adjective)
Enough to achieve a particular result.
Passion alone is not sufficient to start a company.
inherent (adjective)
Existing as a natural or basic part of something.
Technology push gives an inherent advantage over competitors.
identify (verb)
To recognize and clearly name something.
A market pull founder has identified a real problem in an industry.
team formation (noun)
The process of building a group of people to work together on a goal.
Team formation often brings passionate founders together with idea-holders.
apply (verb)
To use something for a particular purpose.
A technology-push founder must apply their invention to a real market.
unsolved problem (noun)
A difficulty that has not yet found a working answer.
Market pull founders often start from an unsolved problem they've seen firsthand.
personal drive (noun)
An inner motivation pushing someone to act.
Personal drive alone doesn't guarantee a successful company.
walk in (to a center) (phrasal verb)
To arrive somewhere, especially in casual or informal contexts.
Three types of people walk into MIT's entrepreneurship center.
entrepreneurship center (noun)
An organization or office that supports and trains people starting new companies.
Aulet runs an entrepreneurship center at MIT.

Chapters

From the YouTube description

MIT 15.390 New Enterprises, Fall 2013
View the complete course: http://ocw.mit.edu/15-390F13
Instructor: Bill Aulet

Discussion of the three key ways to start a company: passion, idea, technology.

License: Creative Commons BY-NC-SA
More information at http://ocw.mit.edu/terms
More courses at http://ocw.mit.edu

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