Session 5: October 6, 2008

From Idea to Opportunity II

Quote of the Day

"What people say you cannot do, you try and find that you can."  ~ Henry David Thoreau

Summary

This is the second of two sessions where we discuss the differences between an idea and an opportunity.

Required Readings (Policy on Required Readings.)

• Readings from the Textbooks:
• Technology Ventures (Dorf and Byers): Ch 6 Risk and Return; Ch 7 Venture Creation and the Business Plan (Highlights: 6.3, 6.5, 7.1, 7.2)
• Additional articles to read:
• Case Analysis Guidelines
• Case:
• “Facebook Platform” (HBS Case # -808-128) [in the course reader]
• Watch the following short video clips:

• Vinod Khosla (KPCB) - Any Big Problem is a Big Opportunity
• Arcadia Kim (Electronic Arts) - Opportunity Assessment: Lord of the Rings
• Matt Hershenson, Joe Britt, Andt Rubin (Danger) - How Danger Turned Down Some Opportunities

Study Questions (Policy on Study Questions.)

Discuss these as a team but do not put your answers in the email:

• What is a platform? Why is a platform a business opportunity? In other words, how do platforms make money?
• How can Facebook attract 3^rd party applications to increase the value of its platform?
• What should Facebook do about Google’s Open Social Platform?
• How can Facebook get enough advertising to justify its $15 billion valuation in 2007?
• How is the pursuit of opportunities in Web 2.0, Social Networking different from opportunities in Enterprise Software, Life Sciences, and Clean Tech?

Team Case Analysis (Policy on Case Analyses.)

Monday Teams should answer these questions in your email submission. Be concise! 

• You are Mark Zuckerberg.  Assume that you have a budget of approximately $250 to $300 million in 2008 to achieve revenues of $300 to $350 million and EBITDA of $50 Million.  (See case Exhibit 12). What percent of your budget would you commit to each of the growth opportunities below in 2008?  Assign a percent to each of the initiatives below. The percentages should add up to 100%.

___ % International expansion

___ % Strengthening the Facebook platform

___% Granting users greater control over what information is accessible 

___% Micropayment Processing

___% Facebook as Portal

____% Internal and Third Party Advertising Network

___% Social Search: A search product to rival Google’s

___% Other:

___% Other:

___% Set aside for contingencies

100% = total 2008 budget

• Why are some of these opportunities more attractive investments than others?
• Identify the Top 3 risks in executing your plan of action. How would you prevent those risks from occurring?  What is your contingency plan if they occur?

Cases must be submitted by 7PM on the day before class when the case is discussed.

Note: This is the first submission for the Monday teams which should be sent to the appropriate homework list. If you are a Wednesday team, do not submit a case by email. All teams will still be responsible for discussing the assignment in class.

Submission Format

1.      PUT IN EMAIL HEADER: E145:  Case Name, Team Name
          i.e. E145: Facebook Platform, The Randys

          You must submit all cases with this format for the subject line. Your assignment may not be graded if you fail to do so.

2.            PUT IN CASE STUDY:

• Names of the students in the team
• First sentence should be whether or not you agree with the prompt