L1 3 Effectuation P2
Summary
TLDRThe video explores five entrepreneurial stories, each demonstrating the application of effectuation principles to build successful businesses. Nerd Academy leveraged local resources to create a tutoring service, while Kevin Dewitt's Agilex turned waste into oil, starting small and scaling up. George Crum's innovation with potato chips exemplified turning challenges into opportunities. PayPal's strategic partnerships, like Verisign and Discover, highlight the importance of collaboration. Lastly, Elise van Hooten's 'Dress Your Doll' concept showcases the value of controlling one's destiny in business.
Takeaways
- 🎓 Nerd Academy started with the founders' personal network and local needs, illustrating the 'Bird in Hand' principle of effectuation.
- 💡 Kevin Dewitt's Agilex venture demonstrates the 'Affordable Loss' principle, focusing on what he could afford to lose rather than seeking large investments.
- 🍟 George Crum's creation of potato chips from unsatisfactory french fries exemplifies turning problems into opportunities through the 'Lemonade Principle'.
- 🤝 PayPal's strategic partnerships, like the one with MasterCard, highlight the 'Patchwork Quilt' principle, emphasizing collaboration and pre-commitment from partners.
- ✈️ Elfe Van Hooten's 'Dress Your Doll' concept showcases the 'Pilot in the Plane' principle, where entrepreneurs control and steer their own business direction.
- 🚀 Entrepreneurs use effectuation principles to start with what they have, rather than chasing after resources they lack.
- 💼 The 'Bird in Hand' principle encourages entrepreneurs to leverage their current capabilities and networks to create businesses.
- 💰 Understanding one's 'Affordable Loss' helps in managing risk and making informed decisions about investment and growth.
- 🔄 The 'Lemonade Principle' is about converting setbacks into innovative opportunities, as seen with the invention of potato chips.
- 🔗 Building a 'Patchwork Quilt' of partnerships is crucial for expanding reach and reducing uncertainties in business ventures.
- 🛠 The 'Pilot in the Plane' principle empowers entrepreneurs to take control of their business's future, adapting to changes and making their own path.
Q & A
What is the primary service offered by Nerd Academy?
-Nerd Academy offers a home tutoring service in Raipur, India.
How did Nerd Academy's founders overcome the lack of funding and technology?
-The founders leveraged their network of friends and contacts who wanted to give tuition and parents who needed such services, creating a one-to-one tutoring service without needing initial funding or technology.
What is the 'Bird in Hand' principle in effectuation?
-The 'Bird in Hand' principle in effectuation means starting with what you have rather than hunting for resources or technology.
Who is Kevin Dewitt and what is his venture Agilex about?
-Kevin Dewitt is an entrepreneur based in Oregon, USA, who started Agilex, a venture that extracts crude oil from discarded plastic waste, helping to recycle plastic and put it to good use.
What is the 'affordable loss' principle in effectuation?
-The 'affordable loss' principle in effectuation is about understanding what you can afford to lose at each step of your venture, rather than seeking large, all-or-nothing opportunities.
How did George Crum's response to customer complaints lead to the creation of potato chips?
-George Crum, a chef, responded to complaints about his french fries being too thick by slicing them extremely thin, which inadvertently led to the invention of potato chips.
What is the 'lemonade principle' in effectuation?
-The 'lemonade principle' in effectuation is about leveraging contingencies and turning problems or unpleasant surprises into new opportunities.
How did PayPal address the issue of losing customers due to websites not accepting PayPal payments?
-PayPal formed a partnership with MasterCard to develop and launch Verisign, a secure card service that allows customers to make payments on websites that do not accept PayPal directly.
What is the 'patchwork quilt' or 'crazy quilt' principle in effectuation?
-The 'patchwork quilt' or 'crazy quilt' principle in effectuation is about collaborating with various types of partners who are willing to pre-commit, rather than searching for potential partners who might not be available or motivated.
What is the story behind Elise van Hooten's venture 'Dress Your Doll'?
-Elise van Hooten, CEO of Ruse Productions, started 'Dress Your Doll', a concept where children could make clothes for their Barbies. She seized growth opportunities in the U.S. market by starting a workshop for U.S. customers.
What is the 'pilot in the plane' principle in effectuation?
-The 'pilot in the plane' principle in effectuation is about entrepreneurs controlling and steering their own path rather than predicting the future.
Outlines
🎓 Entrepreneurial Success through Effectuation Principles
This paragraph introduces the concept of effectuation principles in entrepreneurship through the story of Nerd Academy, a home tutoring service provider in Raipur, India. Despite lacking funding and technology, the founders leveraged their network of friends wanting to give tuition and parents seeking such services. By mapping these two groups, they established a successful offline tutoring service. The story illustrates the 'Bird in Hand' principle of effectuation, emphasizing starting with available resources rather than seeking external ones. The paragraph also discusses other effectuation principles like 'Affordable Loss' through the story of Kevin Dewitt's venture Agilex, which recycles plastic waste into crude oil, and the 'Lemonade Principle' exemplified by George Crum's creation of potato chips. Additionally, it highlights the importance of leveraging networks and forming strategic partnerships, as demonstrated by PayPal's collaborations with MasterCard and Discover Card.
🤝 The Power of Collaboration and Control in Entrepreneurship
The second paragraph delves into the importance of collaboration and control in entrepreneurship. It discusses the 'Patchwork Quilt' principle, where entrepreneurs form strategic partnerships with pre-committed stakeholders to reduce uncertainty. The story of Elise van Hooten, CEO of Ruse Productions, is highlighted, showcasing her initiative to start 'Dress Your Doll,' a concept allowing children to make clothes for their dolls. Recognizing a growth opportunity in the U.S. market, she quickly established a workshop there, embodying the 'Pilot in the Plane' principle. This principle encourages entrepreneurs to control and steer their future rather than predict it. The paragraph motivates aspiring entrepreneurs to take charge of their ventures and start their entrepreneurial journeys.
Mindmap
Keywords
💡Effectuation
💡Nerd Academy
💡Bird in Hand
💡Affordable Loss
💡Agilex
💡Lemonade Principle
💡Patchwork Quilt
💡Networks and Partnerships
💡Pilot in the Plane
💡Control and Steer
Highlights
Nerdy Academy started as a home tutoring service in Raipur, India, showcasing the effectuation principle of starting with what you have.
The founders of Nerdy Academy leveraged their college network to connect tutors with parents needing tuition services.
Nerdy Academy's success illustrates the 'Bird in Hand' effectuation principle, focusing on available resources.
Agilex, founded by Kevin Dewitt, recycles plastic waste into crude oil, demonstrating the application of industry knowledge.
Dewitt's venture began with an affordable loss strategy, aligning with the effectuation principle of controllable risk.
George Crum's story of inventing potato chips exemplifies turning customer complaints into a new opportunity.
The 'Lemonade Principle' in effectuation encourages entrepreneurs to make the best out of adverse situations.
PayPal's strategic partnerships, like the one with MasterCard, highlight the importance of networking and collaboration.
The 'Patchwork Quilt' principle emphasizes the value of forming alliances with pre-committed partners.
Els van Hooten's 'Dress Your Doll' concept is an example of entrepreneurs steering their own path.
The 'Pilot in the Plane' principle encourages entrepreneurs to control and navigate their business's future.
Entrepreneurs are encouraged to start with what they have instead of seeking external resources.
Effectuation principles help in reducing business risks by focusing on controllable losses.
Turning problems into opportunities is a key strategy for innovative business growth.
Collaborating with various partners can reduce uncertainties and create a supportive business ecosystem.
Entrepreneurs should aim to write their own future and be in control of their business's direction.
Transcripts
let's look at five entrepreneur stories
to see how they use effectuation
principles to create businesses
let's start with nerdy Academy
nerdy Academy is a home tutoring service
provider in raipur in India
the founders wanted to set up an ad Tech
Venture which would provide an online
and mobile app platform for tutors and
students Unfortunately they did not have
either funding or access to technology
so what did they do they looked at what
they had in hand
since they were in college they had many
friends and other people in the network
who wanted to earn more by giving
tuition to school students
they also knew the parents of several
school-going children who required such
a service
all they did was bring these two
together
by mapping people from the two pools
they were able to offer a one-to-one
tutoring service which was completely
offline and focused on their town alone
today nerdy Academy has over 200 tutors
and about a thousand students registered
with them
this illustrates the effectuation
principle Bird in Hand
and this is common sense isn't it
all it means is you start with what you
have rather than hunting down for
resources technology
Etc
let's move on to entrepreneur Kevin
Dewitt based out of Oregon USA he
started a venture called agilex which
extracts crude oil from discarded
plastic waste thus helping to recycle
plastic waste and putting it to good use
today it is a multi-million dollar
company
but how did David start his Venture well
he started based on what he had learned
in his 20 years in the chemical industry
he saw an opportunity for making money
out of trash by applying his knowledge
in science but he didn't start with a
big Bank rather he set up a small and
Basics no flow recycle unit which grew
over the years to decide on how much
money he could spend and how much more
to invest he asked himself one simple
question
what could he afford to lose this is the
second effectuation principle and is
known as affordable loss
expert entrepreneurs can limit Risk by
understanding what they can afford to
lose at each step they do not look for
large All or Nothing kind of
opportunities in other words they do not
Gamble
expert entrepreneurs also believe in the
saying when life gives you lemons make
lemonade
that's what George Crum did
at the time he was a chef in an elegant
New York Resort and was facing Flack
over his french fries which is guests
complained were too thick and not crispy
enough
so to play a joke on them he cut his
fries so thin that people won't be able
to eat them with a fork and lo and
behold potato chips were born
this is the third principle of
effectuation the lemonade principle the
Mantra is to leverage contingencies and
turn unpleasant surprises in other words
problems into new opportunities
but leveraging contingencies alone is
not enough to make your Venture a
success leveraging your networks and
forming strategic Partnerships is
equally important
who hasn't heard of PayPal
when PayPal discovered that they were
losing out on customers because there
were some websites that did not accept
Paypal payments directly they formed a
partnership with MasterCard
this led to the development and launch
of verisign a PayPal secure card service
that allows customers to make payments
on websites that do not accept Paypal
directly by generating a unique
single-use MasterCard number for
e-checkout
again in 2012 PayPal announced its
partnership with Discover card to enter
the offline retail Market where they
could use Discover Cards existing
Network across 7 million stores
this is the essence of the fourth
effectuation principle the patchwork
quilt or crazy quilt
here entrepreneurs collaborate with
various types of Partners who are
willing to pre-commit rather than search
for potential Partners who might not be
available or be as motivated
networking is the Mantra here accumulate
as many stakeholders to create the
future and reduce uncertainty
entrepreneurs are always looking to
reduce uncertainties and to do that they
want to write their own future and be
their own bosses
that's what Belgium's elves van Hooten
CEO of ruse Productions did she started
dress your doll a totally unique concept
where children could make clothes for
their Barbies themselves
then she found significant growth
opportunities for dress your doll in the
U.S market a market
with a dramatically different retail
Network she sees that opportunity and
then started their own workshop for U.S
customers without second thoughts
she became her own pilot
this is the fifth principle of
effectuation the pilot in the plane
where the entrepreneurs don't feel the
need to predict the future as long as
they control it and steer their own path
so are you ready to steer your own
aircraft what are you waiting for get
ready get going
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