artist as entrepreneur
DESCRIPTION
Slides from a lecture given at the Artist Summer InstituteTRANSCRIPT
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© Amy Whitaker [email protected]
Artist as Entrepreneur
July 31, 2011Artist Summer Institute
Governors IslandAmy Whitaker
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© Amy Whitaker [email protected]
Everyone is an artist, and a businessperson.
Goals:To migrate business thinking to the creative part of your brainTo develop tools for seeing the big pictureTo practice business plan writing as a story-telling device
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© Amy Whitaker [email protected]
agenda1. applying business creatively 2. business plans as storytelling frameworks 3. tools for analyzing the big picture [ break] 4. the elements of a business plan 5. conclusions
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© Amy Whitaker [email protected]
economic
political
creative
activist art campaigns
entrepreneurshippie in the sky
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© Amy Whitaker [email protected]
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© Amy Whitaker [email protected]
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Maria Sacarias sports her first pair of glasses alongside Warby Parker co-founders Dave Gilboa and Neil Blumenthal and Amaya Xoch, a local entrepreneur trained by non-profit Community Enterprise Solutions to provide glasses to those in need. San Jorge, Solola, Guatemala
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Glasses increase one’s income by 20%. That’s the equivalent of creating an extra day’s work each week. Glasses are one of the most effective poverty alleviation tools in the world.
We have distributed over 50,000 pairs. Glasses distributed by Warby Parker to people in need enable them to become productive members of their families and communities.
1,000,000,000One billion people don’t have access to glasses, which means that 15% of the world’s population is unable to effectively learn or work because they can’t see clearly.
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Oberonfmr.com
• Take waste that a company has to pay to dispose of and turn it into fish food
• Your negative externality is someone else’s positive, with some investment
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© Amy Whitaker [email protected]
S.M.A.R.T. Targets
As you move forward with your art, you are trying not just to accomplish known outcomes, but to discover new ones. How do you plan for this?
You focus on what your lighthouse is, your guiding principle. This may be your mission, as in a nonprofit, or your defining question or idea, as in a start-up business.
SpecificMeasurableAchievableRealistic Time-Bound
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© Amy Whitaker [email protected]
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© Amy Whitaker [email protected]
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That purpose—that “lighthouse” goal—is an important part of your story. It is the “major dramatic question” (the MDQ) that compels you forward.
M.D.Q.
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MDQ?
• Can men and women really be friends?• What will happen with Harry and Sally?
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© Amy Whitaker [email protected] Will Harry live? Will he save everyone else?
Can you be ordinary and extraordinary at the same time?Can bravery triumph over evil?
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© Amy Whitaker [email protected]
More than anything else, a business plan is a format for telling that story.
It is also a living, breathing, changing planning document for you.
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© Amy Whitaker [email protected]
The plan is a basic structure to communicate: what, when, how, whom, where, why:
what are you offering?
when why now?
how what is your business model?
who are you and your partners?
where what is the market you are serving?
why what is your mission and purpose?
What contribution is being made? What need is being filled? What is at stake?
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Women’s share of voice:
Total share of public voice 15%
Television Pundits on political talk shows
Wikipediacontributors
HollywoodWriters, producers, directors
Congress
Opinion Writers Top ten print and online outlets
16%
13%
15%
15%
17%
Corporate Boards
15%
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What if the solution is simpler?
The Washington Post tracked submissions for five months.
We need more women submitting.
Men 90% of submissions
Men 88% of bylines
Women 10%
Women 12%
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Op-Ed
Online Community
Radio/TV
Credibility
TV Gigs
Book deals
Policy Consultation Offers
Increasing Exposure and Influence
Expert Citations
Fellowships
Public Influence
Positions of leadership in every field
Ability to Change the World
Op-Ed as a “Front Door” in Thought Leadership
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You can think of a business plan as being like a painting from before the advent of photography. It must document your business, but it can also express your viewpoint as an artist. Everything is a decision.
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Van Gogh
StructureCompositionContentStylePoint of viewSkill and expressiveness
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Competitors—Rivalry in the
Industry
Supplier Power
BuyerPower
Availability of Substitutes
Barriers to Entry
Michael Porter’s Five Forces, 1979
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Rivalry: Do a lot of other people do what I do? What is special about what I offer?
Barriers to Entry: How easily can someone copy me?
Availability of Substitutes: Is it easy to find substitutes?
Supplier Power: Do my suppliers have power over me?
Buyer Power: Do my customers have power over me?
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Competitors—Rivalry in the Industry
Supplier Power
Users
Availability of Substitutes
Barriers to Entry
Donors
Sharon Oster’s Sixth Force(from Strategic Management of Nonprofit Organizations, 1995)
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Company
Suppliers
Customers
ComplementorsCompetitors
Adam Brandenburger and Barry Nalebuff’s Valuenet(from Co-opetition, 1996)
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If my situations is a “game,” who are all the “players”?
What are my goals? What would it mean to “win the game”?
Complementors: If I succeed, who else succeeds too?
Competitors: Who feels that they win only if I lose?
Co-opetition: Is it possible to turn any of my competitors into complementors? Can I change any of the rules of the game?
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I. Executive Summary – summary of the wholewhat
II. The Marketplace – snapshot of the ‘big picture’when/where
III. Description of Business – what you will do what/how
IV. Financials – start-up costs and operating costs how
V. Management Team – about you and the team who
VI. Supporting Materialswww.sba.gov
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© Amy Whitaker [email protected]
The plan is a basic structure to communicate: what, when, how, whom, where, why:
what are you offering?
when why now?
how what is your business model?
who are you and your partners?
where what is the market you are serving?
why what is your mission and purpose?
What contribution is being made? What need is being filled? What is at stake?
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© Amy Whitaker [email protected]
market sizeHow many people are interested? How many of them can I reach?
Example: Warby Parker donations
• 1,000,000,000 people need eyeglasses. We aim to reach 1%, that’s 10 million people. 10% would be 100 million.
• They have reached 50,000, which is 0.005%
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Uniqlo sold 26 million fleeces in a market of 120 million people (22%)
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© Amy Whitaker [email protected]
Competitors—Rivalry in the
Industry
Supplier Power
BuyerPower
Availability of Substitutes
Barriers to Entry
Michael Porter’s Five Forces, 1979
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© Amy Whitaker [email protected]
Costs
Fixed Costs: overhead (rent, utilities). Does not vary with level of production.
Variable Costs: materials, hourly workers. Varies with level of output.
Opportunity Costs: the cost of your next best alternative. The value of your time.
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Time Value of Money
A dollar today is worth more than a dollar tomorrow because you could invest it:
$1 $1.05 - $1.09 next year
The long-run average U.S. stock-market return is 9%. A treasury bill returns 5%.
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Looks like a $10,000 investment leads to $12,000 in income, a $2,000 return.
Apply the “opportunity cost of capital.”
C/(1+r)^t means that the denominator gets bigger.
At a discount rate of 5%, the net present value = $10,335.© Amy Whitaker [email protected]
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Expected ValueIf I play poker with Bob and Anne, these three things could happen: • A 50% chance of making $20• A 30% chance of losing $20• A 20% chance of breaking even
Expected value = the probability of an outcome x the value of the outcome
What is the expected value of each outcome?50% chance of $20 = .5 x $20 = +$1030% chance of $20 = .3 x -$20 = -$620% chance of zero = .2 x $0 = 0
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Expected ValueExample 2:
I am going to teach a class and charge $30.• If I get great attendance, 100 people will come.
($30 x 100 people = $3,000)
• If I get poor attendance, 20 people will come. ($30 x 20 people = $600)
At 50/50 odds, that is $1500 + $300 = $1800At 20/80 odds, that is $600 + 480 = $1080
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Breakeven AnalysisAt what point to I recoup my costs and start making a profit?
Example:
To start a school, I need $5000 for rent, supplies, equipment. For each student, a foundation gives me $150. I have to spend $50 of that on supplies for that student. At what point do I break even?
Break Even = Total Fixed Cost = 5000 = 5000 =
Revenue – Variable Cost150 – 50100
50 students
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your business plan
Lighthouse
Market Size
Start-Up Expenses
Budget Year 1-3
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review
Ultimately: •why it’s special•where it sits•what’s at stake
Two types of creativity: letter and envelope
The brick and the house:
material resourcefulness
Finding your lighthouse
Telling the story of your
business plan
Your business as a work of art
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“back of the envelope”
making decisions with limited information, iterating, estimating, moving forward
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• “The founder of the science of business was one of the most unbusinesslike of mankind.”
- Walter Bagehot on Adam Smith
The founder of economics was an artist.
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“Ask what econ can do for you and what you can do for econ.”
It can help your work and life. And you can help shape the creative design problems of the economy itself.