Lean Startup: A Path to Profits or A Road to Perdition?

The lab’s Venture Evaluation working group research initiative focused on exploring how well conventional innovation approaches perform based on the cash flows they generate vs. their ability to return value via an exit (e.g. a sale, IPO etc). The results of this initiative helped form the basis of the lab’s evolution from the Market Creator’s Lab to the Build to Hold Lab, as the “building to exit” pattern uncovered in this research initiative demonstrated the need for a focused alternative.

Additional Context:

Lab members and partners have noted a disconnect between many VC-backed ventures where investors are ultimately looking for a blockbuster exit to return their capital (and to deliver performance for a whole portfolio of ventures) vs. other ventures where the sponsors/investors are looking to generate enough cash to support and grow the business (i.e. via profits). Examples of the latter include corporations, sustainable development organizations, entrepreneurs bootstrapping a venture or new business lines etc., all who cannot or do not want to exit the venture.

Research question:

“In what way should ventures be innovated differently when the investor/funder plans to hold the venture for its cash flows rather than profiting via exit?”

Research output:

• A white paper summarizing three case studies that will re-evaluate the historical financial returns of “VC success stories” through a cash-flow analysis. The first case study chosen is Amazon.

• Presentation delivered at Cornell University during Celebration Ezra, a two day entrepreneurship conference hosted by Entrepreneurship at Cornell.

See presentation slides here and a video below.

Video recording

Presenters

Erik Simanis, PhD

Co-Director, Built to Hold Venture Design Lab · Cornell University, Half-Solved

30 years experience leading and guiding over two dozen ventures across a wide range of industries, including health, financial services, education, energy and mobility. Dr. Simanis’ work is published in Harvard Business Review, MIT Sloan Management Review, and Wall Street Journal.

Mark Yde

Senior Associate, Investor, Ajinomoto Group Ventures

Directs and supports investments across therapeutics, food, greentech and other segments of Ajinomoto’s innovation frontier. Mark has extensive experience as a venture builder and investor, with a deep background in biotech and neuroscience innovations and technologies.

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