Effectuation and lean startup processes are two different perspectives that can be combined when considering launching a new venture

Effectuation and lean startup processes are two different perspectives:  they are difficult to combine when considering launching a  new venture

The lean startup never starts with a vision

The effectuation approach places the entrepreneur at the center

Entrepreneurs have strong egos and they like to be treated in a special way. This is the same reason why we have courses on “leadership”, for example, as leaders want to feel special too. One shall rarely find a course on “followership”, for example. 

Entrepreneurship does not replace any of these other topics, but rather complements it as a process of organizing in a particular context. Entrepreneurship is then merely the process that is most relevant to use in the context of higher levels of risk or uncertainty, while management is the process more relevant in contexts of lower risk and certainty.

Seasoned entrepreneurs often say “if I would have known what I know now about how much it work it was going to be, and how hard it would be to launch my venture, I don’t know if I would have started it.” So it seems that knowing less about what entrepreneurship is, creates better entrepreneurs. This is why there is only one course on entrepreneurship.

Entrepreneurship is all about action, and so people have understood that it is best not to bother entrepreneurs with too much theory. Having all these topics squeezed in one course is just what one needs to get oneself going as an entrepreneur.

Venture capitalists are companies that invest in startups with money that they themselves have received from “Limited Partners”: banks, pension funds, or wealthy individuals. The Limited Partners seek high returns on investment, and so the VCs seek startups that can deliver this return: companies that are not listed on the stock exchange, that can achieve high growth rates but that need money to make it happen.

Venture capitalists are companies that trade stock on the stock exchange. They receive money from “Limited Partners”: banks, pension funds, or wealthy individuals. The Limited Partners seek high returns on investment, and so the VCs use artificial intelligence to seek out the best stocks on the stock exchange to invest.

Venture capitalists are risk-lovers. They seek the same sense of adventure, fun and adrenaline as extreme sportsmen or casino players when jumping off a cliff or winning the big lottery. Yet instead of seeking cliffs or casinos, they seek it in tech startups. The bigger the risk, the bigger the thrill!

Venture capitalists are very wealthy individuals that buy startups at a low valuation (euro value of the company), restructure them and sell them off at a higher valuation. They are therefore looking for companies that are in a bad state in attractive markets.

Debt investors offer loans to startups that have to be repaid in full, and they are paid a fixed interest fee in return. The risk when things go bad is therefore with the entrepreneur. 

While equity investors require the money they invested to be paid back on a monthly basis, debt investors are more flexible. As soon as the company is listed on the stock exchange, they will earn their money back.

The more successful the startup, the happier the equity investor. For debt investors, however, the success of the startup does not impact their returns.

Equity investments offer money to the entrepreneur in return for a share of the company. When things go bad for the startup, the risk is therefore shared between all the shareholders of the company. 

In order to determine the question mark, I had to use an inductive approach to search. Each observation of a sequence of shapes helped me to develop a theory of what the next shape would be. Every following observation helped me to confirm or disconfirm that theory. This theory then helped me to guess what the shape on the question mark would be.

This is a mathematical problem. One needs to calculate the total surface of all the shapes and then divide it by either 3, for triangle, or 5 for pentagon. From this equation, you can determine which shape.

In order to determine the question mark, I had to use a deductive approach to search. We know from theory that in all intelligence tests, the last answer is the correct one.

There was no way to know from using either induction or deduction. The only way to get the right answer is to make a guess.