The case opens in July of 2009 with Becky Splitt, CEO of StudyBlue, facing a series of difficult decisions. These include: determining the appropriate business model to monetize the StudyBlue site, which customer segment to target, and how much new capital to raise (and from whom). The case tells the story of how StudyBlue was begun as a side project of Chris Klündt and Steve Wallman in 2006 and how it evolved into a full-fledge start-up with seven employees. Over the course of three years, StudyBlue develops a healthy following of college users and adds significant new features and functionality. However, by the close of the case, there is still uncertainly around how quickly it can grow revenue in the future. Given new competitors on the horizon and the window for Series A funding round closing, Splitt must make her decisions quickly.
The case follows Andrew Housser and Brad Stroh, two recent graduates from the Stanford GSB, as they search for a business opportunity and ultimately start a company in the consumer finance industry. It covers their inspiration for the business idea and their decision to initially bootstrap the company. The case then highlights some of the complexities involved in managing a rapidly growing business. Specifically, Housser and Stroh are faced with challenging decisions regarding expansion/opening a second call center and with hiring/firing and the resulting difficult conversations with employees. Finally, the case concludes with an overview of a lawsuit currently filed against the company and the founders trying to decide the best course of action for Freedom Financial Network.
This case discusses the astounding growth of Crocs, Inc., a manufacturer of plastic shoes, from 2003 through early 2007. Much of the company's growth was made possible by a highly flexible supply chain that enabled Crocs to build additional product within the selling season. The normal model used within the fashion industry was to take orders well in advance of each selling season, and produce to those orders, with relatively little additional production. If demand was far in excess of this production, there would be stockouts and the company would lose the ability to capture revenue for that season. The product might or might not be in fashion the following year, when production would again be based on preseason orders. Crocs' ability to build additional shoes within the season enabled it to take advantage of strong customer demand, resulting in the company filling in-season orders totaling many times that of the initial prebooked orders. The case describes the Crocs supply chain. It asks students to assess the company's core competencies and how those can be exploited in the future. The case was revised in March 2011 to present information on the company's results in 2007 and prepare students for discussions of problems that would be faced in 2008 (covered in the B and C cases).
The Packet Design case looks at successful serial entrepreneur Judy Estrin and her efforts to build a technology incubator immediately before the Internet bubble burst. The incubator's failure caused Estrin to look anew at the key drivers of success in any business. By her own definition, a leader must have vision and passion for a company and product. Further, building a business for the long run, not for sale, is a critical component to Estrin's recipe for a venture success.
Charts the development of outsourcing service provider ExlService. Founded by Indian nationals Vikram Talwar and Rohit Kapoor, the firm has moved through several phases of evolution. At the conclusion of the case, the company is offering highly sophisticated outsourcing solutions to manage complex processes for insurance and financial services companies. Throughout ExlService's history, it constantly faces pressures to revise and redefine its service offerings (as outsourced services become commoditized) and retain its well-trained workers (who are highly sought after in India). Chronicles the connections between the firm's investors and the company's strategy and competencies.
When a company launches a new product into a new market, the temptation is to ramp up sales force capacity immediately to gain customers as quickly as possible. But hiring a full sales force too early just causes the firm to burn through cash and fail to meet revenue expectations. Before it can sell an innovative product efficiently, the entire organization needs to learn how customers will acquire and use it, a process the authors call the sales learning curve: The company--marketing, sales, product support, and product development--and its customers transfer knowledge and experience back and forth. As customers adopt the product, the firm modifies both the offering and the processes associated with making and selling it. The more a company learns about the sales process, the more efficient it becomes at selling, and the higher the sales yield. As the sales yield increases, the sales learning process unfolds in three distinct phases--initiation, transition, and execution. Each phase requires a different size--and kind--of sales force and represents a different stage in a company's production, marketing, and sales strategies. Adjusting those strategies as the firm progresses along the sales learning curve allows managers to plan resource allocation more accurately, set appropriate expectations, avoid disastrous cash shortfalls, and reduce both the time and money required to turn a profit.
In November 2005, Microsoft prepared for a global launch of its next-generation game console, the Xbox 360. Microsoft's original Xbox had been introduced a year after Sony's Playstation, but would beat Sony's next-generation system to market by a substantial amount. It would also play an important part in Microsoft's future strategy, where the home entertainment system was seen as a major growth opportunity. Describes the evolution of the video game console business and the evolution of the Xbox, both from a design and manufacturing perspective. Microsoft's decisions for the original Xbox supply chain are described, together with the changes in the supply chain that were made for the Xbox 360. Asks questions about the motivation for changes to the supply chain, the risks and benefits of global rather than regional launch, and the use of contract manufacturers. Prepares students for discussion of how supply chains must evolve to support changing business strategy.
Flextronics, the world's largest contract manufacturing firm, made a strategic decision to expand its business to include original design and manufacturing (ODM) services. As an ODM supplier, Flextronics designed and built products that original equipment manufacturers (OEMs) purchased and sold under their brand names. Purchasing from an ODM allowed OEMs to bring new products to market quickly and efficiently. ODMs could sell the same basic product to many OEMs, providing substantial design and manufacturing efficiencies. Flextronics' first ODM products were cellular phone handsets. The company had substantial hardware capabilities, which grew out of its contract manufacturing experience. In 2004, Flextronics considered adding software design expertise and considered a number of approaches to accomplish this. Having learned of the outstanding reputation of Indian software companies, the company's CEO and the president of its Design and OEM Services operation visited India. Describes the contract manufacturing and design landscape in 2004, with a focus on software.
For Netflix's IPO, on May 23, 2002, the company selected Merrill Lynch as the lease underwriter. The case details the process the offering team followed to lead the company to a successful IPO during difficult market conditions. Covers the process for selecting the underwriters, working with the SEC, the road show, decisions on pricing, the lock-up period and directed shares, and issues relating to the SEC-mandated quiet period and material disclosures.
In May 2000, Sonia Syngal, director of procurement strategy and supplier relations at Sun Microsystems, needed to make a critical decision. Under Syngal's leadership, the company had just completed its first "dynamic bidding" pilot tests and, as a result, cut its sourcing costs by 30%. Given these results, the potential for cost cutting via the implementation of a dynamic bidding system on a widespread scale at Sun was enormous; on an annual basis, the company was currently spending about $9 billion in direct materials procurement. Although the potential to cut costs significantly was clear, Syngal had several other issues to consider, including: 1) Sun's suppliers and the potential impact of a dynamic bidding program on the company's critical relationships; 2) the reaction of Sun's internal constituents, namely, its commodity directors who had spent years trying to identify the most effective way to work with the company's suppliers; and 3) selecting the best software vendor, which would be difficult in a crowded space.
After opening the first Gordon Biersch brewery restaurant in July 1988 in Palo Alto, California, Dan Gordon and Dean Biersch successfully built Gordon Biersch into a $20 million company, with restaurants in five locations and a small retail beer business. By early 1995, they aimed to open 20 new restaurants throughout the United States by 1999 and to expand the brewing side of the business. To do so, they needed to grow at a much faster pace, which required additional funding and management expertise. Therefore, in November 1995, they accepted an investment of $11.2 million from the Fertitta family. In exchange, Dan and Dean gave the Fertittas majority control of the company. This case provides students with an update of what happened at the Gordon Biersch Brewing Co. after receiving funding from the Fertitta family in 1995 and up to 2002.
This case examines the myriad of issues facing two entrepreneurs who use the search fund model to search for, purchase, and ultimately operate a home health care services company. The search fund is a proven investment vehicle through which a group of experienced investors support the efforts of aspiring entrepreneurs who wish to buy and run a small company, despite their lack of operating experience. After an arduous three-year search, Peter Landry, Paul Brooke, and a group of investors purchased SunWest Medical Services. However, shortly after the deal closed, Landry and Brooke realized that SunWest was a different company from the one they thought they had purchased. Among other things, the company was not as profitable and was shrinking rather than growing. Issues are tracked over an 11-year period. The case concludes with a review of ways an entrepreneur might best balance personal career interests with the financial interests of investors.
Introduces Handspring, a manufacturer of handheld devices, and concentrates particularly on the company's and founders' historical and forward-looking relationships. At the time of the case, Handspring is generating approximately $500 million annually in sales and is a leading brand of PDAs. The company founders are Donna Dubinsky, Ed Colligan, and Jeff Hawkins--the "legendary" team that developed Palm Computing's handheld PDA in 1992. The founders look back to their rationale for striking out on their own from Palm and the lessons learned and different paths followed in this second company founding. Focuses on the creation, valuation, and nurture of Handspring's myriad relationships, including supplier and manufacturer relationships, marketing agreements, and new business partnerships.
The advances of the Internet has enabled some companies to dematerialize their products so that digital versions can be personalized and shipped to customers without the usual logistics costs and delays. Once this is achieved, then the opportunities to provide customers with additional services, or to transform from a product-based to a service-based company, could be tremendous. Traces the experience of Intuit in pursuing its digital channel to sell and distribute its products, the challenges faced in making this migration while managing the physical channel, and the new service opportunities that the company created once the digital channel was in place.
Offers an overview of Veritas Software's history, beginning with the initial company, Tolerant Systems. Discusses the troubles Tolerant ran into and introduces the changes the company went through when it became a restart led by Mark Leslie. It touches on hiring and training a new sales force, striking new OEM partnerships, revisiting key partnerships and contracts, including a large one with AT&T, and accomplishing its goals on a shoestring budget.
Chronicles the founding and initial growth of World Wrapps, a retail quick-service restaurant chain serving gourmet, internationally flavored burritos. Gives the backgrounds of the four founders and the origin of the idea to create World Wrapps and then details how they financed and created the first store in San Francisco. Immediately, the store was a success and the management team's attention quickly went to growth and streamlining the operations of individual stores so that they could provide products and service with quality and cost efficiency. Examines a number of decisions made and to be made relating to expansion: how fast to grow, whether to franchise, whether to do a joint venture with another company, etc. Also considers how they should respond to numerous important competitive threats on the horizon. Finally, focuses on a financing decision--they have competing offers from venture capital firms that each have their advantages and disadvantages. Students are asked to advise the management team on their financing decision.
Chronicles the founding and growth of Hotmail Corp., the leading provider of free e-mail services to consumers. The focus is on its financing history, starting with its first-round negotiations with the venture capital firm, Draper Fisher Jurvestson, and finishing with its consideration of a fifth round of financing only a year and a half later. The first round was a relatively quick negotiation to give the company seed capital of just over $300,000. The second round was a contentious one that examined the relationship between entrepreneurs and their VC investors. The third and fourth rounds of investing were structured as contingency financings. Finally, the fifth round of financing showed a number of options that the managers must consider, including an investment from Kleiner Perkins, strategic financing, and an acquisition offer from Microsoft. To add to the complications, Hotmail was running out of money and needed a short-term solution (possibly bridge financing) to complete these negotiations. The case examines each alternative and asks the reader to rate them.
Founded in 1984, Cisco Systems made the Fortune 500 list and surpassed the significant $100 billion mark for market capitalization in 1997. Cisco, whose core technology is routers that allow disparate computer networks to "talk to one another," has become the worldwide leader in networking for the Internet. Acquisitions have been an integral part of Cisco's corporate strategy--one industry analyst estimated that 40% of Cisco's 1997 revenues came from acquired businesses. Cisco undertakes acquisitions to enable it to quickly tap into new market opportunities and offer customers end-to-end networking solutions. The case discusses Cisco's background and founders, its philosophy toward acquisitions, its stringent acquisition criteria, and its well-documented and tested approach to integrating manufacturing processes and organizations. Also describes a recent acquisition and poses the question of how to integrate the acquired company's manufacturing organization.
Sun's strategy is to identify 2-3 key leading edge differentiators for its products and standardize elsewhere, leading it to outsource the bulk of its manufacturing. Issues surrounding this strategy include: 1) selecting responsibilities within the purchasing function; 2) organizing and assigning responsibilities within the purchasing function; 3) developing long-term relationships with suppliers; and 4) developing management tools that appropriately motivate suppliers. In particular, the "Scorecard" that Sun uses as a supplier management tool is presented.