New Releases for 2018The case collection from the Lloyd Greif Center for Entrepreneurial Studies captures stories of entrepreneurship, social entrepreneurship and corporate innovation. From Southern California startups to a Bogota business incubator to a rising Beijing smartphone maker, these cases feature the narratives of innovators who are changing the rules for building new ventures.

The USC Marshall Greif Center

Entrepreneurship Case Collection

SCG-527J u l y 1 7 , 2 0 1 7

J E R E M Y B . D A N N

K A T H E R I N E B E N N E T T

A N D R E W O G D E N

Xiaomi:DesigninganEcosystem

Forthe“InternetofThings”

early two dozen shoppers navigated the consumer electronics boutique, some looking for the

latest, top-performing gear and others searching for the perfect accessory to complement the

products they already owned. The store’s walls were a gleaming white and the floor a light

gray. The brightness of the environment definitely set it apart from several of the neighboring stores

in this trendy Beijing shopping mall.

Liu De walked amongst the displays of smartphones, each anchored with a cable to a base on the

rectangular natural wood tables. But Liu was not checking out the smartphones’ latest features—

rather he was checking out the people checking out the smartphones’ latest features. Liu was one of

the cofounders and top executives at Xiaomi, the fast-growing maker of smartphones and other

consumer electronic devices which some industry observers had tabbed as “The Apple of China.”

Trained as a designer, he couldn’t help

but employ his keen powers of

observation as he navigated the retail

location, the first-ever Xiaomi owned and

operated store.

Though Xiaomi’s rapid rise was

undeniably tied to savvy uses of social

network communities and e-commerce,

Liu and his fellow cofounders believed

that the company’s future growth might

be more linked with brick and mortar

operations like the one he was touring.

They were pondering making some major

investments in retail operations for the

first time.

Accompanying Liu on this consumer observation mission were Li Ningning and Chen Lu, early

Xiaomi employees and, like Liu, also trained in design at Pasadena, California’s Art Center. While Liu

observed customers trying out mobile phones and tablets on counters near the front of the store, Li

and Chen were watching shoppers’ reactions to very different sorts of products. A college student

tried out a desk lamp while a young mother examined a rice cooker. The two Xiaomi designers took

interest because these seemingly mundane items were designed to connect with their company’s

smartphones—new “Internet of Things” products that could be controlled by Xiaomi technology. Li

and Chen played important roles in managing the relationships with dozens of allied companies that

took part in this emerging “Ecosystem” of cobranded products.

N

SCG-519O c t o b e r 1 7 , 2 0 1 6

E L I S S A G R O S S M A N S U S A N H A R M E L I N G

FullPsycle:GettingSomewhereByGoingNowhere(A)aul Harmeling, the founder and CEO of Full Psycle, looked out the large front window of the

Full Psycle studio in beautiful Costa Mesa, California, and smiled. It was November 2014, and

Full Psycle had just opened its third location, two months earlier.

Harmeling had reason to be pleased. Full Psycle had achieved incredible success since opening its first location in Costa Mesa in February 2013 and a second studio in March 2014. The “spin” studio was now poised to compete with the biggest boutique indoor cycling studios in the United States, including the famous SoulCycle, which began in New York and was expanding across the country.

The future success of Full Psycle, however, would depend on choosing the

right way to expand. Harmeling and his partners could retain control of the company by funding

expansion themselves – or they could obtain outside investors. They could even try to franchise Full

Psycle. Harmeling wasn’t sure what the best option would be, but knew that he needed to proceed

carefully. Decisions made during the next few months would be critical for the long-term success of

the company.

DiscoveringaLoveforIndoorCyclingHarmeling, who had always been athletic and passionate about sports, took his first indoor cycling

class in Boston in 2001. He loved the class and returned on a few occasions, but he preferred, at the

time, to continue his participation in various adult sports leagues. It wasn’t until 2008, after

completing graduate school, that he began to take cycling more seriously. (Harmeling obtained a

Masters in Engineering from the Massachusetts Institute of Technology in Spring 2003 and an MBA

in Finance from the University of California - Irvine in Spring 2005.) It was while working at Green Street Advisors, Wall Street’s preeminent real estate investment

trust research firm, after years of work in various finance jobs (and years of continued play in

basketball and soccer leagues), that Harmeling began to consider a change in routine. “By the time I

reached my early 30s, I noticed that these sports were taking a huge toll on my body,” said Harmeling.

“It was clear that I needed to pursue a lower-impact form of exercise.”

P

SCG-517

Octobe r 12 , 2016

J E R EMY B . DANN

M ICHAE L G LA SSMAN

JeffSmulyanandNextRadio:

MobilizingaCompanyandanIndustry

eff Smulyan loved seeing his hometown of Indianapolis crowded with visitors—even if the extra

traffic almost made him late for his first meeting of the day. “March Madness”—the National

Collegiate Athletic Association’s renowned, tradition-rich basketball tournament—had returned

once again to Indianapolis in 2015. Smulyan was taking advantage of the opportunity to meet with

several media executives in town to watch the “Final Four” teams vie for the title.

It was a warm spring day in early April. Smulyan walked

from his office on Indianapolis’ famous Monument Circle to a

nearby lunch with fellow members of the National Association

of Broadcasters. As he walked, he listened to “The Dan Dakich

Show” on “The Fan” 107.5 FM, a station Smulyan’s company,

Emmis Communications, owned. “We’re putting it out there

to the listeners: who’s going to win Saturday’s Semifinal? Will

it be overall number one seed Kentucky, or will it be the

Wisconsin Badgers? Vote now,” declared Dakich, a nationally-

known sports radio host. Smulyan pulled out his Sprint HTC

One to cast his vote for the underdog Wisconsin.

While listener polls were typical in sports talk radio, this one was different. In the early days of

sports talk radio (a format Smulyan had helped pioneer two decades before), listeners would call in to

vote. With the rise of mobile phones, radio personalities would have listeners use text messaging or

Twitter to respond. This poll, however, popped up automatically on Smulyan’s smartphone, its

appearance synchronized with 107.5 FM’s broadcast. Smulyan’s vote, along with the votes of other

listeners in the Indianapolis area, was cast with one simple click using the mobile app NextRadio.

Smulyan had spent the better part of the last decade as the main champion for enabling mobile

phones in the U.S. to receive FM radio transmissions. When smartphones were first introduced, he

aggressively lobbied both legislators and mobile telecom executives in the hope of equipping the

devices with a chip capable of receiving FM radio. Later, he committed millions of dollars of Emmis’

capital to developing the NextRadio app and the business ecosystem around it. Today’s lunch meeting

was with several of the industry colleagues who had committed early on to the NextRadio effort. The

lunch was in his hometown at a restaurant he chose, so he knew he’d be picking up the tab. He just

hoped the free lunch and the news about NextRadio’s progress would be enough to keep them on

board as enthusiastic supporters of the initiative.

J

SCG-525

May 22 , 2017

MAR IANNE S Z YMANSK I MEGAN S TRAWTHER

RobertGoodwin:AcceleratingSocialImpactatMattelobert Goodwin waited in his office at the high-rise headquarters of Mattel, Inc. in El Segundo,

California. He glanced at some memos as he prepared for an afternoon meeting with senior

members of the Hot Wheels brand team. Goodwin served as the Executive Director of the

multinational toy manufacturing company’s charitable foundation, the Mattel Children’s Foundation,

and simultaneously as the Director of Corporate Affairs and Philanthropy for Mattel. The purpose of

that day’s meeting was to discuss how the company should build upon the results of the Foundation’s

Hot Wheels “Speedometry” program and integrate more “purpose” into the commercial strategy of

the Hot Wheels brand. Goodwin had come to Mattel from Executives Without Borders, where he had served as the CEO

and worked with nonprofits in Brazil and Haiti to help scale their models of impact by leveraging the expertise of multinational corporations. While that work had been demanding in a myriad of ways, he wondered if convincing the executives of a Fortune 500 company that blending a social mission with its core business operations to increase the bottom line might be an even greater challenge.

When Goodwin joined the team in 2014, Mattel had divided its charitable efforts evenly among activities related to the Foundation, corporate philanthropy initiatives, and global toy donations. When Goodwin agreed to lead philanthropy for Mattel, his goal was to find ways to incorporate social impact into the

overall business strategy of the company to increase both the financial and social value of the toy

giant. The Hot Wheels Speedometry program was one of the major initiatives Goodwin had launched

that he felt could both increase education outcomes for children and create a long-term benefit for

how the Hot Wheels brand was perceived by parents and teachers. Despite his efforts to transform Mattel’s approach to charity, he found it difficult to get his

company’s brands on board. Would Goodwin be able to convince top executives that by investing in

social outcomes for children, it could actually create conditions that improved the sales of their

products in the long run? Was it possible to implement this systemic change and new way of

thinking–integrating “purpose” into core operations–within Mattel’s complex bureaucracies?

If Goodwin were to expand Speedometry and other programs like it, domestically and

internationally, what would be required for Mattel’s employees to be truly engaged and contribute to

the project’s success?

R

Bratwurst, Beer and Business: Planning for Growth at WurstkücheTyler Wilson and Joseph Pitruzzelli are young entrepreneurs who find rapid success opening a restaurant in Downtown Los Angeles during the height of the 2008 economic recession, when many experienced restaurateurs were forced to close their businesses. The company’s emphasis on branding and customer service allows them to pursue a successful second location in Venice, California. When Wilson and Pitruzzelli expand to Denver, Colorado, however, they unexpectedly struggle with operational complications and organizational culture problems across disparate locations.

TOPICS: Management Skills, Organizational Culture, Customer Focus, Managing Uncertainty, Managing People, Developing Employees, Scale

Built on Grit: h.wood and John TerzianJohn Terzian is a rising nightclub owner and restaurateur in Los Angeles, CA. As a co-founder and CEO of The h.wood Group, he has cultivated the success of each new venue through stubborn grit, a trusting nature, and reliance on personal touch. This highly

involved, time-intensive approach has attracted A-list celebrities. However, as The h.wood Group begins to scale outside Los Angeles, Terzian must manage the use of his personal attributes as strengths while preventing them from turning into pitfalls.

TOPICS: Entrepreneurship, Influence, Power sharing, Networks, Social capital, Individual abilities, Persuasion, Personal Characteristics, Scale

Full Psycle: Getting Somewhere by Going NowherePaul Harmeling, an investment banker, pursues his passion for indoor cycling (“spinning”) and launches the Full Psycle fitness studio. After the third location opens, it is clear that the early success can be attributed to exclusive technology rights and Harmeling’s personality and enthusiasm. As Harmeling prepares to take the brand to a national level, the case explores the challenges of replicating this success across multiple locations. The case also examines the five expansion strategies available to Harmeling and the potential trade-offs each offers.

TOPICS: Startups, Growth Strategy, Startup Financing, Franchising, Scale

Jeff Smulyan and NextRadio: Mobilizing a Company and an IndustryExperienced radio entrepreneur Jeff Smulyan finds an opportunity to embed FM-capable chips into US smartphones, enabling users to listen to over-the-air broadcasts for the first time. His company creates the app and the ecosystem that seems like it will be mutually beneficial to broadcasters, advertisers, and artists. Still, Smulyan and his team ponder how to keep industry giants committed to NextRadio and how soon the venture should tap into international markets.

TOPICS: Entrepreneurs, Innovation, Business models, Business and Government Relations, Multi-Party Alliances, Entering Foreign Markets

KCC: Third Time’s the Charm?KCC was founded by two bankruptcy lawyers who saw the potential to tap technology to make dramatic improvements in the work they could perform for clients. Their current dance with a potential acquirer is their third attempt at selling their startup to a larger company. The case details their experiences and lessons from each of their first two attempts and the terms they are considering from the latest suitor. Should they agree to aggressive earn-out hurdles? To an eight-year non-competition agreement? To changing the founders’ roles in the company after the acquisition closes?

TOPICS: Startups, Exit Strategy, Entrepreneurs, Entrepreneurial Management

Nanxi Liu: Finding the Keys to Sales Success at EnplugIn 2012, Nanxi Liu and her four co-founders launched Enplug, a digital signage company that specialized in providing businesses with customizable, interactive digital displays. A few years into the venture, Enplug pivoted from an installation-based service model that relied heavily on digital advertisements for revenue to a product-focused company that built and sold downloadable software. The case revolves around Liu’s considerations of Enplug’s pricing models, sales strategy, and newly launched reseller program. It also examines Enplug’s startup culture and how that played a role in Liu’s decision-making as Enplug’s Chief Executive Officer.

TOPICS: Startups, Organizational Development, Capabilities, Sales Strategy, Product Development, Organizational Culture

New Releases for 2018

Polymath Ventures: Building an International IncubatorPolymath Ventures is a distinctive “company builder” fostering enterprises for the rising middle class in Latin America. Founded by Wenyi Cai, a successful Silicon Valley entrepreneur, Polymath boasted a business development methodology that sought to leverage international expertise to envision, finance, and scale innovations for the Colombian market. After two successful years, Polymath’s latest venture is facing early setbacks and Polymath’s Silicon Valley-inspired corporate culture is causing friction within Colombia’s traditional entrepreneurial environment.

TOPICS: International Business, Global New Ventures, Entrepreneurship, Innovation International Human Resources, Women in Business, Organizational Culture

Redgate Media Group: M&A During Global Financial CrisesIn 2008, Peter Brack was on the verge of a Nasdaq IPO with Redgate Media Group, a high-growth Chinese media conglomerate. Brack had guided the accelerated expansion of Redgate in five short years on the promise of this rapid IPO. However, the global financial crisis in 2008 upended Redgate’s plans, leaving the company with limited cash and many angry employees. Brack must now scramble to restructure Redgate to reduce costs and find a new market in which to IPO.

TOPICS: International Business, Entrepreneurship, Rapid Growth Stage, Exit Strategy, IPOs, Mergers and Acquisitions

Robert Goodwin: Accelerating Social Impact at MattelRobert Goodwin simultaneously serves as the Executive Director of the Mattel Children’s Foundation and the Director of Corporate Affairs and Philanthropy for Mattel, Inc., one of the largest toy companies in the world. His goal is to “integrate purpose” into the overall business strategy of the company to increase its social and financial value. One initiative he spearheads is Speedometry, a curriculum that incorporates the popular Hot Wheels brand to provide STEM education to elementary school students. Goodwin must figure out how to effectively scale and sustain this program while navigating Mattel’s complex bureaucracies and appealing to the company’s commercially focused brands.

TOPICS: Corporate Social Entrepreneurship, Social Entrepreneurship, Triple Bottom Line, Strategic Philanthropy, Business and Government Relations

Senn Delaney: An Entrepreneurial Exit in the Consulting IndustrySenn Delaney is a culture-shaping consulting firm located in California. From 1999-2012, the firm was led by CEO Jim Hart. The case traces Senn Delaney’s path from acquisition target in 1999 to private buyout after failure of the acquirer in 2003. It also examines the significant investments the firm made in culture, structure, and technology to restore and expand its capacity to serve its clients. When faced with a decision point for exit, stakes are high as Hart and the legacy partners decide what entrepreneurial exit strategy will provide the greatest reward for the firm and its partners.

TOPICS: Exit Strategy, Organizational Culture, Human Capital, Acquisition Strategies, Firm Value

Xiaomi: Designing an Ecosystem for the “Internet of Things”After its founding in 2010, Xiaomi quickly rose to become one of China’s top smartphone manufacturers. By mid-2015, it was looking to bolster its declining repeat purchase rate and deepen the impact of its products. The company begins to invest heavily in an “Ecosystem” of allied companies and compatible smart products. Xiaomi also must determine if its Internet-based sales model will continue to drive growth or if it must invest hundreds of millions of dollars in a full-fledged retail network.

TOPICS: Innovation, Business Models, Open Innovation, Design, Customer Feedback, Corporate Ventures, Value Networks

Wolo: The Highs and Lows of a Socially-Conscious VentureThis case describes the strategic and operational challenges faced by John Frederick, the founder of Wolo, an online marketplace for socially-conscious businesses. Frederick has difficult decisions to make regarding investment, brand orientation and personnel as he seeks to increase Wolo’s profitability. Frederick sees great potential in focusing on the yoga products category, but needs to decide if Wolo will abandon its vision of creating the first marketplace that spans the spectrum of socially-conscious products.

TOPICS: Entrepreneurship, Social Entrepreneurship

SCG-531

November 15 , 2017

E L I S SA GROSSMAN

DR . DAV ID GROSSMAN

JohnQ.Inventor

AndtheCardboardSn

owplow

very few hours that night, John would wake up, walk into his kitchen, flip the switch on the

porch light, and eyeball the snow collecting outside. The weather forecast had called for about

seven inches, but John knew that forecasts were almost always wrong – in one direction or

the other. If seven inches did fall, it would be a mixed blessing. It would be an unexpected day off

from work. No need to wake up early (though his excitement was keeping him awake). No icy,

slippery, dangerous commute. On the other hand, if a “Snow Day” was called (the official label for an

announced, weather-related, school or work cancellation), John would still need to clear the driveway

John simply loathed shoveling – a task that offered, in his view, a truly unpleasant combination of

heavy lifting and bitter cold. On snow days, his kids would help a little. For that reason, they had not

one shovel in the garage, but a few ... It was easier (in theory) to clear snow with a “team” of workers,

even if those workers were young and more interested

in snowball fights! But each shovel had cost about $40,

which added up. And the “shovel part” on cheaper

shovels (what was that part actually called, he

wondered?) kept falling off when used on the wettest,

heaviest snow.

“How much snow so far?” his wife asked, walking

sleepily into the kitchen. “About three inches,” John

answered. “I don’t think the forecasters got it right.”

His wife shook her head. “They so rarely do.” They

both knew that three inches were too few to close

anything. Even with an additional inch by sunrise, a school or work cancellation felt unlikely. “Do you

think we should hire someone?” his wife asked. Every once in a while, if the snowfall was too

significant, or the weather conditions too cold and blustery, they would hire a snowplow driver – a

neighborhood hero with a large metal plow affixed to the front of his pickup truck, who cleared the

driveway in minutes. “Not worth it today,” John answered. At $150 a pop, an amount that could all

too quickly use up funds for a family vacation to a warm, snow-free climate, his choice was to shovel.

His wife continued staring out the kitchen window. “Maybe we should buy a snowblower. It costs,

what, $250, $350, and you could use it every time. Just get out there, like with a lawnmower, and

blow away the snow.” John shook his head. “No. Those things are dangerous, and they break all of the

time. Plus ... I don’t think they work well when only a few inches have fallen. I just don’t want one.

The worst part of shoveling is the cold. Using a snowblower doesn’t change that.” His wife nodded,

wishing away the back problems that prevented her from helping him. “You know,” she said, “You

invent everything else. Why not just invent an alternative?” He looked thoughtfully over at her.

“You’re right. There has to be a better way.”

E

SCG-534

November 15 , 2017

S COTT L ENET L A JU OBASA JU S E L INA T ROESCH

RebelTechnologiesSeriesSeed

Negotiation:RebelInformation

PublicInformation ProfileofEmperorVenturesEmperor Ventures (“EV”) is a San Francisco-based venture capital firm with $250 million under

management. The funds under management are organized in the form of three limited partnerships

whose investors represent a broad range of institutional planned sponsors (public and corporate

pension funds) and high net worth family offices. The firm specializes in media, communications,

networking, and software investments, and the group has established a reputation as an aggressive

and knowledgeable investor in cutting edge technologies.

EV’s Managing Partner, Garth Sidwell, is

internationally known, regularly appearing on

the popular reality show Shark Wars, where

entrepreneurs compete to receive investment

offers from venture capitalists. Sidwell and EV

also gained attention as the Series A investors

for the startup that released Forest Moon, an

augmented reality app based on a once-

popular children’s cartoon. The game was

lauded for encouraging people to leave the

house in search of elusive characters. Forest

Moon “went viral” with over 500 million

downloads. EV is now looking to make a

splash in the world of virtual reality by

investing in the “next big thing.” However, Sidwell is wary of investing in an unproven platform and

seeks to find a startup that, while still at the seed stage, has demonstrated at least some proof of

concept and the potential to dominate in the nascent VR market. With a preference to be the initial

and sole professional investor, EV typically places $2 million to $4 million in private, high-growth

technology companies with the aim to sell or go public within a three to seven-year time frame. EV

generally desires to invest for significant minority equity stakes, and actively manages its portfolio

companies. The firm has four partners who manage EV’s fifteen current portfolio companies, usually

through a role at the Board of Directors level.

EV’s youngest partner, Anna Kincaid, was recently promoted following the successful sale of

Saber, a portfolio investment that she championed, to Admiral, PLC.

Lloyd Greif Center for Entrepreneurial Studies | USC Marshall School of BusinessThe Lloyd Greif Center for Entrepreneurial Studies at the USC Marshall School of Business is the nation’s oldest integrated entrepreneurship program. Consistently ranked among the top programs in the United States and abroad, the Greif Center was named #4 by US News & World Report in its Best Business Schools 2017 rankings and #4 worldwide by the Financial Times in 2015. With more than 93 classes taught by 31 professors and practitioners, the Greif Center offers a wide range of courses in entrepreneurship designed for students who want to start or own a high-growth business, join an emerging business or participate in an entrepreneurial venture in a mature corporation (intrapreneurship). The Greif Center also offers co-curricular programs such as venture competitions, speaker events and a new venture incubator, and it actively engages with alumni to support their work and to connect them with our current community of student entrepreneurs.

CONTACT:

Lloyd Greif Center for Entrepreneurial Studies USC Marshall School of BusinessT: 213-740-0641 E: greifcases@marshall.usc.edu

For more information and to order, please visit:HARVARD BUSINESS PUBLISHING FOR EDUCATORS

www.hbsp.harvard.edu/THE CASE CENTRE

www.thecasecentre.org/educators/ordering/whatsavailable/collections/GreifCenter

New Classroom Exercises for 2018John Q. Inventor and The Cardboard SnowplowThe Cardboard Snowplow tells the story of an inventor who has a novel idea that he believes represents a business opportunity. In response to this story, students are asked to summarize the problem (the high cost and physical exertion of clearing snow) and proposed solution (a corrugated cardboard snowplow). They are asked to (1) assess the solution’s likely potential as a business opportunity; (2) identify what they perceive as the most likely sources of business launch vulnerability; and (3) propose potential tests that might inform a data-driven “go/no go” decision.

TOPICS: Entrepreneurship, Market Research, inventions

Rebel Technologies Series Seed NegotiationStudents engage in a high-stakes seed stage investment negotiation between Empire Ventures, a leading venture capital firm, and Rebel Technologies, a cutting-edge virtual reality game developer. The parties must quickly hash out the size of the investment, board composition, founder vesting provisions, and other issues, or risk falling behind in a fast-moving marketplace.

TOPICS: Venture Capital, Entrepreneurial Finance, Negotiations