Business Mission of Extreme Spee

Business Mission of ICISLT

The mission of ICISLT is to enable expanded research and development in speech and language technology. To further this mission, ICISLT will teach courses and do consulting to help companies that are helping to develop the technology or that are developing applications. In particular, in addition to the technology courses we are developing a business curriculum based on methodologies aimed at maximizing the probability of business success.

Conventional Venture Capital

Although it may seem strange at first, a conventional venture capital does not try to maximize the probability of success of its individual portfolio companies. Of course a venture capital fund, or any institutional investor would ideally like to have every one of its portfolio companies succeed. But upon reflect on the following example, it is clear, however, that an institutional investor should NOT try to maximize the probability of success when certain trade-offs are involved.

Example:

Option 1: probability of making $10 million = 0.9; probability of failure = 0.1.

Option 2: probability of making $200 million = 0.1; probability of failure = 0.9.

The second option is worth more than twice as much in expected value, and so would be preferred by any institutional investor. The individual entrepreneur, however, does not have a large portfolio to average the successes with the failures. A given business will either succeed or fail. If allowed to choose, most entrepreneur would choose option 1. But for most entrepreneurs seeking venture capital, option 1 is not available as a choice. Business plans that lead to the scenario in option 1 would be rejected because they don't even meet the minimum conditions for an exit strategy.

Bootstrapping

Bootstrapping is a technique that allows a company to grow without venture capital. Extreme Bootstrapping is a collection of techniques that allows a company to start with little or no capital investment. It gives the company the option of growing without venture capital. It also gives the option of a new form of venture capital, called Extreme Venture Capital or Bootstrap Capital which removes the structural constraints that control conventional VCs allowing a strategy that maximizes the probability of success. It also takes a different view of IPOs that is driven by the goals of the entrepreneur rather than those of the investment bankers.

What is the meaning of "Extreme?"

Fundamentals