Managing Technology Ventures - Harvard Business School MBA Program

Managing Technology Ventures

Course Number 1795

Senior Lecturer Jeffrey F. Rayport
Fall; Q2; 1.5 Credits
14 Sessions
Project

Career Focus

Managing Technology Ventures (MTV) is designed for students who plan to join scaled digital technology ventures, who seek exposure to challenges of managing technology ventures at scale, or who plan to evaluate scaled technology ventures through a principal investing lens, with a particular emphasis on ventures in the consumer Internet and mobile sectors.

Educational Objectives

The course adopts the perspective of the CEO and functional leaders in managing scaled digital technology ventures, with a focus on envisioning a venture’s ecosystem and analyzing its competitors; formulating strategy; designing organizational structure, systems, and culture; and managing challenges within and across the product and engineering, sales and marketing, and business development functions. The course explores issues that leaders and managers encounter after a technology venture achieves scale, usually after a late-stage round of VC financing, growth equity financing, or an IPO.

MTV is a natural companion to the MBA electives Launching Technology Ventures (LTV) and Scaling Technology Ventures (STV). LTV focuses on early-stage ventures that are searching for product-market fit; and STV focuses on ventures from confirmed product-market fit through exit or some other liquidity event. Given its integrative general management orientation, MTV may overlap modestly with other technology-themed courses such as Strategy and Technology as well as Managing Growth, but should prove largely complementary, given that MTV looks at cases through an entrepreneurial lens and places an emphasis on founder and leadership team roles.

Course Content

Through case discussions, MTV will examine a series of paradigmatic challenges and opportunities in scaled technology ventures. These include:

Disruption as a strategy: Scaled technology ventures operating in dynamic markets often adopt disruption of themselves or others as a strategy. Self-disruption occurs when a business adopts a new and/or alternative technology that puts its core business under threat, such as Netflix shifting from DVD rental by mail to streaming video, or Amazon transferring wholesale accounts from retail operations to its third-party Marketplace platform. Disruption of partnerships or ecosystem occurs when a venture threatens other players by forward or backward integrating its technology, products, or services, such as Netflix moving into original content (versus film and TV production studios), Disney moving into streaming media (versus distributors such as cable companies and theaters), and Zillow or Redfin selling homes (versus residential real estate brokers). In traditional industries, such moves are rare; in scaled tech, they are often the norm.

Shifting the business model: Leveraging scaled technology platforms and user bases, tech ventures may evolve their business models toward higher quality or more defensible revenue streams. A common pattern is shifting from advertising-based to e-commerce revenues, such as King Digital Entertainment’s pivot from in-game advertising to sales of virtual goods, TripAdvisor’s and Yelp’s pivot from hosting hotel and restaurant reviews to booking hotel rooms and restaurant tables, Google’s pivot from showing airline flight grids to booking seats, Zillow’s pivot from helping home buyers research a mortgage to selling mortgages, and Alibaba’s pivot from hosting third-party sellers to providing mobile payment services through AliPay.

Corporate Culture and HR Debt: Tech talent is notoriously demanding when it comes to workplace culture. Demands are for a company that makes a difference, invests in their professional development, and creates an inclusive, values-based culture. Some ventures do this well (WeWork, Zillow, Netflix); others don’t (Uber); and some sacrifice culture in the pursuit of increasing scale (Zulily). When scaling ventures neglect people, culture, and values, they incur what the course calls “HR debt,” and paying it down becomes a crucial condition of a venture’s long-term stability and success.

Consortium Companies: Dynamic digital technology markets have given rise to unusual corporate forms, which we call consortium companies. These are multi-sided joint ventures that reflect the networked basis of many technology markets, such as Hulu (owned by the movie studios to compete with Netflix), Zelle (owned by big banks to compete with PayPay and Venmo), Hotwire and Orbitz (owned by hospitality and airline companies to compete with Expedia and Travelocity), and the as-yet-unnamed health-tech venture launched by JPMorgan, Berkshire Hathaway, and Amazon. It is crucial to understand both offensive and defensive strategies implicit in these new entities, as well as their implications for the attackers they aim to fend off.

Operating multi-brand companies: Many technology ventures have driven to scale through organic and inorganic growth. The result is companies that operate multiple, often competitive, brands and platforms under single corporate umbrellas, such as Facebook (with Instagram and Whatsapp), Zillow (with Trulia, Streeteasy, and Realestate.com), Expedia (with Hotwire, Hotels.com, Trelvocity, and Orbitz), Priceline (with Kayak and OpenTable), and IAC (with Match.com, Tinder, and OKCupid). How such ventures operate involves myriad strategic choices worthy of examination: branded house versus house of brands, technology platforms separate or integrated, impression-level data pooled or unpooled, and separate or integrated.

Transformative M&A: Scaled technology ventures often use transformative acquisitions to pivot their businesses, such as Zillow acquiring Trulia, Costar acquiring Apartments.com, Priceline acquiring Booking.com, Verizon acquiring Yahoo! and AOL, and AT&T acquiring Time Warner and AppNexus. The course will examine how to evaluate such M&A opportunities and how to maximize chances of success.

In exploring these issues, MTV will adopt the perspective of the founder/CEO and the leadership team, and it will pay close attention to the implications for functional roles and stakeholders within scaling ventures. The course will also shed light on organizational structures and systems used in scaling startups to manage cross-functional conflict as well as managing through post-merger acquisitions and integrations.

Students will have a choice between a final exam and a final project, which gives them an opportunity to apply course concepts to a scaled technology venture. For the final project, MBAs are encouraged to work in teams of two or three either using public sources or primary data from an actual technology venture to draft a short essay, optionally published on the MTV course blog, about what they have learned.