Why be an entrepreneur?

Why Be An Entrepreneur? (and why not?) Some Observations on Entrepreneurship LIS 478: Information Entrepreneurship Simmons Graduate School of Library and Information Science April 16, 2009 Timothy Rowe

Q: WHY BE AN ENTREPRENEUR? A: Its a Win-Win-Win-Win-Win
You win … Get Rich!
Your employees win … Make them rich!
Your investors win … Make them rich too!
Your customers win … Make them happy!
Your state and your country wins … Create jobs!
It’s the best job in the world! And Massachusetts is the BEST place in the country to do it – ask me why

IT IS ALSO HARD WORK AND PAINFUL
My business hailed as a NextBigThing in national press (2000)
Lots of money invested ~US$17m
A good friend invested $100,000 – a lot of money for him
But - we had the model wrong – spent $16m learning
Retrenched, went from 50 to 5 employees (’01)
Ouch!
Now we are large and profitable,
with 25 employees and 180 customers
Welcome to entrepreneurship!

WHERE TO GO FOR MONEY
Yourself (savings, credit cards, home equity)
Family and friends
Customers!
Angels/VCs


DO ’s and DON’T s
DO ignore dilution. Get as much funding as you can!
DON’T worry about confidentiality
DO keep team small and minimize zatsugyo
zatsugyo (jap.) peripheral tasks which do not directly deliver value to your customers, such as accounting, legal, managing your office space
DON’T dwell on the hype about you, focus on substance
DO respect your supporters/investors and treat them right
DON’T give yourself a fixed job in the business

SOME QUALITIES I LOOK FOR
Midas test: do they have a knack for success?
Have they had many successes in their past? (OK to have had some failures)
Madoff test: are they going to be 100% straight with me?
Good ones see investors as partners, bad ones see investors as marks
Houdini test: can they find clever ways out of a pickle?
Startups come near death many times before making it. Will they find a way?
Airport test: would I mind being stuck in an airport with them?
Are they fun to be around? Do they accept advice?
Julia Child test: do they understand all the ingredients?
Are they scrappy?
Do they know how to make a lot happen on very little resources?
Are they passionate?

HOW TO PITCH
Explain what you are doing to a non-business person over 60
If that person doesn’t really understand it to the point he or she can explain it to someone else, then your pitch is no good
Explain it to investors the SAME WAY
Explain the background/context briefly but thoroughly enough so they get it
Don’t assume they really know anything about your field, and don’t use jargon

GOOD STARTUP CONCEPTS “Tim’s 5 T’s”
The Trend. A big, indisputable trend, preferably recently recognized
The Twist. A cool, special thing that you do that makes a big economic difference
The Trillions. Explain why it will make a lot of money
The Teflon. Explain what makes it unlike other businesses—why its margins will sustain
The Talent. Tell enough about yourselves to convince a skeptic that you are the team to pursue the idea (integrity, track record, passion, special expertise, integrity)

Why does all of this matter?
New business is a key driver of growth, especially in hard times
85% of all businesses in MA have 20 or fewer employees—you are it!
It’s a great avenue for someone who finds him or herself suddenly jobless
We at CIC saw tremendous growth in startups after the last downturn—we grew by 50% in 2003 and 100% in 2004—slow years otherwise
What can you do?
Start a business, or
Join a startup
Either way, it’s a terrific experience you will never forget

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Why be an entrepreneur?

by Timothy Rowe on Apr 16, 2009

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