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Why be an entrepreneur?

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A talk delivered by Tim Rowe, CEO of Cambridge Innovation Center to students in a course on Information Entrepreneurship at Simmons Graduate School of Library and Information Sciences.

Published in: Business, Economy & Finance

Why be an entrepreneur?

  1. 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
  2. Q: WHY BE AN ENTREPRENEUR? A: Its a Win-Win-Win-Win-Win <ul><li>You win … Get Rich! </li></ul><ul><li>Your employees win … Make them rich! </li></ul><ul><li>Your investors win … Make them rich too! </li></ul><ul><li>Your customers win … Make them happy! </li></ul><ul><li>Your state and your country wins … Create jobs! </li></ul>It’s the best job in the world! And Massachusetts is the BEST place in the country to do it – ask me why
  3. IT IS ALSO HARD WORK AND PAINFUL <ul><li>My business hailed as a NextBigThing in national press (2000) </li></ul><ul><li>Lots of money invested ~US$17m </li></ul><ul><ul><li>A good friend invested $100,000 – a lot of money for him </li></ul></ul><ul><li>But - we had the model wrong – spent $16m learning </li></ul><ul><li>Retrenched, went from 50 to 5 employees (’01) </li></ul><ul><li>Ouch! </li></ul><ul><li>Now we are large and profitable, </li></ul><ul><ul><li>with 25 employees and 180 customers </li></ul></ul><ul><li>Welcome to entrepreneurship! </li></ul>
  4. WHERE TO GO FOR MONEY <ul><li>Yourself (savings, credit cards, home equity) </li></ul><ul><li>Family and friends </li></ul><ul><li>Customers! </li></ul><ul><li>Angels/VCs </li></ul>
  5. DO ’s and DON’T s <ul><li>DO ignore dilution. Get as much funding as you can! </li></ul><ul><li>DON’T worry about confidentiality </li></ul><ul><li>DO keep team small and minimize zatsugyo </li></ul><ul><ul><li>zatsugyo (jap.) peripheral tasks which do not directly deliver value to your customers, such as accounting, legal, managing your office space </li></ul></ul><ul><li>DON’T dwell on the hype about you, focus on substance </li></ul><ul><li>DO respect your supporters/investors and treat them right </li></ul><ul><li>DON’T give yourself a fixed job in the business </li></ul>
  6. SOME QUALITIES I LOOK FOR <ul><li>Midas test: do they have a knack for success? </li></ul><ul><ul><li>Have they had many successes in their past? (OK to have had some failures) </li></ul></ul><ul><li>Madoff test: are they going to be 100% straight with me? </li></ul><ul><ul><li>Good ones see investors as partners, bad ones see investors as marks </li></ul></ul><ul><li>Houdini test: can they find clever ways out of a pickle? </li></ul><ul><ul><li>Startups come near death many times before making it. Will they find a way? </li></ul></ul><ul><li>Airport test: would I mind being stuck in an airport with them? </li></ul><ul><ul><li>Are they fun to be around? Do they accept advice? </li></ul></ul><ul><li>Julia Child test: do they understand all the ingredients? </li></ul><ul><li>Are they scrappy? </li></ul><ul><ul><li>Do they know how to make a lot happen on very little resources? </li></ul></ul><ul><li>Are they passionate? </li></ul>
  7. HOW TO PITCH <ul><li>Explain what you are doing to a non-business person over 60 </li></ul><ul><ul><li>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 </li></ul></ul><ul><li>Explain it to investors the SAME WAY </li></ul><ul><ul><li>Explain the background/context briefly but thoroughly enough so they get it </li></ul></ul><ul><ul><li>Don’t assume they really know anything about your field, and don’t use jargon </li></ul></ul>
  8. GOOD STARTUP CONCEPTS “Tim’s 5 T’s” <ul><ul><li>The Trend. A big, indisputable trend, preferably recently recognized </li></ul></ul><ul><ul><li>The Twist. A cool, special thing that you do that makes a big economic difference </li></ul></ul><ul><ul><li>The Trillions. Explain why it will make a lot of money </li></ul></ul><ul><ul><li>The Teflon. Explain what makes it unlike other businesses—why its margins will sustain </li></ul></ul><ul><ul><li>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) </li></ul></ul>
  9. Why does all of this matter? <ul><li>New business is a key driver of growth, especially in hard times </li></ul><ul><ul><li>85% of all businesses in MA have 20 or fewer employees—you are it! </li></ul></ul><ul><ul><li>It’s a great avenue for someone who finds him or herself suddenly jobless </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><li>What can you do? </li></ul><ul><ul><li>Start a business, or </li></ul></ul><ul><ul><li>Join a startup </li></ul></ul><ul><ul><li>Either way, it’s a terrific experience you will never forget </li></ul></ul>

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