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Innovation
       in
Small Companies

        Mike Bartlett
  MIT Enterprise Forum DFW
The Pace of Innovation is Increasing




March 29, 2012          Mike Bartlett            2
                                                 2
Innovation Outsourcing

       “No internal R&D group can possibly
       predict, evaluate or cover all possible
       designs or competitive positions.”
             Outsourcing Innovation: The New Engine of Growth
                   by James Brian Quinn, July 15, 2000




March 29, 2012                  Mike Bartlett                   3
Why Outsource Innovation?

•   Big company overhead and inertia.
•   Keeps the R&D cost off the books.
•   Small companies don’t own a factory.
•   Buying a company gives good press.

Innovation in most Big Companies is
  just not working!
March 29, 2012     Mike Bartlett           4
Where Is the Innovation?
• 64% of net new jobs in the US over the last 15
  years came from small business and a
  substantial portion of those new jobs were
  created by the high growth, high impact small
  businesses. (Source: Brookings Institution)

• Not to be confused with the Main Street
  businesses: restaurants, car repair shops, dry
  cleaners, and the myriad of other small
  operations who contribute little net job growth.

March 29, 2012         Mike Bartlett                 5
Basic Requirements of a High
    Growth Start-up Company
1. “Fire in the Belly”
2. A great idea!
3. Technical Skills in building and running a
   company.
4. Funding


March 29, 2012       Mike Bartlett              6
Who Does a Start-Up?




             Source: Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity.




March 29, 2012                                        Mike Bartlett                   7
Baby Boomers
• Boomers have broader job skills
• Better access to capital – both their own
  savings and through personal networks
• Also at a life stage where starting a
  business is less risky and more attractive.

76M Boomers retiring could drive a new
  Entrepreneurship Boom on their own!
March 29, 2012       Mike Bartlett              8
Generation Y
• Generation Y may be the most
  entrepreneurial generation ever.


     Percentage of
     respondents 18 –
     29 years of age
     who wanted to:




March 29, 2012          Mike Bartlett   9
Why the US Leads?

• Culture

• Direct access to the world’s biggest
  consumer market




March 29, 2012         Mike Bartlett     10
A Great Idea?

• Probably the biggest barrier to a
  successful new company.

• Need “Domain Knowledge” from working
  in a field for several years to identify the
  needs and gaps.


March 29, 2012       Mike Bartlett               11
2011 Angel Investments ($’s)




March 29, 2012                   Mike Bartlett
                 Source: Angel Resource Institute – 2011 Halo Report   12
Entrepreneurship Training

• Can Entrepreneurship be taught?

• More than 2,000 college and universities
  in the United States, about two-thirds of
  the total, now offer a course in
  entrepreneurship (Kauffman Foundation).


March 29, 2012     Mike Bartlett              13
Basic Requirements of a High
    Growth Start-up Company
1. “Fire in the Belly”
2. A great idea!
3. Technical Skills in building and running a
   company.
4. Funding


March 29, 2012       Mike Bartlett          14
Funding Sources
•   Friends & Family – to validate the product
•   Angels and Private Investors
•   Federal Grants - SBIR
•   VC’s (if you can find one)

• The best funding source – Customers!


March 29, 2012        Mike Bartlett          15
March 29, 2012   Mike Bartlett   16
Summary

• The pace of innovation is accelerating
• Driven largely by small companies
• Boomers plus Gen Y will lead
• Primary areas: Social and Healthcare
• It will affect the future for all of us!

March 29, 2012         Mike Bartlett         17
How Are You Involved?

            • Start or Join a Small Company
            • Help a Start-up
                 – Mentoring
                 – Funding
            • Teach Entrepreneurship
            • Help improve the Innovation
              climate in Texas & the US

March 29, 2012                 Mike Bartlett   18

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Innovation in Small Companies

  • 1. Innovation in Small Companies Mike Bartlett MIT Enterprise Forum DFW
  • 2. The Pace of Innovation is Increasing March 29, 2012 Mike Bartlett 2 2
  • 3. Innovation Outsourcing “No internal R&D group can possibly predict, evaluate or cover all possible designs or competitive positions.” Outsourcing Innovation: The New Engine of Growth by James Brian Quinn, July 15, 2000 March 29, 2012 Mike Bartlett 3
  • 4. Why Outsource Innovation? • Big company overhead and inertia. • Keeps the R&D cost off the books. • Small companies don’t own a factory. • Buying a company gives good press. Innovation in most Big Companies is just not working! March 29, 2012 Mike Bartlett 4
  • 5. Where Is the Innovation? • 64% of net new jobs in the US over the last 15 years came from small business and a substantial portion of those new jobs were created by the high growth, high impact small businesses. (Source: Brookings Institution) • Not to be confused with the Main Street businesses: restaurants, car repair shops, dry cleaners, and the myriad of other small operations who contribute little net job growth. March 29, 2012 Mike Bartlett 5
  • 6. Basic Requirements of a High Growth Start-up Company 1. “Fire in the Belly” 2. A great idea! 3. Technical Skills in building and running a company. 4. Funding March 29, 2012 Mike Bartlett 6
  • 7. Who Does a Start-Up? Source: Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity. March 29, 2012 Mike Bartlett 7
  • 8. Baby Boomers • Boomers have broader job skills • Better access to capital – both their own savings and through personal networks • Also at a life stage where starting a business is less risky and more attractive. 76M Boomers retiring could drive a new Entrepreneurship Boom on their own! March 29, 2012 Mike Bartlett 8
  • 9. Generation Y • Generation Y may be the most entrepreneurial generation ever. Percentage of respondents 18 – 29 years of age who wanted to: March 29, 2012 Mike Bartlett 9
  • 10. Why the US Leads? • Culture • Direct access to the world’s biggest consumer market March 29, 2012 Mike Bartlett 10
  • 11. A Great Idea? • Probably the biggest barrier to a successful new company. • Need “Domain Knowledge” from working in a field for several years to identify the needs and gaps. March 29, 2012 Mike Bartlett 11
  • 12. 2011 Angel Investments ($’s) March 29, 2012 Mike Bartlett Source: Angel Resource Institute – 2011 Halo Report 12
  • 13. Entrepreneurship Training • Can Entrepreneurship be taught? • More than 2,000 college and universities in the United States, about two-thirds of the total, now offer a course in entrepreneurship (Kauffman Foundation). March 29, 2012 Mike Bartlett 13
  • 14. Basic Requirements of a High Growth Start-up Company 1. “Fire in the Belly” 2. A great idea! 3. Technical Skills in building and running a company. 4. Funding March 29, 2012 Mike Bartlett 14
  • 15. Funding Sources • Friends & Family – to validate the product • Angels and Private Investors • Federal Grants - SBIR • VC’s (if you can find one) • The best funding source – Customers! March 29, 2012 Mike Bartlett 15
  • 16. March 29, 2012 Mike Bartlett 16
  • 17. Summary • The pace of innovation is accelerating • Driven largely by small companies • Boomers plus Gen Y will lead • Primary areas: Social and Healthcare • It will affect the future for all of us! March 29, 2012 Mike Bartlett 17
  • 18. How Are You Involved? • Start or Join a Small Company • Help a Start-up – Mentoring – Funding • Teach Entrepreneurship • Help improve the Innovation climate in Texas & the US March 29, 2012 Mike Bartlett 18