Entrepreneurship I

Class #2

Ideas and Opportunities

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Entrepreneurial achievement is driven by people who search for and shape superior opportunities

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Joseph Schumpeter regards the dynamic process of new firms replacing or changing existing firms:

“gales of creative destruction.”

This, he defines, is the essential feature of capitalism. Entrepreneurial companies are the true life blood of a region, pumping renewed energy and vigor into the economy.

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Entrepreneurship buzz

• Brontosaurus capitalism• Intrapreneurship• Youth• Get rich quick

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What’s Important

Founders

Opportunity recognition

Resources

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What You Need

Unfair advantage

Ability to sell

Earn the right to exist everyday

Implementation

Commitment

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Luck and Smarts

• Business is timing/high tech is timing

• Importance of marketing– Research, analysis, strategy– Selling $1 for $.50 is easy– Selling $1 for $1.10 is not

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What ideas form the basis of a good business?

Pain Passion

Problem

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Ideas and opportunities

market, market, market

More money than good ideas

Strategic money

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Points of interest

• Life cycle of businesses• Changing strategy and culture• Team building• Long term value vs. short term

profits• Balancing risk and reward• Lifestyle businesses vs. growth

businesses

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Why businesses fail

• 1 out of 3 succeed• The bigger you are, the faster you

grow, the better your chances of survival

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Opportunities

• Start with the opportunity– Not money– Not strategy

• Market demand• Market structure and size• Margin analysis

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Sources of inspiration

Inc Magazine

Red Herring

UpsideWall Street Journal

Start Up by Jerry Kaplan

Fast Company

Business WeekHigh Stakes No Prisoners

NY Times

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Small Businesses

Start Ups

Growth Oriented

Gazelles

> $1 M 20% growth for last 4

years

IPO

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Hot Segments

Hi tech

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Hi tech• Spending was $760B in 2001.• $280 B spent on IT hardware = 17% more than U.S. new

motor vehicle purchases, 49% more than new home spending, and 168% more than commercial and industrial construction

• Average wage in high tech sectors is $17K greater than wages in traditional sectors ($49K vs. $32K in 2002).

• Growth in spending increased 10-13% annually from 1992-2000. (Goldman Sachs).

• Goldman Sachs survey results predict growth in spending under 5% for 2002-2003, with a quarter of corporate respondents predicting decrease in spending.

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High tech

• High tech jobs have accounted for 20-25% of real wage and salary growth

• For the past 3 years, high tech sectors have contributed 27% of growth in GDP

• Pa is ranked 8th in both total tech employment and and # of tech firms

• PA = 2nd largest biopharmaceutical state and 5th in biotech

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Tech transfer growth

• 383% increase in gross licensing revenue from 1991-1999

• 1991 licensing income - $123 mm• 1999 licensing income – 594 mm

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Tech transfer CMU

• CMU made $5.9mm in 1999 • 5 startups, 23 licenses• 104 invention disclosures, 21

patents filed• Total of 119 active licenses and

options through ‘99• 9 FTEs in the office

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Tech transfer Pitt

• Pitt generated $.6 mm in 1999• 3 startups, 16 licenses• 48 patents filed, 107 invention

disclosures• Total of 57 active licenses and

options through ’99• 9 FTEs in the office

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New generation entrepreneurs

• Low capitalization• New services or products or old

positioned in brand new way• Different perspective on risk

Blinding glimpse of the obvious

Thorton Wilder

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Mission

• Organization’s purpose • What it wants to accomplish in the

marketplace• Defines the business in terms of

satisfying customers’ needs

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Mission statements

• Realistic• Specific• Distinctive competencies• Motivating• Driven by a vision

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Example The mission of XYZ is to serve the natural gas, oil

and water industries through the manufacture and distribution of state of the art pipeline products in an atmosphere reflective of the highest professional and ethical standards.

Our firm commitment to excellence, integrity and innovation is designed to ensure superior product value and unequalled service to our customer base while providing enhanced growth opportunities for our associates and maximum value for our shareholders.

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Mission statements should

• Be clear AND concise• Tell WHAT you do and WHO you do

it for• Indicate the core VALUES of the

organization• DIFFERENTIATE you from the

competition