Getting

Personal
Go-Founders
BS in Economics,

University of Wisconsin, 2009

.--

*r, '&,*;x

*,

#i

i!

s+ d. +. +: !,,

BS in Real Estate,

University of Wisconsin, 2011

BS in Computer Science,
Columbia University, 201 1

BS in Real Estate,

University of Wisconsin, 2011

Dialogue

with

Xach Suhaa*
BEST ADVICE I'VE RECEIVED
So witl'r yoilr passian. Mak*s !t so
mush easi*ri tr lovs bik*s, and It
makes my

j**

in{init*ly

cas}mn

MY BIGGEST WORRY
AS AN ENTREPRENEUR
Sales

WHAT I DO WHEN
I'M NOT WORKING
PIay pianc/guitar and sing

MY FAVORITE
SMARTPHONE APP
Uhcr *n QuizlJp

MY FIRST ENTREPENEURIAL
EXPERIENCE
Pur* Fix 0ycl*s
BEST PART OF BEING

A STUDENT
lHeetlng

test Friends!

l
l

li

ocuouodxo otll Inoqe llol sropunol oql nnoq {enuoc o} pou6rsop spn oueu oL['solc^C
ornd pollBc [uedtuoc e po]Porc [eqt puE lno] eLl] peuoploquo ocuotJodxe slL.ll_

xll

'leoJq Jolurn JoAo ptos saM JopJo oJrluo oL{}

'ruor} ole/v\
lo
'rce( lxou or.ll
sol eL,ll ol solrq eq1 paddlLls^lqlporcul

spuotrJ oql Jo JnoI oreq^ 'EorB sele6uy

^eqf
q6noue rcq1e6o1
Jo^o llos oI tuotll Outlcedxe 'sollq gg L lo repJo lsJU roql punJ ol [euour
podercs spuorJJ Jnol oql 'ollq oL,ll pllnq ol JaJnlcelnueu seosrono up pu4 Jnol aLlt podlor.,l

'ssoutsnq Uodxe-Uodtut eq1 ur sp^ tlcltlM {rrue; s,srol+o}S 'spuil.u Jroq} ur }seol }E ,,'looc,,
pup 'olqepro#e 'e;durs spl rlcrq/v\ 'allq Jeo6-pexry E JoI u6;sep e dn polcotu '{1lsreruu61
EtqrunloC le luopnls e sen oqn 'uepJof loqloJq s,neqcs qynn 6uole 'spuouJ eolLll eql
'olqerlor oJotu pue plrnq ol JodpoLlc el,[eq1
'ollq rce0r1nu E uerll sotrrl le epp ol UoJJo ororu olpll e e1e1{eru Aeql
puy'Ouornn oO upc }Brl} L{cnu }.ust oJoL.ll'syed Ournou lectuqco}

'ssocoJd leunouoJdorlue oLl+ uleldxf .g

'serlorcos puP soil"uouoco
uo sruJr+ lerjnouordoJluo pup dtrlslnou
-ordoJluo Jo slcaJJo e^rusod oql ssncstC .

'solPls po]lun oql ul stnouordorluo lo

scrqdBrooruop 6utOuprlc oql ssncsto . g
dn-ye1s 1o sedfi oorrll

"o,ri#J

"r,
'drqsrneuerde.rlue

Ourpre6er sqytur uorutuoc enll ure;dx3

'slneuelde.lluo Inlssoccns lo
scrlsrJoloeJeLlc utetu tnol fir1uep1

.g

.b
,t

ollr.{/v\

Attl6ltl al o^eL{ sollq eL{} ocurs 'soM S,uarplL.lc }soru e1r; lee6 e;6urs
p eAEq^sorxrl 'looql Jeel eq1 leou polunolu Joytqs rceO lelcords!]lnLu
e Ourneq lo peolsu; 'sesnduec eOe;;oc uo dn peddod te[ ],uppL{ }nq
'er!l euos Jol sJoprJ ftrc Ououre {puel1 uoaq oABL1 sorxu ,('erx4,, lo
'oM peeds-e;Ours 1ee6-pexrl e pllnq :uorlnlos aL.lI 'allq olqernp
lpuorlrpeJl e lo Our;;es pue Ouryeu eql lo lno slsoc or.ll lo otuos olp+
ol spl e;qrssod sen srr.ll [enn {1uo oL{} }eq} A eu>l ,{eq1 'o}nuuoc {lrep
p puelsql!/v\ ol q6noue elqernp pue qsrl{}s sp^ }BL.l} oXlq elqeproJ}e
uE sen popoou IoIJEru ol4l lpL4M 'lolteu eL{} u! pton p sEM oJol,l} 6ul
-Iulq1 upruL1sq pue 'sroJJols 'nel,lcs 'inpqcs 1oO ecueuedxe slql

'srneuerdelluo or.uocoq ol optcap

'ueuqsrl loeLlclu\ puB'nEr.lcs uepJof 'sloJ+ols urlsnv'nBLlcs qcez
eldoed suosesJ uretu oo;r.ll ssncst6 .Z
sapnlcur ueel e1cA3 xrJ oJnd eq1 '1q6u ol Uol tuot+'o1oqd Aqrceu oL.ll ul
stuJrl ;euneuerdolluo Jo
'enrsuedxo sr elrq e ol sree6 Oe ol I OutppV'stee6 eL{}
Io osnecoq sB^
scrls rJolcprellc eql p ue' d qsi neuelde.llue
U leql punot eq 'qcreesoJ oruos 6u;op JaUV 'enrsuedxo os olom sollq
elerodloc 'drqs;neueldellue oqtJcso6 .
f
[qnn perepuo^ ag 'le6pnq s!L,l popaocxo r..lc]Ll/v\ 'e6uer OOO'L$ or.,l] ul
:o7 ipeet
oJo^ [eq1 pq 'polll or..l solrq lero^os puno] nBLlcS 'tr.lcuetg sE qcns
aq pfiaqs nall rc1deqc qW 6u1rtpnis nUV lp
'spuelq uerlell oL.ll Jo oLuos poJr.upe rc;ncryed ut pue 'edo;n3 u oze)c
SEAI,f,CXISO CNINUEXT OurlcAcrq eq1 Ournnollo; uooq peq '(leqlorq le6uno[) neqcg ueprof pup
'ueuLlsrJ loer.lcry\ 'stoJJols utlsnv spuaul qlrnn Ouole 'npqcs 'solels
ul soruc {lpueu;-eM }solrl eLl} }o euo 'ulsuocsrM 'uoslpeyl ut pe}Ecol
r

poilun

oL,ll

ffi

sr ulsuocslg lo {1ts;enrul eq1 'ursuocsr711 1o firsrenlun oL.l} }e Jotuos B spn qcez

'oM e Jol Ourddoqs pauels spuoul oLuos pup ner.lcs L,lcpz uoL,lm 'OIOZ ur ue0eq lp l
sa1cfigg4@:Jail,Ng o safcdg

n! eJnd :Uoaqsrel

o ruoo"sof crtcxyendly:d11ttr

:gaf{l

fuols leynouolde4u3 ctsselC eql

STIJOUd CNINXdO

dtUsrn auardatlug
o] Lrollcnporlul
U]IdVH3

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

they were trying to create: cycling at its purist. Fishman and Stoffers headed back to
Wisconsin, and Jordan Schau made his way back to Columbia University. ln 2011,
Stoffers and Fishman entered Pure Fix Cycles into a business plan competition at
the University of Wisconsin and won $7,000. This money enabled the team to place a
larger, second order. The second batch of bikes sold out in two weeks. That success
led to a series of successive orders and sales. "We kept doubling our order, and we'd
sell out even before we received the bikes," Zach Schau said. "We had no grasp of the
demand, and never had enough bikes."
After Fishman and Stoffers graduated from Wisconsin and Jordan Schau graduated from Columbia, the four co-founders of Pure Fix Cycles, Zach Schau, Jordan
Schau, Austin Stoffers, and Michael Fishman, settled in the Los Angeles area to work
on Pure Fix Cycles full time. The four continued to have the bikes manufactured in
China and sold them via the Internet and through bike shops across the United States.
From the outset, they found their bikes to be a fairly easy sell. Fixed-gear bikes are
mechanically more efficient than any other bike, with the most direct power transfer
from the rider to the wheels. The bikes were also simple and good looking and had
an attractive price point of around $gZS. The founders also introduced several innovations that spurred the sales of their bikes. Over time, they introduced four categories of
Pure Fix Cycles, including the Original, Glow, FGFS, and their City line. Each category
includes several different styles of bikes, which have distinctive names and looks.
For example, the Victor, which is in the Original category, has a Celeste-Green frame
with Ghost-White deep dish wheels. The Whiskey, which is in the same line, has a
Flat Dolphin-Gloss frame with Ostrich-Blue deep dish wheels. The company's Glow
line-you guessed it-glows in the dark. The frames of the bikes in the Glow line are
covered with a glow-in-the-dark paint that makes them visible after dark. Pure Fix
Cycle says that an hour of daytime sunlight will make the frame glow in the dark for an
hour or more if the moon is out. This feature makes the bike safer to ride and is fun too.
Pure Fix Cycles envisions a bright future; however, the founders also realize that
the firm is facing an increasingly competitive marketplace. Several other companies
are now selling fixed-gear bikes. To prepare for additional growth and competition, in
2012, Pure Fix Cycles accepted investor funding and hired Andy Abowitz, a former
senior executive at Priceline.com, as the company's president. The founding team
remains passionate about biking and continues to innovate and build the Pure Fix
Cycles brand. Zach Schau recently remarked, "We have various product lines and pivoting is atways a fun challenge. Launching new lines feels like launching new brands
and it's exciting to see it through, from the design process to the product development
to the manufacturing and distribution."l

n this first chapter of your book about the successful launching of an entrepreneurial venture or firm, we define entrepreneurship and discuss why
some people decide to become entrepreneurs. We then look at successful
entrepreneurs' characteristics, the common myths surrounding entrepreneurship, the different types of start-up firms, and the changing demographics of
entrepreneurs in the United States and in nations throughout the world. We
then examine entrepreneurship's importance, including the economic and
social impact of new firms as well as the importance of entrepreneurial firms
to larger businesses. To close this chapter, we introduce you to the entrepreneurial process. This process, which we believe is the foundation for successfully launching a start-up firm, is the framework we use to present the book's
materials to you.

'(glOZ'looulcs sssutsng uopuol pue'lezeu lnpqv

unf rllslenrun 'olloresoq lop peplsJo^tun 'e6el;o3 uosqeg) yodag pqog e L1Z
Joltuory dtqstnauatda4ul pqo,p'Eulsog 'N pue solotuv 'f 'l' uo poseg :acJnos

%L'ZI

sotels pouun

eUoOlN

%6'6e

Brssnu

%8'9

uropour) pollun

o/ol'L

ocuPU

%9'V

{uetureg

%0'9

fu1uno9

ssoursng rnaN e

eu!luo6lv

%6'91

lzua

%t'Ll

ol!L,lc

%e'vz

Pu!r.,lc

%0'vt

6u;ye1g uollelndod Io luocrod

(tg ol BI so6y) I4;apcy

Flrnauarda4ut a6els-[1reg

Jo soleu r " T flTffiH,L

sur4J lBlrnorrarda4ua Jo se]BJ IB^IiLrns 'l(1pcgo1s1g ,'sdoJng go sped Jeq]o 14

]uocred 6'99 o1 dn sI ]I e[qla '1uac:ed g'tg sI >IrBIIrueO LII peqsllqe]se sern]uel
lBrrnerro:darlue JoJ se]BJ [B^!Lrns ree.r{-eerq} aq} }Bq} sa}Bclpr4 ocuoplle 'aldurexa
rod 'uoIlBraFFBxe uB sI sreed xreJ ]s-qJ r.req] q IreJ sosser.4snq OI Jo lno 6 ]Erp cn
-sllels pesn uelJo aqJ 'eru1 ].usl dldruls ]I 'IpBJ sesser4snq llreuJo rQUo[eu eq] ]Erp
s1 'sserd ern t4 psleadar uelJo sI qclqa 'd1qs:neuerde4ue Jo ruslcngc euo
dlqs
s'(slcedsord raerec Jo >IcEI E ruolJ Fulllnser) i9lsseceu Jo esneceq &Ireuud
-:naue-rde4ua o] ury\EJp eq o] pue] oq/\{ 'sel-r}rrnoc eruocul-ry\ol u1 aldoed Jo eru}
sI esJeAeJ er{J 'sep1unpoddo aAI}ceJnB;o eFeluerrpe e{E} o1 dlqsrnaua-rderlua o}
rrr\,\Brp ere seglunoc eruocul-qfilq u1 aldoad Jo dfUo[eur er{J 'eruocul tre uJBe o}
dllssaceu Jo esneceq Jo dlluqroddo errllceJne rre Jo aFeluenpe a{B} o} sseulsnq
zneu e Funre}s are s}uepuodsar s}I req}eqr& seIJI}uapI osp dpnls WgC er{J
z'PIo sreed-3pr{-e-puB-3eJrn rreq} ssel sI }Brn sseulsnq

e 3o -raFeueru/-rauzvro eql sI ro sseulsnq e Fu-rgels u1 peFeFua d1a41ce sI sllnpe

rrecpeury g dlerre Jo lno I ]sorule lBrD sI selels pel1un eq] roJ sueoru luecrad
L'ZJ arp ]Er{r!\ '(luecred L'Z,I se}E}S pe}Un eq} pue '(luecrad I'Z) uopFufy
pel1un '(luecred 6'9) duerrrJeC sB qcns selrlunoc eruocur-qFq uI aAISSerdu4
osIE ere seler er.{} 'p;pue1d }ou ere sqof pooF eJOq 4, 'se1:}unoc oruocul-aol rq
rncco sen1n1lce dn-ge1s Ieuneuerde-r1ue Jo seler lsaqFIH arp a1lr{r!\ 'I 'I eIqEJ
u1 u \oqs s1 ,(pnls rugC eql u1 pepnlcul selrlunoc uI dlprnce IelJnaue:da-qua
efiels-d1:ee Jo eler er{} Jo eldrues y 'sread JIEI{ E pue eerq} ueq} ssal roJ ecue}sl
-xe uI ueeq e^Er{ l.Er{} sesseulsnq pue pape}s Fulaq }snf eJE }Er{l sessoulsnq Jo
slslsuoc qclq^{ 'dlvrqce Ielrneuerde:1ua eFels dlree sI WgC o} }seJe}ul JBIncn
--red Jo 'selBls pollun aq] Fupnlcul 'seulunoc oZ u1 dlqsrneuerde4ue s{cer}
'(e1sdep61) >1ezeg FpqV unJ IlISra^Iun prre '(eUr{C 'oFel1ueg) ogor-reseq Iep
pEpISJe^Iun 'Ioor{cs sseulsng uopuonl 'eFaIIoC uosqeg dq UoJJe qcJeeseJ }ulo[
B sI qcg#a 'I IgC '(lttgC) rolluol I dlqsrneuerde;1ug IBqoIC eq] dq pepyrord s1
qclq \ Jo oruos '1I Fulpoddns ecuopl e sI eJaril 'ploq ruees deur ]ueruel]s slql
HFnoqlly 'plJoly\ eq] punore dlqsrnaue-rdeJlue uI ]seJelur snopuatueJ] sI eJeqJ

d;qsrnouorderlut ol uolpnporlul
dIHSUN]NfUd]UIN] OJ NOI]CNOOUINI

U]I.dVHC

'ART

1 I

DEcrsroN To BEC.ME AN ENTRE'RENEUR

launched in the United States have been as high as 5O percent after four years.
While overall these flgures are heartening, the percentage of firms ttrat do fail in
Europe, the United States, and throughout the world shows that a motivation to
start and run a business isn't enough; it must be coupled with a solid business
idea, good financial mzur.agement, and effective execution to maximize chances
for success. In this book, we'll discuss many examples of entrepreneurial firms
and the factors separating successful new ventures from unsuccessful ones.
Many people see entrepreneurship as an attractive career path. Think about
your friends and others you know. In all probability, you are acquainted with
at least one or two people who want to become uui. entrepreneur-either now or
at some point in the future. The number of books dealing with starting one's
own business is another indication entrepreneurship is growing in popularity.
Amazon.com, for example, currently lists over 36,900 books and other items
dealing with entrepreneurship and over 89,9O0 books concerned with small
businesses. The number of books on small business is up from 62,7}Ojust three
years ago.

What Is Entrepreneurship and

Why Is It lrnportant?
l.

OBIECTM

The word enbepreneur d**tes from tJ:e Flench words entre, meaning "between,"
Describe entrepreneurship, alrd prendre, meaning'to take.'The word was origlnally used to describe people
corporab entepreneurship, who "take on the risk between buyers and sellers or who 'r:ndertake" a task such
and the characbristics 0f
as starting a new !nture.5 Inventors and entrepreneurs dilfer from each other. An
entrepreneurial tirms.
trventor creates someflling new. Arr entrepreneur assembles and t]len integrates
all the resor:rces needed-the money, the people, tlle business model, the strategr,
and the risk-bearing ability-to transform the invenUon into a viable business.6

LEERNING

EDtrEprGnGurrhlp is deflned as tJ|re process by which individuals pursue

opporhrnities without regard to resources they currenfly control for t]:e purpose of exploiting future goods and services.T OtJ:ers, such as venture capltalist
Fled Wilson, deffne it more sirnply, seelng entrepreneurship as t]le art of turning an idea into a business. b1 essence, an entrepreneur's behavior finds him or
her trying to identiff opportunities and putting useful tdeas into practice.s The
tasks called for by ttrJs behavior can be accomplished by either an individual or
a group and typically require creativity, drive, and a willlngness to take risks.
Zach Schau, the cofounder of Pure F)x Cycles, exempliffes all these qualities.
Z,ac}r saw art opprhnitg to create a new q4)e of bicycle and a new type of bicycling orperience for riders, he risked his career by passtng up alternatives to
work on Pure Fix Cycles fi:Il time, and he's now working hard to put Pure Fix
Cycles in a position to deliver a creatirse and, useJftrl product to its customers.
In tlds book, we focus on entrepreneurship in the context of an entrepreneur or team of entrepreneurs launchlng a rrew business. However, ongoing
ffrms can also behave entrepreneurially. lrpically, establtshed llrms with an
entrepreneurial emphasis are proacuve, innot auve, and risk-taking. For example, Goo$e is widely recognlzed as a ffrm in which entrepreneurlal behaviors
are clearly e!'ident. Larry Pae, one of Google's cofounders, is at the heart of
Google's entrepreneurial culture. With his ab lty to persuade and motivate others' imaginations, Page contlnues to hspire Google's employees as they develop
innovative product after innovative product. To consider the penetration Goo$e
has with some of its turnovations, think of how often you and people you know
use the Goo$e search englne, Gmail, Goo$e Maps, or Goo$e Earth. Goog;le
is currenfly working on a beqr of far-reaching lnnovatons, such as Goo$e
Glasses and self-driving cars
studying Facebook or Dropbods ability
to grow and succeed reveals a history of entrepreneurial behavior at multiple
levels within tJ:e ffrms.s In addition, many of the flrms traded on the NASDAQ,

1red sseursnq e Fulpels dq 'suo-rlenlls IIE uI eIqISSod 1.usr qceo-rdde slql e11r17!\
'r{}I & ulFaq o} eruB ged sseulsnq rleril Fuprels dq 'dlpnperF aJoru sseulsnq
rleq] Fulurno o] qo[ IEuoI]IpB4 B ruo4 uoI]ISrrE4 sJneuerda-qua eruos
urno

,r'ldecuoc e qlplr
prelrroJ Fulnou eroJeq sFulleeru IeurelulJo spupl 11e puepe pue eldoed eldppur o1
seepl dur
ol e^Br{ o} e}servr e-erun Jo e}se^4. eleldruoc e prre Fqlerlsn-ry }I punoJ
1as
elerofuoc eql dq peuuuoc ]IeJ I 'ssoq uls,o dur eq o] palrrely\ s{ervrp 1

I 'ernlrrl4s

:pe>IJBrueJ

slpnedeq 'ruJg eFrel B JoJ Fupporu. uerp FqrSsges eJoru ueeq

uo FupuauuoC 'suone}I q lelcos

fueduoc e 'dpuaTyp&re1Jo rapunoJ eril 'qpnedecl dpueTyl dq

eABq JIesJer{ ro3 Fuppoin secrregedxa ror{ 1!\or{

pez-ruolsnc se>[Bru

]Br.f+

pegqdruexa s1 sqof puourrelrroc r4 Fu.rqrorn IaeJ sJneuardarlue eruos ]ErD tropBJ+srLg

go eddl erf,L 'sqo[ puoplpe4 u Fu.npon pe]B4sn.g eruoceq oAErI deql esnereq ro
rurg rrr\\o 4er.p u/!\o o1uoHqrrrB arrq]-Fuol B pEr{ e^Er.{ der{} Jer{+.re esnEceq ssoq [rlY\o

4ern eq o] 1tre/r,r srnauaide4ua drretu 'peelsul 'dlgorpne Frrgdecce elqno4 e^Bq

dar.D ]Er{+ Jo rry\{ >IJo1K o} }FcUJTp aJB srnauardeJ+ua }eq} ralerltoq 'r.reeur }.useop
stql 'dluoruuroc ]soru ueuUF s-r-ssoq uA\o s.elro Frqeq+LroseeJ eserp Jo ]sJg erll

ssog ururo Jlaql ag

'slnouoldo4uo

'spJB teJ IBIJ

ouoJeq q eplcep eldoed
suosEl UlPul ooltll ssmslo 'Z -ueug azIIEeJ prr 'sEapl u..[o 4erIl ansrnd 'ssoq rr.rr.o 4etn eq ol eJE SIUJU II/Yro
ctuggssr rlatp 1rels prre srnauardarlua aurocaq eldoed 1etfl suosBal ,ireuryd earp 3r.f,L

g1rr1crlao

asrnouorderlut ourocog eldood o(I ,tqtn

.r'seedoldtue Og r.reql erou per{
tueql Jo euo ]ou prre 'sepreduroc pJoceJ .&eplsqns Og se dueur sB per{ ely\ 'clsntr [
uIFTIA plos e 4. eru-r} eql dg 'cg,prq uoeq eleq sn roJ sllnser erll '{ro^4, rler{l JoJ leez
:eleerfi e pue urrogred oJ e^Iluect4 releerF e eABq deql dlgesseceu ]nq 'op o] {ror\4.
eJorrr qcruu per{ },ueleq pe lo^r.4 eldoed erp 'slq} euop e4e^4. eru11 r{ceg ..'dueduroc
.&\err BJo-rolce4p Fr4le{Jeru pue ro}Jo.4p seles '[ro1ce-qp FtqFerreru] OW.^ltou eJ,no
'suopep1erFuo3,, 'dES prre roJce4p Fu.rle{Jetu dlndap oq} prre 'JoJceJ-rp seles ,findep
eql tolce-rp FulFeueru $ndep aql o1 oF 1 's1gn rellBrus o1t4 dn 1I epl Ip ezn FIq oo]
sleF se-rnluel Jno Jo euo orul] d.rele ]nq ..'InJnneeq sI FIq,, leq] selelclp "' uopue uoC
:Jorrrreru IelJneuerderlua uB uI saleredo dued
-ruoc s1r{ lnor{ seqrrcsap 'u-rFr-r1 Jo OgO pue JapunoJ eq} 'uoslreJg pJBr{cIU JIS
'a1onb Fulznollog eq] uI 'clsnru prre seUIIJIE sB osJeAIp sB sesseulsnq uI pe^Io^r4
sI pue ulellrg uI sprrerq pazluFocor ]soru eql Jo auo sI UIFTIA 'lulds pgnauard
-erlue ue ueq] q ru]su1 pue IIEurs sllun s11 dae>1 o] pJBr{ s>IJor\A. 'aleraruolFuoc
qsnp51 aFrel aq1 'dnoJC uIFJIA 'eldruexe rog 'dceJcneeJnq ]nc o1 sdezn roJ >IooI
dpelnFer [11sue1ul [Blrneuerdarlue Jer{F1r{ q}UA srrrJld'JeuuBru Ierrneue:de-r1ue
LrB Lrr eler{eq o} ue{Bpapun UoJJe go eerFep eq} sI rurlJ e o} ro IEnpI lpur rre o}
acuelrodrul s.dlqsrneuardeJlue Jo suoIlBJIpuI oAISBnsJad lsoru eql Jo euo
'esJeAE >ISIJ eJE prrE 'a^rlE^ourrr ssel
eJB 'eJnlsod .,ees prre ]IE1\4.,, e Jo eJoru e>IB] sruJIJ eAIlEAJesuoc '1se4uoc uI 's{s1:
pelElnclec Fupqe] o] osrele lou eJE pue sJolelorrul alllceord d1pc1dd1 ere sruJIJ
Iegneuerderlua 'd1snolne:d peuolluoru e/v\ sV , r'.f1gsue1ug lelJneue.rde.4ue
sll sB o1 peuaJeJ sI runnr.rrluoc s1rp uo IUJIJ E Jo uonlsod eqJ 'Iegnaue-rda4ue
dlqFU o1 a^Ile^resuoc {qFU ruor; seFuer }Bq} runnr4}uoc pnldecuoc e Fuop
IIBJ surJIJ IIV or'dgqs.rneuerde.rlue elu.rod.roc ecllcerd dlpgnauerde4ue Funce
pJBl\4.o] uollBluelJo rrB qll { SIUJIJ per{sllqB}se }Br{} eJeq a}ou o} }rrB \ efl\
'efiuer{cxe eq} uo pa}sll sapredruoc OOO'9 dlreeu q}Iff\ '}e>IJBru {co}s cluo4cele
'S'n lsaFrel eql sI OVOSV1T1 er{J 'srurg 1elrnauerda-que sB ;o lqFnoql dluoru
-ruoc are 's:alseog ee.IJoC urelunotr I uoaJ9 prre 'a1ddy '11n1u1 'uaFury sE r{cns
dtHSUnlNSUdful_Nl ol-

NotrcnooutNt

USJ-dvHc

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

time individuals can gain valuable experience, tuck away the money they earn,
and find out if they really like the business before deciding to leave their job. In
some businesses, such as catering or financial planning, it takes time to build
a client list. Some entrepreneurs will time their departure from their job with
the point in time where their client list is large enough and profitable enough
to support a full-time business.la

Pursue Their Own ldeas

The second reason people start their own firms is to pursue their own ideas.l5
Some people are naturally alert, and when they recogrlze ideas for new products or services, they have a desire to see those ideas realtzed. Corporate entrepreneurs who innovate within the context of an existing firm typically have a
*.ihrrrism for their ideas to become known. Established firms, however, often
resist innovation. Wtren this happens, employees are left with good ideas that
go unfulfitled.l6 Because of their passion and commitment, some employees
to leave the firm employing them in order to start their owrl business as
"hoo".
the means to develop their own ideas.
This chain of events can take place in non-corporate settings, too. For exarnple, some people, through a hobby, leisure activity, or just everyday life, recognize
ihe need for i product or service that is not available in the marketplace. If the
idea is viable enough to support a business, they commit tremendous time and
enerS/ to convert the idea into a part-time or full-time firm. In Chapters 2 and 3,
we focus on how entrepreneurs spot ideas and determine if their ideas represent
viable business opportunities.
An example of a person who left a job to pursue an idea is Melissa
Pickering, the founder of iCreate to Educate, a company that is developing
software apps that allows students to build, express, and share their creativity
through animated videos. Pickering started her career as a mechanical engineer .t Wrtt Disney Corp., a role that she said is more commnonly referred to
as an imagineer or a roller coaster engineer. She was struck by the fact that
even at Dinsey, a place that some may refer to as the ultimate creative group,
there weren't many people who were female or close to her own agie, and young
engineers didn't seem to be seeking out a Disney career. Her attention shifted
to creativity and kids. Commenting on what happened next, she said:
My hunch was kids are not getting enough hands-on opportunities in the classroom to express and engage their creativity and problem solving skills. At that point
I sought to launch an education technologr business that would provide kids with
the tools to create and explore, fostering the natural innovator within.17
iCreate to Eductate is currently building a portfolio of products, which includes
both an iPhone and an iPad app. All of the firm's products are centered on helping kids better develop and expless their creativity.ls

Pursue Financial Rewards

Finally, people start their owrr firms to pursue financial rewards. This motivation, however, is typically secondary to the first two and often fails to live up
to its hype. The average entrepreneur does not make more money than someone with a similar amount of responsibility in a traditional job. The financial
lure of entrepreneurship is its upside potential. Peop1e such as Jeff Bezos of
Arnazon com, Mark Zuckerberg of Facebook, and Larry Page and Sergey Brin
of Google made hundreds of millions of dollars building their firms. Money
is also a unifier. Making a profit and increasing the value of a company is a
solidiflring goal that people can rally around. But money is rarely the primary

srnauoJdoJlul
Inlssoccns Jto
scrlsuolcPjeL{c
w

fueuu6 JnoJ
w ffiffiffiffiffiffi
-

oz'IdeN

Prru rr Iooqcs

aJ.qua rrB

plmq 01 qtnoue sE r rlaols lJosoJcII I Jo serBqs perpunq olql 'urarp dlaq o1 srpols 3o
slunourp lrBrus ul BuF{sec ueBaq 1 1eq1 'selJErqll prrB 's{ooq 'Iooqcs o1 ssacce Fr4
qred lsuood ar11 14 uarpgtrc.{ueur os pru 1 'qaae4.{ru Fupmq
->IoEI 'plror$, eI{} Jo

:pIEs pool\ 'eulzeflevt saqtog

Jalt4 rre ruo{ qfuacxa u1 'rftreduroc aql UoI eq eJoJeq uoa3
dq paqsllqnd
'slooqcs plnq^\aI
Pue s:1ooq r(nq 01 {col.s IJosoJJII I Jo slunoruB IIEurs u! Br4r{sec
uBts ()1 u4r.I pesnEs p1:o,t Suldolaaap at[} r4 uerpF{c dleq o1 uolssed deep
s,poo \ ?Ho t aq1 afumtp 01 {osor4ry 8qtmz1 4ooq atn Jo roqtne et1+ sI pue
peeu ol Iuooll papunoJ oq 'poo^\ uqof qll \ asBc stll serh sg11 'poF plcos e
^. aplse
ans.rnd o1 sraa.rec Sr4slurord
1es oq.m. sldoad dq pagels uago are qclqr\
'sasgfuelue lepos drreur pr4qoq Jol" r,+oru ,treurgd atI+ osIE s1 seaq s,aldoed t4
acuaraJJlp z 8u.qery 'sa,r11 s.aldoed ocuenuu1 flam-11sod III !. ssaulsnq or0 le4
JeIIaq s.mauarde4uo et11 ruo.{ suals d1pc1&(1 uolssed sFf,L 'sserqsnq ?rmsxa
eql q sI lI ratnaq.t 'aceutsnq 4arIl JoI sol338d
rre io rrrJg
B
lxaluoc
Jo
^reu
s1 s:nauerda4ua
IryssaJcns l(q pareqs JF+sgelsEJEqc euo-Jaqrunu etf,L

sseulsng eql Jol uolssed

'uoglcas Fu.rrrm11oJ 3rn q peqlJcsep prre 1'1 arnF14 u1 umoqs
'$nauoJdo4ua
Inpsercns p scssuope aJB r1cFl.lrr 'sagllJenb eseql eJeqs ur:g plmeuerde.que rre go ged fpzerp sre
-lEtlc u!Pt! inol llluopl 'e oqlrl' asoq] prrB sarrqrraa il\eu rrt 3sorf,L 'Iryssaccns eJr oq.$ asoq+ 01 uouruoc
tr,IUICIIAO CNINUTETI 3re [Ere^3s 'srnauarderlua 01 paqgJsE ueaq aaBq slol^Eqaq r{ueu q3noq11y

srnouordorlug lrusseccns Jo scllslrelcereqc

'BapI IEIIIq slq Jo sssccns aH] Fuleas Jo pue sseulsnq 3r{}
Bupgnq Jo IIIJr{} eq} sE r }I-deuou aq} }sn[ ],rrserr ]I 'uosueJg Jod 6r,.'sJBIIop
uo[Ilqy'duoo1 sErv\ I ]r{Fnoq1 eABq plnorA. nod'eru uees eAEq p.nodJI ""sJEIIop
uou[q E roJ {ceqc e Fuploq se^4, I ereq} puv 'ecEJ dru um.op Fulueer}s [ere^\]
"' srBsJ 'Fud.rc sEly\ I '[pelelduloc sB.{y\ sIBS er{} re}Je] }ee4s 3r{} rraop Ful4pzvr
JeqrueureJ L, 'a1olur. 'spJocstl uIFJIA Fu1les JOIJB 'uosuEJg pJeqctu JIS 'eldruB
-xe Jod 'ruJIJ JIer{} Jo IoJ}uoc Fu1so1 dq paluedruocce eJB feg} JI }ee{\sJ3ilIq eq
ueJ dlqsJneueJde4ue qlya pelBlJossB spJB.l!\oJ IEIcuBuIJ eq] ]Br{} UodeJ rre^e
sJnaueJde4ue aluos 'suIJ IElJnsusrderlue rrE Jo r{JunBI er{} pu}t{eq uoI}EAI}ou
dIHSUN]N3Ud3UIN] OI. NOICNCOHI-NI

U]I-dVHC

10

PART

1 I

DECISI.N To BEC.ME AN ENTREPRENEUR

Wood eventually Ieft Microsoft to work on Room to Read full time. Slnce its
inception in 2OOO, Room to Read has built 1,450 schools, established 12,522
libraries, distributed over 1O million children's books, and funded 13,662 longterm girls' schlorships in developing parts of the world.2r
Passlon is particularly important for both for-profft and not-for-profft entrepreneurial organizations because although rewarding, the progess of starting a firm or building a social enterprise is demandrng. There are ffve pr'mary
reasons passion is important, as reflected in Table 1.2. E,ach of ttrese reasons
reflects a personal attribute that passion engenders. Removlng Just one of
ttrese qualities would make it much more difffcult to launch and sustain a successfu I entrepreneurial organization.
A note of caution is in order here: While entrepreneurs should have passion, th.ey should not wear rose-colored glasses. It would be a mistake to believe that all one needs is passion and anything is possible. It is important to
be enthusiasuc about a business idea, but it is also important to understand
its potential flaws and risks. In addition, entrepreneurs should understand
that the most effective business ideas take hold when their passion is consistent udth their sldlls and is ln an area that represents a legitimate business

opportunity.
To illustrate ttre importance of passion, as well as other factors that are
criucal ln determinlng a flrm's success or fallure, we include a boxed feature titled 'What Went Wrong?" in each chapter. The feature for this chapter shows how Prim, a laundry and pick-up and delivery service, ultimately
falled in part because its founders were not able to remain passionate about
their business idea.

ItrBLE 1-2 fine Primary Reasons Passion Is lrnportant for the Launch of a Successful
Entrepreneurlal Organization
Reason Passion ls lmportant

Explanation

1. The ability to learn and iterate

Founders don't have all the answers. lt takes passion and drive to solicit feedback,
make necessary changes, and move forward. The changes won't always be obvious.
Passion makes the search for the right answers invigorating and fun.

2. A willingness to work

Commonly, entrepreneurs work longer hours than people with traditionaljobs. You can
only do that, on a sustained basis, if you're passionate about what you're doing.

hard

for an extended period of time

3. Ability to overcome setbacks

and "no's"

4. The ability to listen to feedback

on the limitations of your
organization and yourself

5. Perseverance and persistence

when the going gets tough

It's rare that an entrepreneur doesn't experience setbacks and hear many "no's" from
potential customers, investors, and others while building an entrepreneurial business
or social enterprise. The energy to continue comes from passion for an idea.
You'll meet plenty of people along the way-some with good intentions and some
without-who will tell you how to improve your organization and how to improve
yourself. You have to be willing to listen to the people with good intentions and make
changes if it helps. You have to be able to brush aside feedback from people with bad
intentions without letting them get you down.
Perseverance and persistence come from passion. As an entrepreneur, you'll have
down days. Building an entrepreneurial organization is fraught with challenges.
Passion is what provides an entrepreneur the motivation to get through tough times.

Sourcei Based on A. Sack, "Why ls Passion So lmportant to a Startup?" A Sack of Seatlle blog, http://asack.typepad.com/a_sack_of_seattle/20'10/03/why-is-passion-so-impodant-to-a-startup.html (accossed May 22, 201't, originally posted on March '16, 20'10).

'vloz'?L qcrEr{
possocce'VIOZ'g uen potsod'urnop-s1nqs-fupune;-ur1d/g1/LO
/VI1z/woc'qouruoqcol//:dprl le olqeltpne'qcurucLlcol,,'1enno1 eq1
ur smolqj dnpelg fupune1 ur1.r4,, 'eu11suoC 'n :Vne itL qc,rey!
possoooe', IOZ'74 A.rcnue1 pelsod'dnpels-pep1o1-e-1o-[tuo]Bue
-wud-77y yg/V Ioz/wo3'aunuol' qcol//:dpq le olqelre^e fieuoy1 p 119
,,'dnyelg poploJ e 1o Auroleuv rrurJd,, 'uepur;e6uef! d 'f .'sacJnosi
'r.lcBoJddp s(r.urJd o1act^los ot.ll

olpduoc

'uorl3oles JnoI iol olBuotlEJ oql upldxo puE letluolod

]sotu oql seq lulr.,ll no^ leql acrruos orll lcolas '(uoc
' oozpns :sd++q) oezpns pue' (ru oc' qsen4s77: sdpq)
//
Llse^ JS' (r.r.r oc're1c o1(ryune11 1: sdUq) rolcolfu pu npl
6ur[pn1s olur] oruos pueds 's6pq olqplool ;erceds
soJrnbo; qclL,lm 'eezpng pue 'punod

[q {ed no{

",.,;t cglqnd e ur
oror-,lM acrruos fuen;;ep p 'L,lspn lS le>1co;
sorllolc.rnoA do.rp no{ ereqnn le1co1fupunel epnlcur

socrruos ose[.lf 'socrlJos fupune; oAr]EAouur leJolos

seq 'paqcunel luud r.lclr]/v\ ur ftrc eLl]'ocsrcueJl UBS

't

aslexreu roqlo ur qyno;6

s,urrd pollrull o^pr.1 plnoc qceordde slLll1urq1 no{
op sAe^ leq/\r ul 'seuruos fuenr;ep [yed-prq] ]o asn
otl+ uo porlo; uru6 'sreurolsnc sU Jo] fupune; lenrlop
pue dn lcrd o1 sJo^up u^ o sU {oldue ueLl} Jor-,;}pu 'e
auror.ll l-llr^ IJoA
ol luelcnloJ oq pue ssoursnq u^ o JreL{} J+o Outuorldts
sp rurJd ees A;;neluono plnol socrruos fupunel 1eq1
peld;c;1ue Jopoq oneLl sropuno1-oc s,rurJd plnoc A oH 'Z
aorleurslqold uorleurq [uoo
sll-,ll sl s{enn }eq/\r u1 '{lecrlrceds sseursnq fupunel eq1
lnoqe eleuorssed lou 1nq {ueduroc e Ougplrnq }noqe
eleuorssed {;lueredde oJoA sropunol s,r.uud assoccns
leunaue.rdorluo ;o yed pcllpc p qcns uorssBd sl AqM 'l
ffiug4ugu{"x. xEsEalJf;l

Js# su*!&s*ms
,,'lolcouuoc

oLll oq o] polue^^ {eq1-fupunpl oL.l} qse^ o1 eneq {1;e

-nl3B o] ]uEA l,uplp ,{eql,, 'plBS 'uJud posolc oec pup
n6 {qnn uo 6ur1ce11e.l lo1eulquloC-A L1ll^ Jouyed e 'ue1
fureg '{euoylppC Aq peqsrlqnd alctue ue ul 'ssoutsnq
fupunel oLll ul ecueuedxo lcoltp ou peq pue e6egloo ul
sluopnls osuorcs rolnduoc olo^ L.llog 'enslnd ol lue^
lou plp [ldurrs {eq1 uorlco;tp e sBA 1r 'uor;;rur g L$ o}
uorllrru 0 L$ lo sonuo^el qlrnn 'sleer( o L of g ut ssoutsnq
elqelrlord e pllnq plnoc Ieql ecrntes {.lpunel u^ o Jlor.l}
Durlcnrlsuoc [q ]eq] poletul]so {eq1 ellqnn '6n1d eq1
peglnd oeo pue nM 'uotle;oqllop ]o sqluotu o^ l JaUV

'poJotuo tuud

lolleu

ou Llceo ul peleedo; oq o+ poeu

plnon dels srql leL{} }codsord eq1 sen 6ur}unep oJoru

uonf '[1r;rce; plo] pue rlsen [.rpune1 orunlo^-L,l6rq e gels
pue plrnq o1 fuessecou srellop lo spuesnoql Jo spo;p
-unq eq1 uen;6 'loodsoJd Ourlunep e sel slqt aocln;os
{rpuneg u^ o JleL{} oseel ro plrnq [eq1 p;noL.{S 'oleur
ol uorsrcop B ppLl 'oec uo^ nx puP nM ur1 ur1 'sre
-punol s,LUrJd '1epou ssoursnq eg16er1 e spn socrnJos
fupunel lecol qlrnn 6urlrol lerll A1r;eer oL,ll r-,lll^ pecel
'sropuno] sll lo Ued eql uo o^losoJ pue uorssed Io Xcel
p sel upd r.lu/rl Ouornn luol 1eq1 6urql puocos orll
'socrnres fupunel

luoro#rp ooJLll q6norql peuJnqc urr.r6 '{.ro}srq UoqS s}r

6uun6 'onuona; pup sJotuolsnc Jlaql llo Ouruoqdls se
r.uud A BS {1len1ueno pue socrn;os fuenrlep u^ o Jrorl}
peq {eq1 'u.r!.rd qlrnn 6url;ol o} enrldecer {;;erlrur eJoA
secrnros fupune1 oLlI ollr.lM irnos 6uro6 sdrqsreuped
or.,l] sen uo lunoc l,uplp turld ler.lM '6ur1run ul lou oron
pue leq;on aJoA slunocsrp orll ]nq 'soon;os fupunel
lpJenos rllrn slunocsrp ounlo^ pelerloOeu uud 'soon
-Jos plol pue qsen slr ezrlrln pue acrn;es fupunel E ol
soqlolc rnoA oXBl plnonn 11 '[ueduoc looqcs-plo ue o]
;oldn.rsrp o^rle^ouur e uorl luon U 'sor.llolc rnoA 1oO
rurJd ocuo 'lsrl 'uJUd qlrnn 6uo.rn +uol s6urql onnl
;6uornn ]uen leq6 '6urnnor0
se^ pup sluollc 0, r.uoJl Aep e fupunel +o spunod O0O'L
6u;gpueq sBA ll 'paso;c ]l ueqn11 'runluouJotu [pee pue
sse;d olqBJoABl peure6 urr.16 'olrsqol s,rur;d q6norql
rol pled senn 6urq1fuen3 'sJoArJp fuenr;ep ro dnlcrd eq1
pup rotuolsnc oLll uool leq spueq pe6ueqc qseo oN
'Aep lxeu eq1 {lree ro {ep }et,l} ro}El 'poplol pue poqsp^

'Ioeq oq plno^ 6urqyfuen3 '(peUets rupd o;oL4nn {1rc

orll ul ocrnres &enr;ep eql lo oueu oq1 sBA meqslcrg)
'ocrnros fuenr;ep {yed-prrq} e Aq po}rnrcor ronup e ,tq
dn pelcrd eq plno^ s6eq eq1 '6eq leuotltppe L,lceo

rol I L$ pue 6eq 1sr1 or..ll ro; gz$ se^ ecr.rd oql 'eul]
fuenr;ep pue dnlcrd e esooqo ol ourluo luon uot.ll pue
'{.rpune; slrJ/or..l pe66eq rouo}snc V 'poryon ocrn;es
fupune1 s,r.rrld A orl s,oroH ree{ }prl} rerpee r.ue.l6o.ld
Jolerelocce ssoursnq lolerqruoC-A snoen6rlseld orll
q6norql 6u;ssed JoUe 'e[g7-plur ur por]cunpl s,rutld
'&punelr;eq1dn >1crd
ro lJo dorp ol lrpn ol Ourneq s;onup ur +lnso; r.lclr-,;/\A [ep eq1
lo sotu4 lsorsnq oql le soull onBr..l socrruos {uey1 'te1e; dn
ueql lcrd ueql pue 'ecrrues fupunel oLlI 1p JJo Luol,ll dorp
'fupune; rreql 6eq ol oner1 s;eurolsnc socuelsut ]soru ul
'olsser4 e ue {eq11eq1sl sec!ruos osor.l} r.l}l^ sulolqold eq1
'solllolc rorll plol pue qsen^ o] socrruos fupunq 6ursn
solels pollun oql ul eldoed lo Joqurnu Ouranot6 **-{
futsnpur fupunel oql 1drusrp oI sp^ eopt s,uu ql
$

oJe

ssoursn8 B IITX uec o^losou pup uorssed Jo {ceT e /r{roH

tl

d|HSUntNfudlurNl

ol_

No[cnooutNt I

H]ldvHc

12

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

ProducV0ustomer Focus
entrepreneurs is a producU
customer focus. This quality is exemplified by Steven Jobs, the late co-founder
of Apple Inc., who wrote, 'The computer is the most remarkable toolweVe ever
built ... but the most important thing is to get them in the hands of as many
people as possible."22 This sentiment underscores an understanding of the two
most important elements in any business-products and customers. While it's
important to think about management, marketing, finance, and the like, none
of those functions makes any difference if a firm does not have good products
with the capability to satis$r customers.
This philosophy is affirmed by Alex Algard, the founder of WhitePages.com.
WhitePages.com started in 1997 to provide consumers a free, accurate, and
fast online alternative to telephone directory assistance. It is one of the most
tmsted and comprehensive sources for consumers to quickly find relevant, accurate contact information in North America. When asked how he was able to
grow WhitePages.com from a one person operation in 1997 to the multimilliondollar company it is today, Algard's reply reflected not only his feelings about
the importance of providing value to both users and customers but also how a
company measures if the value is being successfully delivered:

A second defining characteristic of successful

The philosopny that we as a company have always stuck to is that everything we

build has to provide real value to both our users and customers. The best measurement of whether or not we are successful at delivering something valuable is
if our customers, advertisers in our case, are willing to pay.23

A product/customer focus also involves the diligence to spot product opportunities and to see them through to completion. The idea for the Apple
Macintosh, for example, originated in the early 1980s when Steven Jobs and
several other Apple employees took a tour of a Xerox research facility. They
were astounded to see computers that displayed graphical icons and puIIdown menus. The computers also allowed users to navigate desktops using a
sma1l, wheeled device called a mouse. Jobs decided to use these innovations
to create the Macintosh, the first user-friendly computer. Throughout the two
and a half years the Macintosh team developed this new product, it maintained an intense product/customer focus, creating a high-quality computer
that is easy to learn, fun to use, and meets the needs of a wide audience of
potential users.24

Tenacity Despite Failure

Because entrepreneurs are typicalty trying something new, the possibility of
failure exists. In addition, the process of developing a new business is somewhat similar to what a scientist experiences in the laboratory. A chemist, for
example, typically has to try multiple combinations of chemicals before finding
an optimal combination that can accomplish a certain objective. In a similar
fashion, developing a new business idea may require a certain degree of experimentation before a success is attained. Setbacks and failures inevitably occur
during this process. The litmus test for entrepreneurs is their ability to persevere through setbacks and failures.
An example of the degree of tenacity it sometimes takes to launch a successful firm is provided by Jerry Stoppelman and Russe1 Simmons, the founders of Yelp, the popular online review site. The original idea for Yelp, which
was founded in 2OO4, is that when people are looking for a new restaurant,
dentist, or plumber they normally ask their friends for recommendations. Yelp
was launched to give people the ability to e-mail a list of their friends and ask
for a recommendation. The message included a link that allowed the friend

5=j=

eL

'seulunoc gg uI peqsllqelse
ueeq pEr{ suol}Bcol ,s{cnqrB}s ooo'Iz Je^o'vloz-pltll uI'puodeq p:UiP- vloz
uI rurlJ erp Fu1cEJ seFuel1eqr e^I].rleduroc eq] LII1rv\ Fulpep o] seruoc ]I ueq \
s>IcnqJBlS prre zllnqcs eares ppoqs ecueflacxe uoI]ncexe go slcadse Ie]uaruep
-unJ eser{J oe'e Uq} sseulsnq s1t{ a{Bru o1 dlespn dFolouqce} uol}BruroJul pasn
pue 'dFale4s elnceJJa rre peluoueldurl 'rueel lueueFelreru peuoseas E ]IInq oH
oz'EepI SSeuISnq E elncexe o] /Y\oq /KOII{ z}IntIcS pJB/KoH esnEceq pepeeccns
s{cnqJelg 'sreed IEJeAes }xeu ern JeAo qprorF plde: ule}sns o} d}Uqe s,ruJrJ erg
o] IEIoTLIo se/y\ uolslJep sIqJ 'slellno OOg ssoJce soseqcrnd Jerunsuoc Fu14ce-r1
go alqedec ruelsds eps-go-1u1od e uFlsep o] s.pleuoqcru ruo4 lredxe surelsds
uorJEruJoJuI ]ueuraFeueu B pellruceJ zllnqcs uer{J 'eJn}cru}se4ul IEuoI}BzIu
-eF-ro e^RceJJe ue Fulplpq uo pesncoJ pue 'sueoq aeJJoc runlurerd .{1^ slbpno
s1q dlddns o] dlfllceJ Fullseo: sselc-plro/y\ B pe]cru]suoc 'ruee] ]ueueFeueur
peuosBes E peJlq eq ']sJ.rd 'prreJq IEuoIlEu B r{sllqe}se o} pue Jepeel d.4snpu1
eql s{cnqre}S e>Ieru o1 dlarrlsse-rFFe eceldle>1:eru eq} pe{ce}}E z}Inqcs 'speeu
,sreruolsnc ,!s.r1es o1 dlgnpoddo leerF e Fuleeg 'Fuples 1e1nb 'elqepoJruoc E Lr
eeJJoc dofua o1 aceld e aleq ].uplp suecgsrtrv ]soru ]Eq] ]cBJ er{l;o uolllulocar
sIrI se/lr 's{cnqJB}S
sseccns eLI} puqeq Jneue-rda.4ua eLll '4lrrqcs pJBr\oH
Jo
{ool s.}el 'uol}ncexe pllos e]er]snflI oJ

Jo BepI ssaulsnq eqJ 's{cnqrB}s }B

er{} roJ Fulr{ltrezre Fulop sr qo[ dtu ;o lred FulFue[Er{c }sou .u-fl:"';El ffirli
'duedtuoc apreFull B Jo JepunoJ eq] 'JoBIIBC lpo1- dq pesserdxa sean dlqeeJ sIr{J
'ur.l.rJ rler-I] qcunel f,rq1 relJe dlpoqs sI orull lsoprBr{ eq} 'sJneuerdarlua dueru
Jog zz*'pJBr{ s.letl} uonncaxa s,11 'dsee aJB seepl, 'ples eclro 'uroc'uozeury lo
JepunoJ er{} 'sozeg JJe1- sV 's}InseJ elqeJnseeru pu uol}c o}u1 uopeulFeurl
pue 'zQlzrlluerc '1{Fnoq1 e}EIsuBJ} o} {UIqe eq} spueruep osle }I 'uo os pue
'saadoldure Fullelllou pue FupEeI 'secueug Fulleuetu 'sd1qs-reuped Fulqsq
-qelse '.(auotu Fulsp-r 'urea1 eJnluel rneu e :aq1aFol FuIUnd 'lapour sseulsnq
e Fuldole^ep sueeru EepI sseulsnq B elncexe d1a41ce;;e o1 d1q1qe eqJ
..'lIncIJJIp ,ftarr s1 uedo 11 dee4 o] :dsee ztraur sI sseulsnq B uedo oJ,, 'sr.rrEryr
Fu{es eseug{C }uercue rry 'sIIBJ Jo InJsseccns s1 dn-1re}s B Jer.I}ar+v\ seu1ru
-Jelep ]Brn JolcEJ er{} sI ecueF{Ia}q uonncexe 'sasBc dueur uI gz'ecueflglelul
uollnoexe sB yo lqFnoq] sI ,QUlqe s1q1 'dporuruoC 'srneuerde4ue InJssaccns Jo
cllslrelcererlr da>1 e sI sseulsnq aIqBI B olul EapI p{os B uoIqsBJ o1 d1q1qe eqa

ocuo6lllatul uollncaxS
'ecuerrrJo;:ad JIer{}
erro:du4 o] esn sruJIJ legneue:da-4ua paFeueur-Ilar!\ ]Br{l enbgqce} Jo Ioo} B Jo
alduexa ue eppoJd IIpn Jo sruJIJ Ielrnauerdarlua eJoru Jo euo Jo JoI Bqeq d.re1d
-ruexe eql Jo uollE4snlll ue epyro-rd IIIK eJn]eeJ slr{} 'reldeqc qcBs uI *'ruJlg
IBuneuerda4ug drureg,, pelln eJnlEeJ paxoq eql uI peppro:d sI gz.eJopuBd
go saadoldua eq] IIB pe^Io^q qc1#v\ 'd11ceue1 go aldurexe IBuolllppe uV
'leuJelul 3rn uo sells A\erA3J
relndod ]soru eql Jo euo sI dIeI 'depog 'sesseulsnq Iecol Jo s/y\eIAeJ el1r/vi dlezrp
-ceord o1 aldoed JoJ ruroJleld e Fupyro:d uo pasncoJ pue ,.EapI puegJ rnod [eur
-o,, eql peddorp uBId fi\eu eqJ 'uBId ssaulsnq sll pesIAoJ pue pelorrld dlaa ,1OOZ,
uI 'pe>Ise Fulaq lnoqlIA uolBs JIBq Jo ]uBJnelseJ alIJo^BJ JIer{} }noqE uo-r}BruJoJ
-uI Fuueqs dofue o] peueas eldoed 'uopepueruruocal E JoJ lsenba: s.puegJ i? o]
Fupuodser rrer{} raInBU 'lqFnoqpe}Je rre sB }sorulB suoruurls puB ueuleddolg
dq papnlcur uaeq per{ }Br{} eJn}BeJ B-lvreIAeJ rrrno rnod e}U \ o} d111IqB ern sefl\
{Jo/vr plp }Eq} rrBld sseulsnq s.d1ea;o lcedse eLro aq1 'dlsnounC 'oAIIB sseulsnq
e dee>1 ol se{B} ua}Jo 11 ,Qlceue} eLI} pe}B4suouep suoruruls prre ueuladdolg
'pBeJSuI '1u1od s1r{} }B pelp e^Bq plnoc dlal 'appro-rd o} uol}Bpueruruocer B e^Er{
l.uplp uelJo or1ly\ spuegJ ruo4 seFessaur IIBru-e dueur oo] Fu-rnaF e-rarn d.q] ]ErD
FulupldruoJ pepqs a1doe4 '{Jo.{\4. }.uplp rreld ssaulsnq er.IJ 'puodsa: d11sea o1
dIHSHN]N]UdSUTN] OI NOIICNCOHINI

HSIdVHC

14

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

Pand.ora:What's Possible When an Entire Company Has "Tenacity"

We b : 1IWN. p a

ndora. com; Facesoo k: P a n d a ra, Tw

itter

ost everyone is familiar with Pandora, the lnternet

radio station. The service plays music of a certain
genre based on the artist or type of music the
user selects. The user then provides positive or negative
feedback for songs chosen by Pandora, which are taken

into account when the service selects future songs.

While listening, users are offered the opportunity to buy
the songs or albums at online retailers. Over 400 different musical attributes are considered when selecting the
next song for a user. The goal is to provide the user the
precise type of music that s/he wants to hear. Pandora
has two subscription plans: a free service supported
by ads and a fee-based service without ads. Pandora
went public on June '15, 201 1 , and is now traded on the
New York Stock Exchange. As of that date, Pandora
had 800,000 songs from over 80,000 artists in its music
library and 80 million users. A year later it reported it had
150 million users.

lmpressive, isn't it? But, as the old saying goes,

wait until you hear the rest of the story. Pandora was

founded in 1999 by Tim Westergren, a musician and film

composer. The company raised $'1 million just before the
lnternet bubble burst. At that time, Pandora's business
model was to license its technology to other companies.
The initial investment lasted about a year, which gave
Westergren and his team enough time to build a prototype and have a product to show to potential customers.
Then the money ran out. Pandora spent the next two
and a half years essentially broke, earning only enough
to keep the lights on. What was needed was an additional investment. Westergren pitched over 300 venture
capitalists before one finally said yes. Pandora eventually shifted its business model to offer the lnternet radio
streaming service that it features today. Fast forward to
the present: Today Pandora has over 250 million registered users.
So how did Pandora do it? How did it survive two
and a half years with essentially no money? The answer: lts employees agreed to work for no pay. They
agreed to a deferred compensation plan, meaning they
would get paid if and when the company raised money.
Some used credit cards to survive, some had working

spouses or significant others, and others worked two

@pan d o ra *ra d i a

jobs. Reflecting on this period in Pandora's history,

Westergren, who was the first person to go without pay,
said the employees agreed to the plan for two reasons.
First, they believed in Pandora and its idea. They also
believed that Pandora would ultimately raise money

and become a successful business. Second, the employees felt a sense of responsibility for one another. lf
one left, the burden would be greater on the others. As
time went on, Westergren believes, those relationships
deepened and the employees ultimately stuck it out for
one another.
When the funding did come through each employee
was given his/her entire back pay. This is a very unusual
outcome in the funding world. Usually, new money isn't
used to solve old problems, it's used to build for the future.
Westergren credits his investors for the outcome' He's said
that what the investors were investing in was the tenacity
of the Pandora team.

Lesson Learned: This is what can be accomplished

when an entire company demonstrates the tenacity necessary to build a successful entrepreneurial firm.

ffiucmm&{Frrus Sffifl ffir'x&*mB Yfu $rek*rary

1.
2,

3.

4.

How do you think Westergren was able to perservere

through 300 rejections before an investor finally said
yes to Pandora's attempts to raise additional money?
lf you had been a Pandora employee during the time
the firm was essentially broke, would you have agreed
to work for no money? Westergren provided two
reasons that the employees present at the time were
willing to work without pay. Would these reasons have
been good enough for you? Explain your answer.
Think of a time in your life where you showed tenacity
and the tenacity produced positive outcomes. Briefly
relate the story and what you learned from the experience to your classmates.
What lesson or lessons can other entrepreneurial startups learn from Pandora's storY?

Sources.' W. Wei, "How Pandora Survived More Than 300 VC

Rejections," Bustness Insider, July 14,2010, available at www.businessi n sider.com/pando

a-v c-2O1

-7

Gomrnon Myths .H,bout Entrepreneurs

T.EARNTNG OBIECTTVE

4.

Explain the five com-

mon myths regarding

entrepreneurship.

There are many misconceptions about who entrepreneurs are and what motivates them to launch firms to develop their ideas. Some misconceptions are
because of the media covering atypical entrepreneurs, such as a couple of college students who obtain venture capital to fund a small business that they
grow into a multimillion-dollar company. Such articles rarely state thal these

ere sE 'sJerlrl rilsIJ elsJeporu dlpnsn eJE srneua-rde4ue 'sI qlru] or{J '$ISu
ftq e:{q prre srelqureF ere deql }eq} sI srneuardsrlua }noqe qilu puoces v

sJslqlrIe9 sJV srnsuardsrlu3 :u qIfiH

'ssaco-rd Ielrnauerderlue eq] qllff\ palElcosse dluppacun pue dlpFrqrue oril
secnpeJ srnaue-rda4ue Jeqlo Jo uollelJesqo ]coJlp ]Bq] ]cEJ eql dq peupldxe sr
:nauardo4ue ue Fuplou{ Jo 1cedu4 en111sod eHJ rc'sloporu eIoJ Jo. secue}Llpnb
-cE Jneue:de-r1ue ou qlp{ asoq} sB ruJIJ .1nerr e Funre}s u1 pe^Io^q eq o} dlerfrt
sE ecl 11 rreql eJoru eJE Jneue-rdarlua rre 1\4.orDI dlpuosred oqnn eldoad 'd1:e11u4g
nr'Fulpedde ecuepuadepu1 puIJ o1 {e>1q erorrr sI lenpr rpul uE 'ace1d>1-ro \ otl}
uI ecuepuedapul s.Jerporu Jo s.Jeqle; e Fulsseul1ly\ JoIJV zr'sJneuerde-r1ua eruoc
-oq o] dle{11 oJoru are pedoldrua-;1es eJe^4. oq { sluared q}Ir\ eldoed }Eq}
JeAo
selpnls 'aldruexe Jod ']xeluoc Ielcos s.IEnpIAIpW rre ruo4 aAIoAe prre erul]^roqs
pedolazr.ap eJE sIIEJ] eser{J 't'I alqeJ uI pa}s[ oJB eseql lsrneua,rderlue q]H(\
pelelcosse dluoturuoc sc$spelcEJeqc pue s]TB-4 dllpuos-rad eJE eJaql 'Jeleff\oH
rg'secloqc IeuosJed pue 'secuegedxa e;q ']uerurroJrlue Jo uoncunJ B sI ],useop
Jo seop euoeuros Jerperl\[ 'euo oruoceq o] IEI]ue1od aq1 seq euortre^e ]Er{} pue
rnaua:deJlue uE eq o] .,rrJoq,, sI etro ou ]Brn Fulueau sB peleJfuelul eq uec
eoueplla sIqJ 'eldoed Jer&o ruo4 ]ueJeJJIp dlpcllaueF ]ou ere sJneue-rde-r1ue
]Eq] sI srnauerde-4ua go dne>1eur IBcIFoIoIcos pue IeclFoloqcdsd eq1 uo sel
-pnls Jo speJpunq drreru Jo snsuesuoc er{J 'srneuerde.rlue oq o1 pesodslpe:d
dlpclleueF are eldoed euros ]Bq] JOlIeq ue{E}slru or{} uo peseq sI qilru sIqJ

spBl l toN 'urog aJV srnouoJdarlug

t qiluI

'sJnerroJda:1ue ]noqe senIIEeJ er{} pue sr1ldu uouruoc }sou

eql ]e {ool s,}e'-I 'sseco-rd Ieuneuerda-r1ua er{} Jo slcedse }ueJeJJIp erp Fupncexa
dlnysrec Jo ]InseJ B sI eIIJoJd Fupad6 s,reldeqc r{JEe u1 dpnls o.{r\ sJneue:d
-oJlue er{} Jo dueu Jo sseccns eq} 'peepul 'eapl ssaulsnq p11os e s1 dpuaJoqul
leqm ezllr;lJreruuroc o1 ueld eleprdordde ue Fullncexe d1p;a-rec Jo ]lnseJ B sr
sseccns JIer{} }BrD prre ruJou erp uer4 Jeq}Er uolldacxa eq} eJB s-rneua-rde4ua

r
c

0)

I
@
a

.Tl
9)
:,
o

o
o

o:

'Ouruunr pue dn

Aueduoc r;eq11eO

o+

solel

ll 1BL1/\A s,Ierll I eced cllcoq

B lP IJoM o1 q6noue e1e
-uorssed ore sJneuorderlue
6uno{ osoql rolel ISU
e sdeqred ro 'rolenouur
ue 1e>1urq1 luepuedepur
uP sP rneuerde;luo ue

oqrrcsop lq6ru no1

9t

drHsunrNrudrurNr 01 No[cnoouJ-Nr

u]l-dvHc

:
:_

16

PART

1I

DECISI.N To BEC.ME AN ENTREPRENEUR

TltBt E I.3 GomrnonTraits and Gharacteristics

of Entrepreneurs
A moderate risk taker

Opti mistic disposition

Persuasive

A networker

Promoter

Achievement motivated

Resource assem ble r /lev erager

Alert to opportunities

Creative

Self-confident

Self-starter

Decisive

Tenacious

Energetic

Tolerant of ambiguity

A strong work ethic

Visionary

Lengthy attention span

most people.Ss This finding is affirmed by The Hartford's 2OL3 Small Business
Success Study. The study conducted a survey of 2,60O business owners. A total
of 79 percent of the participants rated themselves as consen/ative rather than
ri"1oy.36 The idea that entrepreneurs are gamblers originates from two sources.
First, entrepreneurs typically have jobs that are less structured, and so they
face a more uncertain set of possibilities than managers or rank-and-file employees.sT For example, an entrepreneur who starts a social network consulting
service has a less stable job than one working for a state governmental agency.
Second, many entrepreneurs have a strong need to achieve and often set challenging goals, a behavior that is sometimes equated with risk taking.

Myth 3: Entrepreneurs Are Motivated Primarily

by Money
It is naive to think that entrepreneurs don't seek financial

rewards. As discussed previously, however, money is rarely the primary reason entrepreneurs
start new firms and persevere. The importance and role of money in a start-up
is put in perspective by Colin Angle, the founder and CEO of iRobot, the maker
of the popular Roomba robotic vacuum cleaner. Commenting on his company's
mission statement, Ang1e said:
Our, "Build Cool Stufl Deliver Great Products, Have Fun, Make Money, Change the
World" (mission statement) kept us (in the early days of the Company) unified with a
common pu{pose while gut-wrenching change surrounded us. It reminded us that
our goal was to have fun and make money. Most importantly, it reminded us that
our mission was not only to make money, but to change the world in the process.38

Some entrepreneurs warn that the pursuit of money can be distracting.

Media mogul Ted Turner said, "If you think money is a real big deal ... you'll
be too scared of losing it to get it."3e Similarly, Sam Walton, commenting on all
the media attention that surrounded him after he was named the richest man
in America by Forbes magazir:e in 1985, said:
Here's the thing: money never has meant that much to me, not even in the sense
of keeping score.... We're not ashamed of having money, but I just don't believe
a big showy lifestyle is appropriate for anywhere, least of all here in Bentonville

LI

'zloz

ul lJoozlpoa-'l

p uo poseq olE
LlonorL,ll ssoursnq B poruJol oql slEnpr^lpu! Let'L lo
^oruns
eoqrunu oql'eLOZ &eruqeg 'uollppunoJ uerullney uoppt
6urrn3 eql'xepul
ZO1Z woozp6e-1 pue uorlepunol uetu$ney orlj ;acrnos

lueuuor^uf dnUets

6Z-8t

9'Ll

68-08

9Z

6v-Q?

VZ

69-09

le

+09

9'Zt

e6v

sJau/no ssaulsng Io ooeluocJed

sreurl

o ssoulsng

Jo

uo$nqlrlslc e6lr

8,"

ffiTfiH,&

a,t. qFnoql uele 'ALCSUICI Jo 'Jenyy11 'x-rg]eN Jo sJepunoJ ar{} erueu plnoc sn
Jo lYieJ lng 's/I\eu eql uI uelJo eJE oq.{\4. s-rnaue-rde4ue eq} eJB esaq} 'uol}us}}E
lqFnos d.q] lou ro rerneq yeIcBrO Jo uos[Ig ^&-re1 ro alFoop Jo ugg deFrag
pue aFe4 &-re1 eqdeu pue '{ooqeceJ ;o Freq-re>lJrv {JBI tr tJJocltozreurv Jo
sozeg JJe1, r.Ilyy\ dn eruoc ppoc sn Jo ]soni aJnoJ Jo oeJr{} sdeqreg 6erueu nod
uec sJneua-rdarlue eseql go dueru /y\or{ }ng 'suJIJ JIaq} q}UA pe^Io^q d1azr11ce
IIIIs eJB srnouerdarlue eseq] ;o dueur pue 'OVCISVN eq] uo pels11 saluedruoc
OOO'9 er1lJo dueuJo rlcunI oqlJo ecJnos ern ere srneue-rderlue ]Eq] JepISuoC
'ocllou c11qnd plone 'secprres Jo slcnpo-rd dlelagdord uo Ful4JorK aJB d.,{t
asneceq 'sJneueJdarlua dueur 'lcEJ uI 'uollue]]e c[qnd 1cer1]B ]ou op ueq]
Jo dflJoferu lsBA er.Il 'Jale.{y\or{ :luedoqureg eJE srnauardeJ}ue eruos 'peopul

Ir{Elnodg qql o^o'I srnauordortug :g q}rtt l

'sJnelreJda:1ue -raFunod uer{}
rerper replo roAJ seplpnb a^IJ esoql Jo rnoJ IsJIJ er{J 'BepI sseulsnq aq} }noqe
uolssed pue 'sseccns Jo pJoceJ {cE4 B 'uol}B}ndar plos E 'sseulsnq eq} dler{
11pa ]Brn sen[IqB pue sIIpIs 'sseulsnq pasodo-rd aq] Jo BaJE er{} u1 ecueuedxa s1
Jolsolul rre Jo sade eql q ..FuoJ1s,, ;neuardeJlue uE se{Bru }EqA\ '-rneue-rdeJ}uo
eJcolpau B pue pepl sseulsnq Fuo-qs B punJ uBrD EOpI sseulsnq eJcorperu E
qlyr rneue-rdeJluo Fuo4s B punJ reqler plnoa d.q1 lerll s1 ssardxe uelJo slsqel
-1dec eJnluel ler{} }uerunues B '}cEJ uI
punJ o} uolslcap eq} uI
z?'seJn}uel
uoIJelIJc luepodtur ]sour JIer{} se (s-rnaue-rdarlue Jo^4.eu
ruee} Jo) rneuardeJlue eq}
go qlFuarls eq] allc uelJo srolselul 'cpaFraue eq 01 luepodurl sI 1I {Fnoq11y
I,'eJnluol fi\eu e Fulqcunpl o1 rogd acuer-redxe {Jo/y\ eABq sJelrl.r.o ssoulsnq
Jo dUofeu eq] 'uollnqlrlsp afie sIql ue^IF 'dlFulsprdns ]oN 'seIUoJ pue sel]
-JILI] JIer{} uI eJB sarueduroc UB}s or1zr sIBnpI IpuI Jo ,QUo[eur aq] 'u.{y\oqs sV
'V'I eIqBJ uI rr/Kor{s sI 'xepul }ueruuorl ug dnpelg ZIOG rttoo71e7x1 prre
uollEpunod uEruJJney eq] dq peulruJelep 'sJeur$.o sseulsnq Jo uonnqgls1p
'seFue-r aFe :azro ]no peerds ,fiuala d1-rp; s1 d1pr11ce Ielrneuarde-4ug
eFe

eql

clta6rou3 puB
Eunotr ag plnoqs srnauardorlul :? r{}Ahl
oraecdou-sllou 'uI punore sFop fur lneq o1 pasoddns I rue ]er{A\
a{cru} dru1c1d B e lrp 1 op dqg a}nc }I }eF I plno^4. esle ereqlyydoqsreqreq eq} }e
]nc JIEI{ ,tu 1eF I }Bq} s/yreu s/y\ }I e^elleq }.uec [-rls I ""etul} e 1e Fe1 euo sJesno4
Jler{l uo slnd euo,,trezra }Brn rr\ou{ IIE e1ydauour rlarp JoJ pJeq {Jor\. $IIoJ eJeq{\
dtHSUnSNlUdluINl ol_ No[cnooulNt

I u]l_dvHc

18

PART

I
1 I

DECISION TO BECOME AN ENTREPRENEUR

lr

frequently use these firms' services. These entrepreneurs, like most, have
either .rroid.d attention or been passed over by the popular press. They deff
the myth that entrepreneurs, more so than other groups in our society, love
the spotlight.

Types of Start-Up Firms

TEARNING OBJECTM

5.

Describe the three types of

start-up firms.

As shown in Figure 1.2, there are three types of start-up firms: salary-substitute
firms, lifestyle firms, and entrepreneurial firms.
Sataryr-substitute firms are small firms that yield a level of income for
their owner or owners that is similar to what they would earn when working for
an employer. Dry cleaners, convenience stores, restaurants, accounting firms,
retail stores, and hairstyling salons are exa-rnples of salary-substitute firms.
The vast majority of small businesses flt into this category. Salary-substitute
firms offer comrnon, easily available and not particularly innovative products or
services to customers.
Lifestyle firms provide their owner or owners the opportunity to pursue
a particular lifestyle and earn a living while doing so. Lifestyle firms include
pJrsonal trainers, golf and tennis pros, the owners of bed & breakfasts,
and tour guides. Tfiese firms are not innovative, nor do they grow quickly.
Commonly, tifestyte companies promote a particular sport, hobby, or pastime
and may employ only the owner or just a handful of people.
Entrepreneurial firms bring new products and serwices to market. As we
noted earlier in this chapter, the essence of entrepreneurship is creating value
and then disseminating that value to customers. In this context, value refers to
wor[h, importance, oruUtity. Entrepreneurial firms bring new products and services to market by creating and then seizing opportunities. Dropbox, Facebook,
and Linkedln ari well-known, highly successful examples of entrepreneurial
firms. Having recognized an opportunity, the entrepreneurs leading companies
of this type create products and services that have worth, are important to their
customers, and piovide a measure of usefulness to their customers that they
wouldn't have otherwise.
One characteristic of entrepreneurial flrms, which will be explored throughout this book, is that they partner with other firms and organizations, often to
obtain the boost they need to realize their full potential. In each chapter, look
for the boxed feature titled "Partnering for Success," which illustrates how
entepreneurial firms used partnerships to increase their chances for success.
This feature in this chapter discusses how entreprenurs and their firms are
engaging business incubators and accelerators to gain access to mentors'
partners, investors, and other critical start-up resources.
Next, we describe the newly emerging characteristics of today's entrepreneurs. You may be surprised to learn about the types of individuals who are
choosing to become entrepreneurs! While reading these characteristics, think
about people you know who are accurately described by these characteristics.
Do you think any of these people will choose to become entrepreneurs?

ffiffiffiffiffiffi a "ffi
Types of Start-Up Firms
Firms that basically
provide their owner or
owners a similar level

Firms that provide

their owner or owners
the opportunity to

of income to what they

would be able to earn
in a conventionaljob

pursue a particular
lifestyle, and make a
living at it

i
i
I

'uotrlsE} o1Aloll| orE LUBJoold

roleJolocce Jo lolEqncut ssoulsnq e ul sluedlctuEd
leLll sdlLlsrouued ssoutsnq lo sod^l or.l] ]o lsll e aIEW .V
auteJ6oJd Jolejolecce
ro rolEqncut poprE6oj-llo^ E olu! peldocsE 6utoq Jo
socueqc reLl Jo srr.l o^ojdrul ol aoolloc ul oltr.l^ op or.l/s
uec lpr.liv\'eepl sseulsnq Oursrtuo.rd e seq luopnls e ll .g

aelquosor

lsor.u U soop suelOotd 'sexol 'urlsny sq1 lo ouo

r-,lctL.l1111

'ure.r6o.rd eql oqrJcseq '[1rc {q.reeu E ro ul enrg noI u^ o}

or.l+ ul.ro Ourpuellp ole no[ flrs.rentun ro e6e;;oc oql le
JoleJolocce Jo loleqncul dn-yels B;o elduexo ue puu .Z
eoq plno^ slllouoq fueuud eq1
lulr.l+ no{ op }eq/n 'os }l auel6ord Jo}Erolacce ro iol
-Bqncur ssoursnq e ur 6ur1ed;cgped uoJ] ltlouoq plno^
noA 1urq1 nofi op 'e;n1uon n ou B Oulpets elenn nofi ;; ']
ll},ul*t*gttr,+"6,,ft_ $Hl;i:1.$t&I,fl;;?,.iifi:p,#.

ti-$".s,i;31&9,4*l:.,,,'*:,

'uesoLlc ele sleuu!/v\ or.l] usr1l pue 'qc1rd

;eut1

p oArO oqnn 's1sr;eu[ B L osooL.lc se6pnl eq1 lee{ qcee }o

qc;ey\ u! plorl ocuoroluoc ([6ogouqce}) o^t}oere}ul pue
'Clsnui 'l,IJlU lpnuue uP Sl L.lcttl^ 'lSoA tllnoS ,(q qlnos
6uunp eceld sale] uoryleduloC tJoluepccv /VISXS

[e6

ou:e6] e ]B slo]sonut o1 Durqcld sluepnp 6ur

-ledrcped Lllrn spuo Jolsoues qcEI 'selueduroc lBoJ Uels

fueurprcslpJolul u! sluopnls sece;d 1; 'snduec
urlsnv Ie sexol lo [lrslenlun oL]] uo s]uopn]s o]enpetfuep

ol srueol

-un JoI r.uet6o.rd 6uo;-.relseuros V :dnye4g utot,16uo1

'sornluon ;euneue.lda;luo nnot6 pue Uels o1

pepoou e6pe;nnoul utellop pue'uorleztletcloulruoc [6o1ou

-Llcol 'uorleprlen ue;d sseusnq pue loIJBtu '6u1p;lnq ueel
'6ur.ro1uetr Brn sndutec utlsnv 1p sexol 1o firs;enlun oL1l
uo sdn-yels ssoutsnq syoddns :sgp-7 aJnluoA sexo_l
'elnylsul 73; s,{lrstontun
or.,l1 r.ll!/v\ poletllge st ]l 'utlsnv le spxol lo firsrcnlun eLll lB
Joleqncur dn-ye1s ot41- iJopqncq r{1olouqcot ullsnv
'poddns luenept-[J]snput ]o srulol
pup s;olueu fir;enb-q6tq ol ssoccp sluedrcryed

drqsreuyed leenn-g7 e leplng olnluan pue 'duleclooq

IooA -B ue 'quol ornluen 'ure.r6o.rd {ep-euo E st t.lclrll
'UEIS ornluon spnlcur sr.uetOotd dtqs6eg s1; 'solnluon
Jleql Llcunel stneueldetlue dleq o] sluetOotd poztletc
-eds pue socrn;os Dulgnsuoc qynn 6uoJe eceds 6u;ytoan

-oc sre$o

+Er.ll Joleqncut 1;lold-lo1

'.tlcueA Llcol

'slueLulsa^Ur

uo-Mollol 0OO'09Z$ .ro1 serueduroo otloJyod 1celes sle6

-JB+ uor1l pue sluotulsonut ;e6ue 000'09$ seqcleu uuet6
-o.td rolerelecce oLlf 'slnoue;detlue bur.rrdse JoJ sluo^e
Jer.llo pue sdnleoul slsoq pue eceds Ourlronn-oc pue
u.re.r6ord Jolelolocoe uE sloLrg :ltolceg pildeC
'IuouJUoJrAue dn-ye1s
snoroOp 'engleerc e ur eceds UoA pue ';elrdec uo-^ ollo] o]
sseccp'srneue.rdo.rluo pouoseas uoJJ Our.rolueu'(000'gZ$
o1 dn) Ou;punl pees-e;d qltn slcelos lt s;noueldetlue eq1
seprnord 1eq1 uer6o;d qpour-oo;q] V :u7snv UueeJO
'sesndulec

e6e1

-loc uo pue serlrc uecrJoulv e6tel pue pezts-uJntpoul ut

suerOo.rd Jel!urs jo lequnu Oursudlns e dn su;n1 6ur66rp
elllll p 'sue;6o.rd Jo roqunu e6e;ene-onoqe ue tego [eur
urlsnv ollLlg 'sexof 'urlsny ur olqelrene sulelOo.rd tolete
-locce pue Joleqncut otl] lo lsll e sl Ournnollo1 orl] '1urod
sltll olBrlsnll! ol 'sorlrs uBctjor.xv lsot! ut srolejeloscE
pue srolpqncu! dn-pe1s lo toqunu 6urnnot6 e de oJoql

'pslcol s! sJelsqcel pue JoleurquoC-A eJeqnn lueserd

{1pcrs{qd oq o} dn-Ue}s e selrnbeJ pue enrlrleduroc fuen

sl sjelsqsol pue Jolpurquoc- oI uotsstupe ollrJM

'oluees
pue ftr3 IroA A oN 'uopuol 'o6ecrq3 'uolsog 'utlsnv o]
pepuedxe A ou sel1 slelstlcel 'suret6o.rd drqstequreut
ul 6u1pun1 e6els poos seprno.ld ll leq] ul
r.,lluor.rr-oaJql

+snLU srneue;delluo r.lctr.,ln tol sr.uet6o;d ele esaq1 I

'nnor6 o+ senutluoc sslels pollun eql ul sr.uetOotd
i
rolprolocce pue loleqncut dn-ye1s ]o loqunu ol,l i

uer6o.rd Jolelolocce Llluotu-oalql V :u7snv sJptsqco_t

'sruJrl ;euneueldeJluo 6u;spuold
Llsunel o1 srepunol ssoulsnq pue qcuEu qcel ueo^ }oq

JolpurquoO-A ol Jplrruts sl sJElSqcoI 'operolo3 leplnog

ur poyels 'lee{ led suotssos r.l}uou-eoJL,l} 'oA } ut slued
-lclUed sll ol sotyunuoddo Ourlton lau pue 'drqs;oluotu
'6urpunl e6els peos seprnotd 1; '{eg;e1 uootlts or-,1} ul
polecol sr roleulquoc-A 'sJels Llcol pup Joleulquloc-A
ere sure;6o.rd toleteleccp uA ou1-llon ]sotu oA ] oqf
'sJolsonur Airnbe )o/pue'sleuped ssautsnq'slopuno+-oc
;et1ue1od loour o] s;nsuo.rdellue.rol seceld ollpol osle oJe
s;ole;oleoce pue slolpqncur dn-pe1g 'eprno.rd {eq1 serl
-runpoddo drqsiolueu oq+ sl sr.ue;6o.rd eseql ]o ouo olut
Outpe6 ,to e6eluenpe +soleel6 eq1 'stur4 Jtorll ut {1rnbe
ropuo;rns lou op lnq ]uor to uorledlcrped Jol lunorue
lsopotu e {ed sdn-pe1s eq1 'sesec lorl}o ul 'Ourpun1
poos lo lunoue lleus Ipelrulrs e )q ftrnbe Jo lunorr;e
IleLus E JopueJrns stnsuorderlue lo upel lo ;neuelde;1
-uo or.l] 1eq1 elrnbe.l suuetOold eq1 'sosec ouos u; 'A;dde

6uo;e 'luoruuolrnue Ourlelnutls e ur ecedsl;on sdn-pe1s

Ourledrcryed seprnotd srelgqcel '{1rnbo }o }unoue llerxs
e Jo] e6ueqcxe ur sdn-yels olul {euou poos slnd 1eq1

Jor.lto

soprnord 'ssoccns lol letluolod eql eztutxeul ol peu6rsep

suelOord 6u1.ro1ueur IooA -r l al -ZL ontsuelul ul eledrcrl
-rBd sdn-Uels potoelos 'sotueduoc spoo6 Jorunsuoo uo
pesnco1
uretOotd
JoleJoloccp
uV :uollels uoneqncul
'sroluor.u filpnb-do] oI ssocce ql!/\\

socrnosofi dn-pets IEcllFC rot{}O pue'slolserrul'sloulled'srolueill

ol ssoccy EurupC 3o [eyy1/rr\oN V:srolproloccy pue sroleqncul dn-pe1g

6r

dtHSUnlNfud3uJ_Nl

ot No[cnooulNt I

u]l_dvHc

20

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

Ghanging Dernographics of Entrepreneurs

I,EARNING OBJECTIVE

6.

Discuss the changing

demographics of entrePreneurs in the United States.

Over the past 10 years, the demographic makeup of entrepreneurial firms has
changed in the United States and around the world. Of the 23 million busi.r.""." in the United States,43 women, minorities, seniors, and young people
own an increasingly larger number of them. This is an exciting development for
the entrepreneurial sector of the U.S. economy.

Women EntrePreneurs
White men are still more likely to start businesses than women, the number
of women-owned businesses is increasing. According to a study commissioned by American Express OPEN, there were 8.6 mitlion women-owned
businesses in the united states in 2013, $enerating over $t.s trillion in revenues and employing nearly 7.8 million people. In addition, between L997
and 2018, the number of women who owned businesses increased at a rate
of one-and-a-half times the national average. Particularly impressive is the
growth in the number of firms owned by women who are minorities. A total of
58 p.r".nt of women-owned firms are now owned by minorities, up from 17
percent 16 years ago.44
Additional data is available from the 2007 u.s. census Beureau's report
on Women Owned Business (the most recent year the data was collected).
According to the report, in some industries, women control a si$nificant share
of the business. Foi example, women-owned businesses accounted for 52 percent of all businesses in the health care and social assistance sector. The three
states with the highest number of women-owned businesses in 2OOZ were
California, Texas, u,nd New York. There were 141,893 women-owned businesses earning more than $ t million in 2OO7 .45
The .rr*6.. of groups that support and advocate for women-owned
businesses continues to increase. An example of these groups is Count Me
In (www.countmein.org), which is the leading national not-for-profit provider of resources, business education, and community support for women
entrepreneurs.46

These are the faces of

the entrepreneurs of the
future. Collectively theY will
be older, more ethnically
diverse, and will include
more women than anY time
in the past.

t!

E.
cr)

N
o

o.
o
o-

VAVI'IGI8

a,',tIlSfJ/UN0VlGIHllIruI
AUvf,Sn

eldoed Frmod 01 sure.foJd uor,lecnpa dlqsrneusrda:que sepBord 'aldurexa rog

'(S111II) dfqsrnauuda4ug ffr1n;ceal JoJ {ro/rqeN aq1 .aldoad Sunor( Fuoure dr-qs1
-rneuerdarlua uI lseJalq FuFrnds ur po Io r4 are suot]"ztrre8Jo Jo Jeqrunu V
*'e1d1sa3T1 lelmeuarderlua arp lE {ool puBrI}s{J e rrrar{+ septrzrord qclu.rn,ssau
-Isnq peuels eaeq srrelprenl ro sluered ryaql ,(es aldoed Bunod 3o (luoJrod
"
Zg) pqqt-auo lnoqv'ZIOZ ol IIOZ uro{I durnf luacrad 6 e eluessrdar aBeluac
--red s1q1 'ssar4snq e UEls ol trloq r4 sassBIJ sJaJJo looqcs 4arp ,{es 61-9 sepa8
14 quepnls go luac.rad 69 tnoqv '(1uac:ad O?) sdoq uBrf+ (luacrad g?) slr6
Fuoure raqFlq q eBeluecrad aq1 ',t1Frr.qsare1ul 'sser4snq u:llo rraql prls o1 ueld
daql des 61-9 sepuB 14 spI{ OI uI ? lnoqe ,farr:ns dogep luacar u o18u1procry
'sldoad firmo,t Fuoure q8q sI reerEr pgnauarda.qua ue ensrnd ol a-4sap V

sJnaualda;lu3 6unoa
'suolleJeueF rallree uer11 seAII JIaril u1 reFuol oJnluol
Ierlneue-rda4ue LrB Jo eole Jeq]Ie u1 peFeFue urerueJ o].,{Ie>Ill eJB pue tefiuol re1
-qlleer{ Fufql aJE }nq 'reFuol FufnII dluo }ou eJB suecrreurv }Er.I} suBeru dcuelced
-xe aJII uI eseeJcul dpeels eql 'uonlppe uI 'se1llsnpul drreur uI sasseulsnq uels
o1 seleplpuec IBepI ueq] e>Ieur qc1t?K 'r{}Ieaq pue -roFI }uallecxe puB 'uodn
uec deq] 1eq1 socJnoseJ IBIctTBuIJ 'ecuagadxe sseulsnq Iellrrelsqns eABr{
^\eJp
aFue: aFe raplo prre Og eql u1 eldoed due6 'sesuadxa Jerno pue secpLres aJBc
qlleer{ orn}nJ rol ded o} eruocul IBUoI}1ppE uJEa o} peeu d.,{} }Eril srolues Fuoure
serLloly\ Fulr,rorF prre 'seAII JIeq] ur ]ueruIIIJInJ puos;ed eJoru JoJ sJe>IJo/K replo
Fuorue eJISep Fulseercul uB 'Fulzlsunop alerofuoc Fulpnlcul 'sJolcBJ Jo Jaqrunu
E o] pelnqp]]e sI asearcul sIr{J
6?'replo puB plo sreed Og slenpl Ipu1 dq pepunog
ere/y\ luec-red g'ZJ reqlorre ellq/y\ p1o sreed 69 prre 0g uee^qeq eldoed ,(q pegels
oJe \ sessoulsnq llreu Jo ]uecJed OZ, 'ZJOZ, u1 '-reldeqc eq] uI JaIIJEa pallc dpnls
utoo71eBe.l prre uollEpunod ueruJJney eq] o] Fulp-roccy 'Fuprno"rF pue Iellrrelsqns
sI sessaulsnq Fulpels (rep1o pue eFe yo sread Og esoql) s-roluas Jo reqrunu oqJ

sJnauaJdajtug Joluas
'ecroruruoC Jo 1ueu4-redo6l selels pelg1 erp Jo ped sI qclqra 'dcuaFv
lueurdole^eq ssel4sng dtuorrynt eql plre 'suopelcossv sseulsng rrBcHeurv TTBISV
Jo Ilcunoc FuoIlBN egJ 'uoflBlcossv sseulsng uBIpuI [BuonBN 'uonBlcossv
sseulsng {cBIg 'uof}Blcossv sser4sng uRe.J eril opnlcul saldrrrexg 'ecue}slsse
apyro:d pue eloruo-rd 1eq1 suolle4ueF-ro Jo reqrunu eq] sI sJneuerde4ua dlUoufu
yo qpnorF
eql
JolcEJ
rle
's;nauerde4uo
FtrpeUIcEJ
uaruo/y\
o] JBIIuIS
lrrepodrul
g?'SJ3{Jo1Y\ 8 pIrB
uo11lpu I'I$ go sldlecer eFerene peq seedoldrua Wpa srurg cpe-[s1g et1l .sa]B]S
pe].run eql 14 sruJg paut\o-cgedslg uo{1prr t'U }noqe eJe/y\ eJaril LOOZ, q ,dller4_{
'seedoldure L prrc uoql1ru I'I$ rrBrn eroru yo sldlacer aFe:azre per{ soodoldue
,

q}YA SIII4I IIBCgEUV IIEISV EIIL'SIuJU PEU/!\O_IIECUEUV LTBISV UO{UUI 9'I 3JEA
areril Looz r4 'dIJBIIrqs 'sJe{ro/lr 6 3o lueur^(oldrue aFererre prre 0oo'I I6$ JeAo Jo
sldlecar eFerezre peq seadoldtus q]1lvr srrrg rrecgeuv rrBcgJV er{L .sa}B}S pe}pn
eql r4 sruJu pewKo-uBclraruv LrecgJV uoIIIlIu 6'I ]noqB 3Je,&\ ereq] 'LooGIuI
,'?,VOZ, dq uollelndod eqlJo ,{fuo[eu eq] eruoc
-oq rulll. pue 'OI OZ, uI uopepdod 'S'n er{} Jo luec:ad gt pe}uese_rdsr sel}Iroulru
'sruJIJ peuuvro-.Quoullu uolflFrr g'g eJe/K eJern 'LOOZ, uJ .sruJg
Jo Jeqrunu puE
'luerudoldure 's1d1aca: ssorfi u1 sruJg dlgoupu-uou Jo qyyro-rF eq] pacedlno
srurlJ peuno-dlgougu '(pe1ce11oc se.&r ElBp aql sread luece-r lsoru eq]) ZO0Z, p:ue
Z,OO7, uee^qaq 'VCEW eq] ol Fulp-roccy '(loF'epqurlrrzlur) deuaFv luaudololeC
sseursng dluoulp eql.dq palroda-r ere scllsllels ellsueqredruoc ]soru eqJ 'selels

pelun eq] u1 srneua:do4ue ,tluoulu ur eseeJcul [Bnue]sqns

B ueaq ser{ eJOqJ

srneuarderluS ftpou11ry
tz

drHSHnsNrUdsUJ_Nl Ol_ NO|TCnOOUj_Nt

HtJ_dvHc

22

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

from low-income communities. A nonprofit organization called Lemonade Day,

sponsored in part by Google, is a l4-step process that walks youn$ people from
a business concept to a business plan and beyond. The idea is to expose young
people to entrepreneurial concepts by helping them start and operate their owrr
business-a lemonade stand. Launched in 2OO7, Lemonade Day has grown
from 2,7OO kids in Houston, Texas, to more than 200,0OO kids in cities across
the United States. The organization's goal is_to eventually provide this experience to I million kids in lOO cities each year.5l
In addition to orgarizations targeting elementary and middle-aged school
kids, a growing number of colleges and universities are offering entrepreneurship-focused programs for high school students. Babson College, for example,
offers a five-week summer program for high school juniors and seniors. The
program, called the Babson Entrepreneurial Development Experience, allows
students to work together on new business ideas. The students can earn college
'credit and learn from top-ranked faculty in a challenging college atmosphere.S2
On university and college campuses, interest in entrepreneurship education
is at an alt-time high. More than 2,3OO colleges and universities in the United
States offer at least one course in entrepreneurship at the undergraduate or
graduate 1eve1.53 Although the bulk of entrepreneurship education takes place
within business schools, many other colleges and departments are offering entrepreneurship courses as well-including engineering, agriculture, law, hospitality mzufagement, and nursing.
A growing number of organizations are popping up that focus on helping
college student entrepreneurs. These orgaf,Lizations range from the Dorm Room
Fund, which is a student-run venture fund that invests in student-initiatied
start-ups, to Startup Weekend, which helps students orgarlrze teams and launch
start-ups in 54 hours. A sample of these orgaruizations is shown in Table 1.5.

The Positive Effects of Entrepreneurship

and Entrepreneurial Firrns
I,EARNING OBIECTIVE

7.

Discuss the positive effects

of entrepreneurship and
entrepreneurial firms on
economies and societies.

Entrepreneurship's importance to an economy and the society in which it

resides was expertly articulated in 1934 by Joseph Schumpeter, an Austrian
economist who did the majority of his work at Harvard University. In his book
The T heory oJ Economic Deuelopment, Schumpeter argued that entrepreneurs
develop new products and technologies that over time make current products
and technologies obsolete. Schumpeter called this process creative destnrction. Because new products and technologies are typically better than those
they replace and the availability of improved products and technolo$ies increases consumer demand, creative destruction stimulates economic activity.
The new products and technologies may also increase the productivity of all
element" of a society.sa
The creative destruction process is initiated most effectively by start-up
ventures that improve on what is currently available. Small firms that practice this art are often called "innovators" or "agents of change." The process of
creative destruction is not limited to new products and technologies; it can include new pricing strategies (e.g., Netflix in DVDs), new distribution channels
(such as e-books for books), or new retail formats (such as IKEA in furniture
and Whole Foods Market in groceries).
Now let's look more closely at entrepreneurship's importance.

Economic Impact of Entrepreneurial Firms

For two reasons, entrepreneurial behavior has a strong impact on an economy's
strength and stability.

'sJnouojdojluo oA

0)

6
o

U)

J
c
o
a
x

{q peyels ocrruos crsnu

Ourr.ueerls ourluo ue Aq

peprnord orsnu 6ur{olue sr

uetuol^ 6uno{ slr.lf 'sontl
s,e;doed ocueLluo

leL,l+

olll o] slcnpo.rd 6u;6upq

roolpc ;euneueldolluo

sr

uE lnoqe s6urql 6ut&

-srlEs lsor.u or.ll lo ouo

tuoc'r

uaJde.rlueOu no['nnmnn

'srneuerderlue 6uno{ iol seclnosoJ Joq}o pue

slool ssoursnq Ouueqs ol polo^op 6o1q pue e1sqoM

tu oc

ron

uo.r de.r1u 3 6u n

o1

punl uoou r.uloc

'pyde3 punou 1slr3 {q polceg 'sdn-Ue}s

polerlrur-luopnls ur slso^Ut lBLl} punJ oJnluo^ unl-luopnls

tuoc' pu nluoo.r r.rirop77: dpq

uorlezr ueDrO (sr nouoJdeilu3

sunu 'sJou^^o ssoursnq +009'6lo IloA lou ssoutsnq pqole

6ro'ees6'nnannn

puolooM dnyelg

'sdn-ye1s qcunel pue

'slcnpold plrnq 'sueol [uJo] 'seepr oreqs ol leq]e6ol oruoc
slsprsnL,llue dn-ye1s pue'sre6eueu lcnpoJd'sle1e>1.leul
'sredolenep oJorln sluono rnoLl-rg oJp spuo)eenn dn-ye1g

6lo' p ueleennd npels / / tdlp:q

popunln

'sdn-ye1s luepnls-o6e11oc rol olrs 6urpunlpnnoic V

lloMoJnluon

'sossoursnq A ou olPorc ol srolB^ouur luepnls

pue [11nce] surer] pup spun] ]pq] uollezrueOlo 1r;oiduou y

6.ro';lennelnluon:A n

r.uoc'popunlun'A

'uer6old prp^^V lneueldelluf ]uopnls

6urOreu.re
6ro'

nUelseOel ;oc'nnrvrnn

Ouuenoc

pqole lenuup ol-ll

'sesndulec e6e;;oc r.uo.r1

sluono pue'serueduroc'e;doed ;euneueldoJluo
oUS s^ ou dn-Uels luepuedepul uV

ol polectpop

dnyelg e6e;1o3

'eopr ssoursnq E uo olpJoqelloc ol luopnls Ouueeur6ue

uE pul1 o1 r-u.ro11e;d ell] osn uec 'e;dupxo Jol '{+uopnls
ssoursnq V'stcelold Jor1]o pue sdn-ye]s uo dn r.uee1o1

6.ro'o-e-c'A

luoc'ropuuqEl|oc'A

6ro'dnyels{epg77:dpq

6ursn erc &1unoc erll ssolcp sluopnls leL,l+ turollpld

dnyelg r{e6-e

'serlrlrqedec lerJnouoldeilue pltnq pue serueduoc

1eq1 urelDord [ep-g e sroJJO

(uorlezr ueOrO,sJnouotdellu3
e1er6ello3) O=C

'sesndurec eOe;;oc OVZ ueql oJotu

uo sleldeqc L,ll!/\ IJoA lou drqslneueldetlue JotllloJd

rspurJqelloS

qo111

Uels-Icrl sluopnls sdleq

ssorppv ailsqo^

uo;ldprcseg

uoglezrue616

seepl sseulsnE fieqJ' e.ur pE rolpue

dlqsrneuerderlutr lnoqg erotr J ureq sluepnls efe11o9 dleg 1eq1 suo;1e4ue6r6 9-t
dlHs8nrNlud3HlNl oI No[cnoou.INt

ez

rrgu;.

I HSIdVHC

24

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

ffimmm,mwm*&mmm Innovatlon is the process of creating something new, which
is central to the entrepreneurial process.55 According to the Small Business

Administration (SBA) Offfce of Advocacy, small innovative firms are 16 times

more productive than large innovative firms in terms of patents per employee.
Small firms tend to be particularly innovative in certain industries, as measured
by patent activity. For example, small firms account for more than 32 percent of
patents in both smqlt grids and solar energr and 15 percent of patents in batleries and fuel cel1s.56
According to the SBA, small businesses create a substairtial
number of net newjobs in the United States. Firms with 5OO or fewer employees create 65 percent of new jobs on an annual basis, while firms \Mith 5O or
fewer employees create 32 percent of new jobs. The only downside of small
business jobs is that employee pay tends to be less than is the case in larger
companiei. According to the SBA, weekly wages averaged $6Zg at businesses
\Mitfr 5 to 9 employees, $StS at businesses with 50 to 99 employees, and
over 250 employees.s7 Still, small businesses are held in
$1,OOO for firms
"riif, ofjob creation.
high regard in terms
gmfu ffim*m&&wm

Entrepreneurial Firms' lmpact on Society

Entrepreneurial firms' innovations have a dramatic impact on a society. Think
of all the new products and senrices that make our lives easier, enhance our
productivity at work, improve our health, and entertain us. For example,
A*gen, an entrepreneurial firm that helped pioneer the biotechnologr industry,
has produced a number of drugs that have dramatically improved people's lives.
An example is NEUPOGEN, a drug that decreases the incidence of infection in
cancer patients who are undergoing chemotherapy treatment. In addition to
improved health care, consider smartphones, social networks, Internet shopping, overnight package delivery, and digital photography. All these products
are ne\r/ to this generation, yet it's hard to imagine our world without them.
However, innovations do create moral and ethical issues with which societies
are forced to grapple. For example, bar-code scanner technology and the Internet
have made it easier for companies to track the purchasing behavior of their customers, a fact that raises privacy concerns. Similarly, bioengineering has made it
easier to extend the shelf life of many food products, but some researchers and
consumers question the long-term health implications of bioengineered foods.

Entrepreneurial Firms' lrnpact on Larger Firms

In addition to the impact that entrepreneurial firms have on economies

and

societies, they also positively impact the effectiveness of larger firms. For example, some entrepreneurial firms are original equipment manufacturers, producing
parts that go into products that larger firms manufacture and sell. Thus, many
exciting new products, such as smartphones, digital czuneras, and improved pre-

scription drugs, are not solely the result of the efforts of larger companies with
strong brand narnes, such as Samsung, Apple, and Johnson & Johnson. They
were produced with the cutting-edge component parts or research-and-development efforts provided by entrepreneurial firms.
The evidence shows that many entrepreneurial firms have built their entire
business models around producing products and services that increase the
efficiency or effectiveness of larger firms. For example, an increasing number
of U.S. firms are competing in foreign markets. These initiatives often require
firms to employ translators to help them communicate with their forei$n counterparts. Speaklike, a 2OO8 start-up, has created an online senrice that provides real-time translation services for two or more people who speak different

sJnaueJdarlue eruos 'sJouUBd sseulsnq {11pnn-qFq }oBJ}}B pue deuoru esIBJ

o1 ueld ssaulsnq ue]]Irn B eABq o1 d.resseceu dlpnsn sI ]I 'Jeuueru oslcuoc
B uI eJnluol sseulsnq B Jo slcodse aq1 IIE seqlJcsep ]Eq1 ]ueurncop uolllJ/y\ e
s1 uuld sseulsnq V 'uBId sseulsnq e ellJl\4. ol /y\oq eqlJcsep o/y\ 'g -ra1deq3 u1
'sseccns s,JneueJdarlua uB o] IBIcnJc s1 aleduroc o] esooqJ IIIzK ruJ.rJ B t{c1tl1y\
u1 d.rlsnpul eql Fuynoug 'g reldeqC u1 urecuoc rno sI slsdpue rollladuoc
pue d.4snpul 'InJsseccns eq o] eJE d..{} JI enIB^ Fuprnldec pue 'Fugenllap
'Fu11earc q]1rlr peuJacuoc senssl eq] ;o FupuelsJepun Jeelc p1s&c B eAEr{
o] peeu sruJIJ IelJneuarda-r1ug 'sJeploqe>Iels sll JoJ anIEA sernldec puB 'sJe
-AIIep 'se1ea:c ]I /!\oq ro; edlaceJ Jo ueld s11 sI leporu sseulsnq s.ruJIJ v
'Iaporu ssaulsnq a^IlceJJa ue Fuldole^ep yo c1do1 luelrodrul eql uo sesnJo! v
-ra1deq3 'r(llunpoddo sseulsnq eIqBI B sllreserdar BepI uB Jer{}eqa eulruJe}
-ep o] dem, aq1 :s1sd1eue dllllqlseeJ uo sesncoJ t reldeq3 'sploJun d1pc1dd1
ssaco:d uopluFocer dllunpoddo eq] /Kor{ seqlJcsep pue sel}Unpoddo e4u7o
-ceJ sJneue-rde-r1uo /y\ortr 1B {ool cIJI}ueIcs B se{81 6 n1deq3 'ue1d ssaulsnq e
Fupgl. pue 'slsdpue ,t4snpul 'leporu sseulsnq oAIlceJJe uB Jo luaudolelep
eq1 's1sd1eue dlqIqISBeJ 'uo111uFocar dllunpoddo sapnlcul EOpI ssoulsnq InJ
-sseccns e Fuldolaleq 'qlyy\ ulFeq o1 dllunlroddo IEaJ ou sel\r. oJeql esneceq

]nq

pJBr{ {Jo/y\ }.uplp -rneuerdeJ}ue eq} esneceq }ou IIEJ sessaulsnq znou due61

tg-A s,taldBqC)
seap! ssaulsng Inlssaccns 6u;dols,ta0
'eJnlual lelJneuerde4ue u \o Jer{ qcunel o} seplcep eqs aJoJeq Iooqcs u1 sI p11qc
lsaFunod -raq I.rlun ]fBA{ deu Lreruol!\ e 'eldruexa Jod 'sJOeJBc IelJnaue:darlue
reFFUt osp deur senssr eldlsag 'dueduoc u1y\o s1r{ 1re}s o1 dauour arp e Br{ aJII
s1r{ q eurn }sJIJ eril JoJ pue acue}gequl uB alrecer lqFpu uos-red E JO 'ssoulsnq
Lrr\{o req ue}s of tr{Fu sI erun eq} }Brn eplcep pue qof req asol deur IEnpI IpuI
ue 'eldruexe Jod 8g'Jneue-rderlue rre oruocaq o] IEnpI IpuI ue slduo-rd lueae
Fu;.reFF!.4 e 'dlpnsn 'spJE{\eJ IBIcuBuIJ ezllruat o} prrB 'seepl rrlno JIeq} ensrnd
o] 'sessoq u 4.o JIer{} eq o} srneue;de4ue eruoceq eldoad 'JaIIJEa pessncsp sV

{t rcldeq3};nauardorlul

uB atuooag o} uolslcag

'suoqces Fupr,rogog er{} uI peupldxe sI t'I aJnFI.{ Jo uo-r}ces qceg 'rnaue:de4ue

uB errroceq o1 uosrad e sldruord eepl ue dolazrap o1 dllunpoddo eql seurleuros
]Bq] seleclpul seepl sseursnq InJSSeJcns Jo luaurdole^ep eq] pue -rneua-rdaJlue

uE
eluoceq
o]
uolslcep
pepEeq-elqnop eqJ 'Slueluoc S,>Iooq
eq]
uee/lqeq
^A.oJJB
s1q1 dolenop aiy\ r{c1{xt punore >IJo/!\eruEI
ro eppF ar{} sI ssecord sIqJ '}xe} s1r{}
e11r7\r dpnls l,nod sseco-rd Iegneuerda-r1ue eq] sleporu t'I eJnFI_tI

Fulpeer

nrJIJ IErrneue-rda-4ua er11 Fup,rorF pue FuIFeueN pda+S

ruo{ Fuyro141 ffidw+S
IUJIJ Ierrnauerde-r1ua uE o1 eepl uB

seepl sseulsnq InJsseccns Fuldole^oq trdm*S

'ssacord
;errneueiderlua oql

rnaue-rdeJlue uB aruoceq o]

up;dq 'g
:sde1s JnoJ Jo

SAITCXIEO CNINUITXT

slslsuoc {ooq slq}

Fulplceq

dmpg

q ssncslp e^4. ssocord pgnauerderlue

or.IJ

ssocord lelrneuerderlut ortr,l

'sJeqlrcsqns xog 1\4.ou eJB serlreduroc OOg aurqJod Jo ,QUoferu eqJ 'pnolc eq] q
seIIJ ElEp eJols o] slue11c slKoIlB ]BrD dn-ge1s [BrrnueJde4ue rre sr xog 'd1re11urls
'sruJIJ eFrel eJB sJaruolsnc s,e{fpfeedg yo aFeluecred eFrel V 'sJo]EISrrB4 rrBrunq
doldrue o] slsoc 1I ]eq/y\ rnolaq fiqereplsuoc sI acIAJOS slq] Jo lsoc sIqJ 'seFenFrrel
94

dtHSUn3NSUdlHlNlOl-NOIJ-CnCOUIN|

LUfIdVHC

26

PART

DECISION TO BECOME AN ENTREPRENEUR

lntroduction to
entrepreneurship

ffi

Recognizing

opportunities
and generating
ideas

ffi

Feasibiliw

analysis'

HJjiHF,-S#=i.ffi-l Deveroping

an
effective business

E@

Basic Model of the

Entrepreneurial Process

-1

Writing 3r
business plan

are impatient and don't want to spend the time it takes to write a business
plan.se This approach is usualty a mistake. Writing a business plan forces an
entrepreneur to think carefully through all the aspects of a business venture.
It also helps a new venture establish a set of milestones that can be used to
guide the early phases of the business rollout.

Moving frorn an ldea to an Entrepreneurial Firm

(Chapters 7-10)
The first step in turning an idea into reality is to prepare a proper ethical and
legal foundation for a firm, including selecting an appropriate form of business ownership. These issues are discussed in Chapter 7. Chapter 8 deals
\Mith the important topic of assessing a new venture's financial strength and
viability-. Important information is contained in this chapter about completing and analyzing both historical and pro forma financial statements.
Chapter 9 focuses on building a new-venture team. Chapter 1O highlights
the important task of getting financing or funding and identifies the options a
firm has for raising money.

Managing and Growing an Entrepreneurial Firm

(Chapters 1 1-15)
Given today's competitive environment, all firms must be managed and grown
properly to ensure their ongoing success. This is the final stage of the entrepreneurial process.

L7

E'I

'sseccns [Epneue:da-r1ue o] IE]I sI

]Er{} ssecord B-ssecord pgneuerdarlua arn Jo s}ueuodruoc IIB o} pesodxe uoeq
e^Bq lpn nod 's-raldeqc gI oseql Fu{pn1s qsIuIJ nod uerry1 'edecspuel Ie1.rneu
-e:da-4ua er{} Jo }uouodruoc FuprorF B sI Fulslqcue{ }nq 'sruJIJ IelJnoue-rderlue
ere suonezyreBto eslqcue4 IIB ]oN'Fu1s1qcue4 uo sesncoJ qclq \'91 reldeq3
r11lla apnlcuoc e ysuo111s1nbce pue sraFraru o] ]ueudolazr.ep lcnpord
^\eu
ruo4 FulFue-r 'qprorF -roy selFaleJls dpnls [.e/y\ '71 raldeqC uI 'sruJIJ qpto-rF
InJsseccns Jo srolleqeq pue scllslrelcerer{c eq} }E {ool il.e/K 'tI -re1deq3
Jo c1do1 eq] sI qynorF go saFualpqc eq] Fullnprra pue roJ Fugedar4
's]oJces epe4 pue 'slqFuddoc
's>IJBruapB4 's1ua1ed sB r{cns 'se}n}E}s dl-radord IBn}caIIe}uI qFnorql seepl
sseulsnq Fullcelord lnoqe {IB} IIUA o/vr, 'uoI}IppB uI 's}esse pclsdqd sdrredruoc
B JO enIBA Aq] SpeeCXe .../y\Oq-/nOLr{,, JO AnIBA etil 'eJOrU prrE eJoIN 'STIIJIJ IEUnSU
-arda4ua Jo ril/KorF eq1 u1 dpado-rd pnlcallelul Jo elor lrrepodrul eq] saulrrexa
61 ;eldeqC'(uopnqglslp ro) aceld prrB'uollourord'ecgd'lcnpord-sd rnoJ oril
prre 'puerq E Fuplpq ']e{reru }eFre} alegdordde ue Fu11ce1es Fupnlcul 'srurlJ
lerrneue-rde4ua Fulceg senssl Fulla4reur enblun eq] uo sesncoJ 11 raldeq3
ponurluoc

trUNCI.I

dlHsunlNludfur_Nl

oI No[cnooulNt

u]l-dvHc

28

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

ffikapt*r Summary
fu*H. Entrepreneurship is the process by which
individuals pursue oppor[unities without
regard to resources they currently control.
A specific application of entrepreneurship
called corporate entrepreneurship is the
conceptualization of entrepreneurship at
the orgarizational level. Entrepreneurial
firms are proactive, innovative, and risk
taking. In contrast, conservative firms take
a more "wait and see" posture, are less innovative, and are risk averse.
K-#ffi. The three primary reasons that people
decide to become entrepreneurs and start
their own firms are as follows: to be their

own boss, to pursue their own ideas,

and to realize financial rewards. Of these
reasons, the desire to be one's own boss
or manager is the driving force of most
individuals' decision to become an entrepreneur. While important, the desire to
reap financial rewards from one's entrepreneurial endeavors is secondary to the
other two reasons people decide to launch
their own firm.

fumm. Passion for the business, product/customer focus, tenacity despite failure, and

execution intelligence are the four primary characteristics of successful entrepreneurs. Of these four, being passionate
about the firm the entrepreneur intends
to launch is the most common characteristic shared among successful entrepre-

neurs. Commonly, the entrepreneur's passion is demonstrated by a belief that her /

his firm will make a difference in people's
lives. Always concentrating on the product
or service as a means of satisflring a customer need, being tenancious in pursuing
an entrepreneurial opportunity, and the
ability to craft a business idea into a viable business operation are the other key
characteristics associated with successful
entrepreneurs.

&ffi4. The five most common myths regarding entrepreneurship are that entrepreneurs are born, not made; that entrepreneurs are gamblers; that entrepreneurs
are motivated primarily by money; that
entrepreneurs should be young and energetic; and that entrepreneurs love the
spotlight. The issue \Mith myths is that,
if unchecked, they can affect an individual's orientation toward and subsequent

behaviors as an entrepreneur. The challenge for entrepreneurs is to carefully

examine myths and prevent each of them
from negatively affecting their approach
to entrepreneurship.

e#S. There are three types of start-up firms.

Entrepreneurial firms are the firms that

bring new products and services to market by recognizing and seizing opportunities regardless of the resources they
currently control. Entrepreneurial firms
stress innovation, which is not the case
for salary-substitute and lifestyle flrms.
In the case of a salary-substitue firm, the
entrepreneur seeks to earn an amount of
income that is similar or identical to what
s/he can earn by working as an employee
for another company. Lifestyle firms are
ones through which an entrepreneur can
pursue a desire to experience a certain
lifestyle (e.8., as a hunting trip guide) and
earn a sufficient amount of income while
doing so.

&ffi&. The demographic makeup of those launching entrepreneurial firms is changing in the
United States and around the world. There
is growing evidence that an increasing
number of women, minorities, seniors, and
young people are becoming actively involved
in the entrepreneurial process. Evidence
suggests that each of these groups of entrepreneurs are capable of appropriately using
the entrepreneurial process as a foundation
for developing a successful entrepreneurial
venture.

g-ffiY. There is strong evidence that entrepreneurship and the entrepreneurial behavior
associated with it have significantly positive impacts on the stability and strength
of economies throughout the world. The
areas in which entrepreneurial firms contribute the most are innovation and job

creation. Entrepreneurial behavior also

has a dramatic impact on society. It's easy
to think of new products and services that
have helped make our lives easier, that
have made us more productive at work,
that have improved our health, and that
have entertained us in new ways. In addition, entrepreneurial firms have a positive
impact on the effectiveness of larger firms.
There are many entrepreneurial firms that
have built their entire business models

ar3]dBr{c slt{} uI peqlrcsep 3rE }Bq} s3}B}s

pelgn eql u1 srneuorda-r1ua go dnsqeru
clqde-rForuep eql o1 saFueqc ar{l ere }ErI/v\ .TZ,-I
aplro/K er{} }noqFno-rq1
sellalcos pue selruouoce uo e/\Brl dlqs:nau
-e:de4ue seop slceJJe leqla'p-rauaF u1 .OZ-T
uolliluls ap aallDaJe ruJe]
eql l(q LrBOru reladurnqcg qdasof p1p ]BrI1!\ .6I-I
asJnauerde-r1ua reFunod o1 pasoddo
se sJneua-rdarlua Jeplo JoABJ sJolceJ ]rUK .8I-I
asrneue:darlua lsoru ;o dllsuado-rd Fup1e1
-{sIJ er{} ezge}ceJer.Ic nod ppolr /v\oH .LT-I
1,sPed eH] Fuorue dlqsuolleleJ
aI{} sI }Bq/y\ pue sseco;d pgneuerde;1ua
.9I -I
eq] Jo sged e^ncullslp rnoJ eql ere ]BrU!\
eeperu 1ou 'uJoq oJB sJneuarda-4ue 1Bq1

qdur eq] slTunqep ]Bql ecueplae erp sI ]Ertry!\ .9I-I

l,dlqsrnauerda-r1ue

yo

sqlur uoruruoc oAIJ ern eJE ]Erl!\ 'vt-r

asJneuo-rderlua
JoJ cllslJelceJeqc luelrodurl uB rlcns 1I
se{Bru }Br{} *.,{11ceue},, }noqB }I sI }Brl\\

.TI-I

asJnouerde-r1ua

InJsseccns Jo cllsgelceJertrc luepodurl

uE sncoJ Jeruolsnc/lcnpord e s1 dqlq
l,ssecord IBIJnsu

- e-rde-r1ue er{} q}p(\ elqlleduroc dlrelncpred

]I se{eru }Bq} uorssed }noqe }I sI }Er{r!\

'7,r-l

.II-I

asJnoue:da-que InJsseccns Jo cllsuel

u qcns uoISSBd s1 dqlq 'OI-I
-cBJEr{c
luepodul
asJneue:darlua
InJSSacCns Jo scllslJelcEJBqc puE
sllBr] ,fteugd rnoJ eq] arE ]BrL!\ '6-I
adqm prre dluoruruoc ]soru
uerrlF sI euo qcpl/v\'sJneuaJda4ue aruoc
-eq eldoed suosee: d.retugd eerql or{} JO '8-I
esJneuerde-r1ua eruoceq
aldoad suospeJ d.reugd eorql eql ere leq/$. 'L-I
l,dlqsrneuarde-r1ue
elerofuoc Jo slelel qFU ansrnd ]Er{} sruJIJ
Jo selnqu]]E ulEru eerql eq] erB lBq/y\ '9-I
auler{c }ueJne}se-r ro feur
e dq perrno lrreJnelseJ E Jo -reFeuetu 1e-re
-uaF eq] sE eole {oo} }sn[ or+vr euoeruos
ruo4 ]uereJJlp ]uBrnelser e peqcunel lsnl
oq/Y\ rneuerdsJlue uB sI sdern lEr{x\ uI '9-I
l,dlqsrneue;derlue sI ler{r!\'V-l
aseJnlue^ IBIJneu
-erderlue qlpn pelelcosse ernIIEJ Jo elEJ
eql lnoqB sn {\oqs ecuepl^e seop }Bq/!\ '8-I
1,d1qs:neuerderlue lnoqe sn epyrord
dpnls
eql seop s1qF.rsu1 l(e>1 1eq11 '2,-I
Shlg5
aetun Je^o epls
-qns 11l/lr padde s11 {uF{} nod op Jo 'pIJolK
aq] lnoqFno-rq1 Fupeerds enulluoc [I/y\
dlqs-rneua:de:1ue ]Brn a1ed1c11ue nod og 'I-I

suollseno /l{rel^eu
8r'enlB^
gz ,]uele FuI.reFFI4
8I'srurlJ alnlnsqns-dreps

Zf

'sncoJ Jeruolsnc/1cnpo-rd

6 'sseulsnq JIer{} :o; uolssed

9I 'sJe{} >ISIJ e}EJepou

8I 'srurg eldlsayq
itG1u.ollP-Aouul

GI'ecueFq1e1u1 uollncexe
g 'd1qs-rneuardaJlue

2'dllsuelul IelJneuardarlue
8I'sruJIJ Iegneuardarlue
GG' Iuollcru]s3p e^IlEeJc
2'dlqsrneua-rdeJlue elerofuoc
96 'ue1d sseulsnq
9Z 'Ieporu sseulsnq

srurel dex
'sBepl ssaulsnq InJssoccns Fuldolarrap
'rnaua:deJlue up eruoceq ol Fulplcep ere
't'I arnF-rd uI pe:n1cyd 'sseco-rd [Bl-rneu
-e:de:1ue aql Jo slueruole ]cr4]slp JnoJ or{J

's:eldeqc FulupeueJ s.{ooq

eq] uI sluaruelo eseq] eurruexe d11n;arec

e.{y\ '}InseJ E sV 'ssoccns lel.rnauarda4ue
uI elor tBcIlUr e sdeld slueruale esorp Jo
qceg 'urIJ [Blrneuarda4ue LrE FuynorF
prre FulFeueur pue 'srJIJ Iepnauerde4ue
uB Fu1qs11qe1sa ol BepI rre ruo{ Funou
6Z

dtHSUn3NlHdtHtNtOJ.NOICnOOHrNI

.g#T

'sseuelllcoJJe pue dcuelc

-UJe rlaq] esBercul srurlJ reF-re1 dlaq ]eq]
secllras pue slcnpord Fulcnpo-rd punore
LHSIdVHC

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

Application Ouestions
l-22. After rereading the opening case, identi$z
all of the effective or smart moves Zac
Schau and his co-founders made in the
early days of building Pure Fix Cycles.
L-23. Assume tJlat you are the dean of a business
school and that you are interested in more
entrepreneurship courses being offered
in your school. Surprisingly to you, some
professors are resisting the idea of offering
these courses on the basis of their view that
entrepreneurship is a skill that can only be
learned through experience. Using materials in this chapter, make an argument that
entrepreneurship can be taught.
l-24. Jose Reyes is a computer science student
in his last semester. He just completed a
class on how to build smartphone apps.
The last day of class, Jose's professor
pulled him aside and told him that he has
excellent aptitude for building smartphone
apps and that he should pursue doing so
instead of taking a job 'nrith an existing
company following graduation. Jose really
respects his professor and is now thinking
about doing what he recommended. He
is confident that he can build successful
smartphone apps and has thou$ht previously about being an entrepreneur. The
downside is that he isn't especially passionate about building smartphone apps.
If Jose asked you for advice, what would
you tell him to do?
L-25. One question that is often asked by
people thinking about launching an entrepreneurial venture is "what should

first-time entrepreneurs know before they

launch?" Based on information featured
in Chapter 1, what should entrepreneurs
know before they commit to launching
their firm?
L-26. Assume you have a friend who is thinking
about starting a business to sell jewelry
that she has been making only for friends
for several years. She is coming to talk to
you because she knows that you are pursing a degree in entrepreneurship. Your
friend says, "I am worried that I may lack
the skitls to effectively operate a business
if I decide to establish one." Given your
knowledge of "execution intelli$ence" as
discussed in this chapter, what advice
would you give to your friend about how
to successfully operate a firm on an ongoing basis?
friend of yours with whom you went to
.
A
L-27
high school and now university as well is
tatking to you about his interest in becoming an entrepreneur. In a way, this does
not surprise you in that Jackson, your
friend, has always wanted to be his own
boss. However, in discussing his interest
to start his own real-estate flrm, Jackson
tells you that a substantial income is the
primary reason he is thinking about becoming an entrepreneur. He asks you if
wanting to earn a significant amount of
money isn't the main reason most if not all
entrepreneurs start their firms. In light of
information included in this chapter, how
would you respond to Jackson's question?

'sls
o]
olqlldocsns
tsor.u oL.ll orB plo
'r.l]eop olqrssod puE
srBo^ I L ueL{} ssol so}olrl}E
^|lecr6e[fuolerrdse;'6ur;;enns
'o6prxep ureJq ]ueuetlrod'ern;re1
urerq prder osnec uec pue rour.u [;enr1e1er eq Aeuu iv\olq
puocos or.,lf 'A olq puocos P surBlsns ololrllB eL,|l J! rncco
uec Llcn.ln '(SlS) eurolpuAs lcedur puoces Ourcueuedxe
1o {lrlrqrssod eq1 sr uorssnouoc e Ouuegns re;re [e;d o1
Ournurluoc ololrlle ue ur rce1 6rq eq1 'OurqcuoJn -Upoq

sr suorssncuoc peleler-yods Jo lcedurr ;er1ue1od

ot,ll_

'eure6 e uor1 penouor oq o] luen l,uop {eql esneceq

ppeq aq] ol /v\olq e 1o {luenos oq} Aeldumop {;1en1ce ;lrnn

sololrlle seurleuos 'uJocuoc osnec o1 q6nouo oro^es

U Jr A ou>l o] preq osle sr 1r 'luered ro r.lceoc e

sel

"Sxpax*guars*ffi& ;Je&BEeq& o sJss{*ffig pmmdcc,cg

sJoA SuB

1,no{ {1st1es

]eqM auorsrcop 6urpun; rno{

poruosqo sr peoLl or-ll o] Molq B ueqM 'funlur Jor.lunl roi

lsu lB ere {eq1 1eq1 Ournnoul }noL,lltnn DutAeld enutluoc
puB pBeq oql o] /v\olq E o^rocoj uouo sololl{le '1;nse; e
sV 'olqelcolop ro lue.redde slennle lou sr uotssncuoc
e 'ure;ds replnoLls e ro JEol lueure6rg e olrlun lELl+ sl
suorssncuoc L1lrm uelqord V'uorssncuoc B ur s]lnser leql
peoq oql o+ /\Aolq e Ournrece; sr sluedrcryed spods 1o sJpoJ

1se66rq oL,l] lo eug 'reet{ qcpo syods ruee] pezrue6ro

Aeld suecrJeuv uorlpl gg L {leleuttxorddy :tlclld

'uorssncuoc e posnpc enel,l Aeu il leql

q6noue 6uor1s peol,l eq] ol /\Aolq e ponrocor spt,l ololqle

uoql ezru6oce; sluered pue 's;etctgo 's;euteJ+ orloltlle
e oleorC :eapl sseulsng
uE

'seqceoc sdleq leq] ocr^op

^q

Sx6Nrll6 #$s}iffi :&#sq##ffisg o ra*#*"dx6uxwm*x*m*q'seffiee

a,1ou {qnn rc {qnn 4{ueduroc slr.l} punl no[ plnonn

'elsqenn s,{ueduroc oL.l} uo pue qclrd oLl} ul peprnord
uorleruiolur eq11sn[uo uorsrcop rnoA oleu o] peLl noA 1 '67*-l

plnon

6ur>1eur

eJoloq slopunol s,r.uJrl oql ISE no{ p;nonn suorlsenb

leldeqc slL,ll ul poronoc lprJoletu or-,ll uo poseg
+eq/v\

slr puolxo

'gz-l

'seoJe
rolllo
ol lopotu ssoursnq pue uro11eld
lnq sseul4 uo pesnoo; [;luernc

orll

'o}rs sU uo ece;d se)E} }eL,l} uor}cpsueJ}

6uu1e1

{q [euour so)eu ollo6

:e#ffi *

o] suorssos leul q6norql unr osle orp pue socuorolor

pue suorlecuruoc Jeq+ ]no lcoL,lc o+ po]]o^ oJe sJeutej]
llv 'sA er^or ror.uolsnc pue 'uorlsnporlur oopr^ e 'suor1
-ecllluoo ssoullo^ pue qllEoq Jo lsll e 'olq e sopnlcu! ]eLll
eOBd e;r;ord e spq reureJl qcel 'olqelteAB erc Ieql uel,ll
pue {ep }eL{} olqelrpnp eJe }eq} sJourer} otll }o lsll e noA
eprnord llln olloM pup 'lnoryol or.,l+ e1r1 p,no{ {ep eq1
aleclpu! ueql no1 'orsop noA Ourugerl lo ed& eqt lceles
pue oUSqoA s,r.lu4 orl] o] oO no1 'slron ollo1171 A or.,l s.eJoH

o1 sueld seq

sr {ueduioc

fuene ,to e6eluecred

'enr; [eql eJeq^ ]o

sse;pre6er sJoquloln Ilrlue1 Jo spuerJ+ sE lnoIJoA otlrps
eql ul eledrcryed uec no[ '1;nse; B sV '(unurxeu enrl)
lnolrol dnor6;no{ ur epnlcu! noA e;doed et{t }celos upc
no1 'selnulur 09 pue oe uoon loq +sel sossel3 'sse;c red
ZL$ pue /$ ueennloq ]soc 'e;doed oAU oI dn epn;cut uec
r.lolrl/v\ 'sesse;c dnorg 'orull e 1e [nq noA slno>1;onn [ueur
A or.l uo ourpuedep ']no)ronn ;ed gz$ pup , L$ uoo^^loq
lsoc sesselc euo-uo-ouo 'eLu!+ Jo^o sselOord rno{ pue
slnolron .rno[ 1o IcBr] sdee>1 teq+ e6ed e;r;o.rd unno rnol
o^Br.l no{ ;;orue no[ ecug 'olqelre^e sp po]stl eneq Aeql
IELUv\ ueql reqlo eurl e ]e lnollon^ e olnpoqcs uec {eq1
Ir oes ol Jo suorlsenb ISE o+ 'sreure.,r1 o1 se6esseu lce;
-rp pues oslE uec no^ ,o'uoos urlr-l rllr^ uolssos loLllouE
Iooq o1 ueld ; '{seeqc 6ureq }noq}rn leuor}ent}or.u seAA
oH 'ruJol Ar.u dn Ougsseu ro 11 Ourop;ono l,usen t orns

eleu; o1 eAe osolc e ldel ]nq ou pe6ue;leqc oq uorssas

eq+ 6uUnO 'perederd pue ';euorsselo.rd fuen ';enlcund
{uuoc,, olll Ourqleuros }o s}srsuoc A ornoJ Jor.uo}snc
lecrdft V 'lxoluoc oeprn-6urrleoJls E ur op Aeql nnoq ees
senn

'qeqer/deroql pue 'sye lerueu

'ecuELU

-ropedTsyods '6ururerl leroue6 'scrqorep 'solelrd 'e6oA ur

elqelre^p sJourpJl leuosrad ser.,l olloM

suorssos

roJJo +Br.ll

'lno UoA no{;ene;oqn lo otuool

lo}oL.l 'ecr;rro

'euoq lno{

Jo Uo1ruoc ot,l] ruor; +nq ecueuedxo pozrleuosred 'enrlce

-Jolu! orues oql enpl,l no1 '6urpes dnor6 p ur ro srseq ouo

-ol-ouo e uo olqElre^e oJe slno)JoM 'lnolro^ e lcnpuoc

ol ourluo Jourer+ ;euosred E L1llA loeu o+ ssecce louralul
pue erouJec qoM e qlln euo{ue smolle }eq} uo}}eld
ll 'ruolqoJd slrl+ o^los o1 peu6rsop sp^ olleM

ourluo uE sr

'IOOA o1IOAA uOrJ Soue^ elnpoqCs lo^eJl

ileL{} +l {pelncryed [lluenborl lo^er] oqnn e;doed ro11;nc;grp
oJor.u uono sr rourerl leuosred e qlln 6ur1eey11 'olqelre^e st

roureJl orll uor.,ln UAO e le Jourerl ;euosred e loolu o1 otutl

or.l] o^Erl l,uop uogo pue {snq ere egdoed teql sg uelqord
oql '{ygrqelunocce pue '}cpqpeo} 'uorlenrlour eprnord
o] lnq slnolron JroLll peol pue ueld {1uo 1ou o1 leuretl
leuos.red e Our6ebue ur pelsorolur ore eldoed {uey11 :rlclld
.SUOISSOS

Dututerl dnor6 Jo ouo-uo-ouo ur eledrcryed pue 'oeprn

onrlcerolu! 'on!l prn sJourerl;euosred qUA lcouuoc ol eldoed
olle 1eull urogeld ouquo ue eleoiC :eepl sseulsnE
sA

#$t#ffisJw#&\& :i*&&$qh * #$$effi :4#{}q**ffi5$ * {&$**'*$$#ffi'eeffiffi :Q#ffi *

dIHSUN]NfUd]UIN] OI- NOIICNCOUINI

Le

UfIdVHC

32

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

Brain Sentry was founded to make it easier to detect

sports-related concussions. The company makes an unobtrusive helmet-mounted device that signals an alert
when an athlete suffers a rapid and potentially dangerous acceleration to the head. The sensor is placed at the
base of the rear of the helmet. ln the event of a big acceleration to the head, a bright red LED light illuminates and
blinks every three seconds. Once the sensor flashes a red
light, the player should be taken off the field and examined for the possibility of a head injury prior to returning
to play. lf the player is cleared to play, the coach or other
designated adult simply resets the sensor to turn off the
blinking light. The sensor keeps track of how many times
it has been activated. lf, within 30 days of the first alert,
a second big impact is detected, the red light will flash

quickly twice every three seconds. The sensor detects

approximately 2 percent of the hardest hits, so it does
not significantly affect the flow of the game. The sensor
is light (one ounce), fully sealed, and is waterproof. lt runs

on a battery that doesn't need to be recharged during

the course of a regular sports season. The Brain Sentry

monitor costs approximately $50 per helmet. lt has to be

replaced each season.
Brain Sentry is initially targeting football, hockey, and lacrosse, the three most popular helmeted sports. lt is also
developing sensors for biking, alpine, and other helmeted
activities. The company has gained some.early traction.
ln 2013, the Louisiana State University football team used
Brain Sentry-equipped helmets during practices and
scrimmages, and the Arena Football League is reportedly
adopting Brain Sentry for all its teams. The Brain Sentry
device was used by the Newcastle, Oklahoma, high
school football team during the 2013 season.
1-30. Based on the material covered in this chapter, what
questions would you ask the firm's founders before
making your funding decision? What answers would
satisfy you?
1-31. lf you had to make your decision on just the information
provided in the pitch and on the company's website,
would you fund this company? Why or why not?

CASE 1.1
GoPro:

.H,

Classic Entrepreneurial Tale

" Web: www.gopre,com

Facebook: GoPro

Twitter: @GaPro

Bruce R. Barringer, Oklahoma State University

R. Duane lreland, Texas A&M University
Entroductiom
GoPro sells a line of wearable, mountable, and reasonably affordable HD video cameras. Although they're
now used for a variety of purposes, they were orginally
designed for extreme sports enthusiasts, such as surfers and snow skiers, who wanted to shoot videos of
their activities. About two inches wide, the cameras look
like tiny gray boxes. Despite their size, they're packed
with amazing capabilities. They can be mounted almost
anywhere and shoot video that was previously impossible to get. lf you've never seen what a GoPro camera
can do, set this case aside for a few minutes and go to
YouTube on your computer or smartphone. Type in the
search box "Flying eagle point of view #'1." The video
was shot by a GoPro camera mounted on the back
of an eagle. You get to see what the eagle sees flying
through a beautiful mountain canyon. The video has
been viewed almost 8 million times.
GoPro (technically Woodman Labs) is an enormously successful company. Currently, the firm is generating over $500 million in annual sales, and its cameras
have become the gold standard for self-documenting
extreme sports experiences. But it wasn't always this
way. GoPro started with a single entrepreneur, working
out of his parent's house, who was passionate about
a specific idea. lt's a good story-one from which any

student of entrepreneurship can learn and find takeaways that they can apply to their own start-up idea.

f{iek Woodman
GoPro was started by Nick Woodman, who gew up in
northern California. ln high school, he played football
and baseball before becoming infatuated with suding.
For college, he picked the University of California, San
Diego, because of its proximity to the beach. Woodman
knew early on that he wanted to be an entrepreneur.
Before starting GoPro, he had two start-ups, both of
which failed. The first, a website called EmpowerAll.
com, tried to sell electronic products for no more than
a $2 markup. lt barely got off the ground. The second
start-up, Funbug, was a game and marketing platform
that gave users the chance to win cash prizes. lt was
launched in '1999, the height of the dot-com bubble,
and raised $3.9 million in funding. The company failed
ayear later, never having gained traction.
Woodman was shaken by the failure of Funbug,
and he decided to take some time off. He traveled to
Australia and lndonesia to surf, thinking that when he
returned he would find a normal job. lt was in Australia
that the idea for GoPro first emerged. Woodman had
brought a makeshift strap that he used to tether a Kodak
disposable camera to his wrist so he could photograph

(penu4uoc)
o
o
J
D

a
N

o
o

U'
J

o
f,
o

1
o-'

0l
(o

o
It

'slrPJl utElunou
6urDuel;eqc 6urpuecsep

pue 6u;puocse llesun,J

pJocoJ o1 'peeqelol sL.l uo

pelunou 'Bloruec oldoe e

6ursn s! oH lo)lr.l utelunou
e sr ueu 6uno[ s;q1

roUV 'peueddeq

leelq

s6u;yodg s,),lcl6 pup

6gq

s,ol6oe '0 LgZ ul 'spooe

lfu olu! o)orq ordoe [11en1uen3

'serlrnrlce s,oJdoe uo uot.ll Ourlepdn qluotu E ecuo lteu

-o uB ueql 6u;pues sel or-l '1urod ouo 1V'uteqc spoo6
Ouryods pup slooplno up 'lfH le sentlncoxe 6ur6e6ue
peyels upr.upoog tolleleJ tofeu B pelplloued ]eA +,uper-4
1r 'serols spoo6 s6ugyods pue sdoqs pns olu! 6urpe6
sBA oJdog q6noqllv'splor"uec uAAo sl! Oupnlcplnueu
sBA oJdoe 'eu!+ slLll Ig 'slolletu sctuoJlcolo Jeruns
llp u! smoL,ls opell 6urpue11e

-uoc pup syods uotlcp

poupls puE uotst^

or.,ll

stLl pouopBoJq oslB

uer!pooM

'so^losruor-{t }B
lcpq ueq} }u!od plnoc
eldoed os seJotuec slt JoI slunou olptu plnon oldoe
'lueuou ;euorletldsut ue o+ pel ler.ll lenup ot,ll lo luoJl ut
sr r.,lcrrln leq 11ol s,lec or.lt oI tuec lsum oJdoe e peddells
oq 'LlcunLl E uO 'eluJoltleC 'Eurouog ur [ennecBg uooul]ul
IE suosso; Ournup o1JlosrulL,l poleo;l eg '6urnup JEc
ooEJ ur Iso;olut up peL{ uerupooM '6uryns qlrnn 6uoy
'Ourlenouur dols l,uplp osle ueulpoog 'lun]uoruotu
1lrnq {nnols oldog 'seutl oelq} CAO uo percedde
ueupooM '9002 ul 'lcnpoJd etlt t\trcc ol ureLll ecutnuoc
o1 6urfu1fu1unoc eLll ssoJce sdoqs Ins peltstn puBO
pue uerupooll rceA lsJll slt OOO'Oge$ pessol6 oldoe

p,eLl A eul os 'u6rsep e;euec u1 eslyedxe ou pprl oH

rolem u! uA op leolq l,uplnon pue 'e;os no[ eletu ],uplp
'leenns noA eleu ],uplp l! os 'cpqe11ce1-led pue sseulq6ll
+cefed oL,ll pul1 ol popoou oH 'ISBI {sBe ue l,usenn 1q6lr
derls eq1 Durpee 'suotlpcr;dde 1ue1ed 6u;pnn pue 'sletJol
-etu burle>1leru Ou;u6rsep 'scuqel Oullsel dolsuou poIJoAA
oLl

ereq^ 'EluJoltlpc 'oiepesod Jeou lsolo} poo^ poJ eql

ol poAoLU oL,l 's1ue;ed str.l LUoJJ {euou 6ur

ur e6epoc E

-A oroq JoUV '(suqep reqlo pue JoIEA LUoJI pJeLuec eLll

lcelord o1) s6ursec pue 'EJoLUpc e 'de;1s oL4l lo uotleulq
-r.uoc B +nq 'de;1s eq1{uo 1ou 6ur;;es o} ponlone 6ur1urq1
srH 'lsun s,lo1.tns e ol eJotuec e Ouueqlol lol olqEltBAE

sel

AJluelnc burqytue ueL.ll Jelleq

1eq1der1s e olerrr
plnoc oLl lpql ocuop4uoc peu;e6 eq 'eurqceu Ournnes
soruor.u srr,l pue slool Jo los pesrnotdtur ue 6urs6 'Og$ sE
Llcnu se JoJ etuloltlec ut lles ol olqe sEA pue 0g'z$.loi

prsouopul ur 1q6noq

oL1

slleq llor.ls-pue-ppoq 6u;1;es lseoc

BruJollleC eql uA op pue dn 6ur;enel1[euotu opeu oLl

'Jlosulq yoddns o1 '6nqung uo {euou ,sJo}senut stL4 }o

uorllil.u 6'eg Outsol LUoJI Oulyeus lltls 'otull srql dn-pels
srq derlslooq o+ poulutrelep sp^ eg 'sed{1o}o.rd 6u;pg;nq
peuels pue osnoq ,s1ue;ed slq olut penoul ueulpooM
alBS

sJeaA qur^oJs
rolnqulsrp eseuedep e ruo;J s1un OO L JoJ Joplo lsJU
sy 1oO oJdoe 'o6e;6 UES ut oqs Jollpleu syodg uotlcv
^
'nnoqs ]sJ!] oLl+ 1e peued
v00z or..ll oq ol lno peulnl qclL/M
-deq lnoqe rueoJp stopunol dn-ye1s lueuoul eqf 'ltncltc
A oqs oppJ] eql ]!q 'eue6 lloN 'eJlq lsJu pue elputuooJ stq
pue
uerupooM
'+cnpotd
s;q tol lollerrl oql lsel oI
'oJdoe uolleutquoc ell+ lpc o1
peprcep eg 'det1s elqeuolLuoc pue elqeJnp e pue 's6ur
B-poluel or.l lptll peq AlleurJ eH 'ButL,lC ut

-sec 'e.retuec

opeu

lopor.u Jeleutll!tu-ge ontsuedxeur uE uo pol]les eH

uE [uoJJ BJotuec E osuoctl o] oABL,l

re;nlcelnueu Oullsrxe

ee

drHSHnlNlHdSuJ_Nl ot-

No[cnoout_Nt

lsrlJ pue 6uldfiCI1o.l6

,.'Plotuec
IsUAA p oler.u ol ldecuoc eql qlrnn dn euloc loneu oABq
plno^ I "' Ourpns JoJ uotssed [u pe^ ollo] (l,upeq) l]l
pg '(du1oL{}) il 1o enrpoddns fuen 6ureq }ou s}uored {ur
Jeqtleuo) 1,,'otJgze6er.u seg.loJ plol uptupooM 'dp1 eq1
uo Durlcepel le1e; sJEe 'eurll llnl serouec JoJ dells lsun
e Ouru6rsep to Bopl oql ons;nd o1 peprcep oq 'elu.ro1r;eg
oI peuJnlel eq uoL.lM 'dul eq+ 6u;lnp su6rsep detls 1ue
-reJJlp qlrn pelueupedxe ueupooM'JEoA o1 q6noue
elqeuolr.uoc eq lllls puB 'senp^ uEoco lo Jeol pue JEoA
eq] o)e] o1 q6noue elqprnp spl +EL4l detls p sen popeeu
oL1 ler.,l7171 'llo^ Iro^ +,uplp 11 'burpns sJoqlo pue Jlesutq

r u]l-dvHc

g4

pARr

1I

DECtstoN To BEcoME AN ENTREPRENEUR

reaching out to Best Buy repeatedly with no luck, Best

Buy approached GoPro. After beating sales targets in
several test stores, GoPro's cameras were placed in all
Best Buy locations. GoPro also got a little lucky. The
Flip camera was a big seller for Best Buy, but its appeal

evaporated when smartphones obtained video capability. ln 2011, the Flip camera was pulled from Best Buy's
shelves. That left a void in Best Buy's camera line that
GoPro was able to fill.
As is the case for most start-up ventures, GoPro
has had some scary moments.ln 2007, revenue was in
the low seven figures and Woodman was concerned.
He wondered if GoPro would grow beyond its extreme
sports niche, and considered turning the company
over to a group of outside investors. The financial crisis
of 2008 prevented that from happening, and GoPro
moved on.

The lnfluence of Social Media

A fascinating part of the GoPro story is the influence of social media on the firm's success. From the

beginning, extreme sports enthusiasts who bought

GoPro cameras posted their videos. Many went viral
and posted millions of views. This situation created
the best possible scenario for GoPro. lts brand was
being promoted not by the firm itself, but by its users. Piggybacking on its users' appetite for stunning
videos, GoPro sponsored several well-known extreme
sports athletes, including American skateboarder and
snowboarder Shaun White. For a fun experience, go
to YouTube and type in "Shaun White GoPro." There
will be several videos. You can see exactly what Shaun
White sees when he tackles an X Games halfpipe
or a particularly difficult run, all captured by helmetmounted GoPro cameras. GoPro is also a littte edgy in
its sponsorships. When Felix Baumgartner set a skydiving record by jumping from the edge of space, he
wore five GoPro cameras on the way down.
To GoPro's credit, in part it has made its own luck
when it comes to social media. lts $300 cameras produce video that rivals that of professionally created
content, so it's fun to shoot and post. For instance,
Woodman and his team knew that to produce truly satisfying video the sound quality would have to be good.
Viewers would want to hear, for example, a snowboard
crunching through snow to get the full impact of a
thrilling descent. Wind noise rushing into a camera's
microphone is a problem in this type of setting and can
easily drown out everything else. By riding bikes that are
nearly silent, Woodman and his engineers were able to
record almost pure wind noise in a natural environment.

They then developed firmware that isolates the sound

of wind and eliminates distracting sound from GoPro
recordings.
As a result of all of this, GoPro says it has over 222
million views on its YouTube channel and 4.7 million
likes on Facebook.

The Hoad Ahead

Not everyone is widely optimistic about GoPro's future'
Maintaining its momentum may be tough. Major brands
such as Sony, Coleman, and Swann have started selling sports cameras that are similar to GoPro's. Other
tech heavyweights, such as Apple and Google, are
working on wearable devices with video and photo
capabilities. The wildcard is smartphones, and how
good their video capabilities will eventually become. lf
a smartphone will eventually be able to do everything
that a GoPro camera is able to do, that doesn't project
a bright future for GoPro, at least in its current form.
GoPro, of course, is aware of these challenges. ln
May 2011, Woodman broke his vow to never take outside funding and raised $88 million in a series A round.
The round involved several venture capital firms, some
with deep ties in the entertainment and technology
industries. Woodman says that the momey was raised
in part to build an experienced board of directors to
help GoPro navigate the future. As for the money itself, Woodman has remained mum about how it will be
used. That causes one to speculate that GoPro may
have future generations of products in its pipeline'

Discussion Questions
1-32. Which of the characteristics of a successful
entrepreneur, discussed in the chapter, do you see

in Nick Woodman? To what degree do you think

these characteristics have contributed to GoPro's
success?
1-33. How does GoPro's basic business idea "add value" in
the lives of its customers?
1-34. How do Nick Woodman's entrepreneurial actions debunk the myth that most entrepreneurs are motivated
by money?
1-35. What are the most significant challenges GoPro faces
in the future? Do you think GoPro will able to meet
the challenges or do you think the company's future
is in doubt? Explain your answer.
Sources; L. Chapman, "Extreme Sports Gets a Camera," The Wall
Streef Journal, 87, June 20,2013; R. Mac, "The Mad Billionaire
Behind GoPro:The World's Hottest Camera Company," Forbes,
March 25,2013; T. Foster, "The GoPro Army," /nc., January 26,2012.

(penu4uoc)

uoElsnpoJlul

tuotl;sodoJd anlPn

'suorsrcop lcnpo.rd rloL,ll1o slcedse lle olut ,,1uer1ed

ol,l] Jo ecron,, ol-,ll JolcEJ ol tuor.l] olqeuo o1 serueduloc
lecrpau ol serlrunuuroc luerled ourluo sU tuo;l stcolloc
ll leLll elpp pole6ei66e llos ol sr re^up onuonor fueurr.rd
slr ']ceJ u1 'fu1snpur lecrpour eL,ll 'lsure6e ueql ror.,llel
'tl+l/v\ Ourlronn sr oy\o)rlsluorled ';eo6 leql olelrllcEJ of
'orec luerled pue sluorled lnoqe sIUlq] fulsnpur 1ec
-!pour orl] ]Er..l] {enn eq1 e6ueqc o1 sr s;eo6 s1r 1o euo
letl] ul '{ueduloc ploq E osle sr ot/\olrls}uor}ed 'uor.,l}
ro1 ln16urueotu fuen ele 1eq1 sAenn ur ]cerolur o+ sluat]
-ed se6ernocuo lerll [!Jo]]eld e-uorlrsodord enlen
enbrun I;nr1 e sr ssoccns s,ol4oxrlsluorled Jo Upor-,1 ot.ll
lV 'suorypuoc 009 JoAo ol ]cedser Lllr^ socuauedxe
Jlorjl Duueqs sluerled lo spuesnoql lo sporpunLl seLl
nnou [ueduoc or..l] '1;nse.r e sV'o1s orl] urol uec uol]lp
-uoc lecrporu {ue qlrnn luerled {uy 'sseccns olqerypru
-oJ po^orqce seq oNolrlsluorled 'Llcunel su ocurs
'sesposrp r!oL,l] qlrnn edoc Jopoq ureql dleq
ler.ll roqlo L,loeo uror1 senbruqcol ureol pue 'secueued
-xo roL1] oJeqs leqloue ouo r.lUA osronuoc ol soseosrp
6utOueqc-olll r.{}l/v\ eldoed s^ olle }eul} [ueduoc pospq
-qoM E 'oy\olrlsluorled pel1ounel pue dels leuorlrppe
uP Ioo] uo8 ror..llorq s!L,l pue orruEr '9002 ul 'suo#o
L{creosoJ Jo requnu e syoddns pue pe#e}s pue popun}
llon sureuer 1r '{epo1 'SlV 1q6r1 sreq}o pue ueqdelg
dleq o1 'uorlepunol lueurdolano6 {deteql SIV orj}
pollec uorlezrup6ro ue poL.lcunel poom{eg oruef '666 L
ul 'senrl s,poonnAeH uog pue oruef Io uorlcorp orll
pe6ueqc {lpunolord elqelrene uego s,}el{l uor}euro1
-u! ]o lcel oL,l+ pue opeu eq ol o^Pr,] leql suorstcop
elll puel1lsrrl 6urcueuedxe pue ospeslp slr..l 1o se6uel
-leqc {ep-o1-Aep oq} L,l}r^^ leop ueqdelg 6urdleg
roureM ueqlEuol.
roqlne Duruurnn-ezr)d )ozltlnd
Tedeey sJotlJoJg stH
'looq e pue 'Jse! oS Llcnry og ^q
'ernou; lecrqdet6otqolne
ue q6norql poroqLuor.r;oJ eq s{enn;e ;;rnn Ieulnol snoe6
-ernoc sll-l lnq 'SlV ol poqunccns {;;enluene ueqdelg
'ornc e pensrnd pue ospes!p slr.,l 1q6nol Ilpe66op
oLl se oprs su-,; [q pools 'ueg pue otuef 'slor.l]oJq
srH 'oseosrp s,6uqoC nol lo '(SlV) stsorolos leJolel
crqdorlo{ue L,IUA pesou6erp se^ oH 'sA ou e;qrssod
lsron^ eq] ]oD 'EturoltleC ut osnoL,l Lupolp srq Ourplrnq
sel^ or.,l^ ;eluedrec p1o-ree{-97 6uol1s e 'poonn{eg
ueqdelg '866 L u; 'fuo1s Ourulennlleeq 1e{ pes E s,}l

Lllleoq pue {;rr.uel }o ololc }q6l} p o} pou4uoc ldey eq

plnoLls pue olenud st uorleluJolut lectpotu s,uos;ed e ]Btl]
sr 6ur1urql lpuorluonuoc leq+ ul 'lcedxe ILlOluJ no[ leqnn
1o elrsoddo otl] sr uorlrsodord enlen s,oy\oxtlsluotlpd

eu opeu

Edopo^ol-edoprqreC 6ut)et pouels lsrll

uoqM,, leql olrlord req uo peyodol oAEl-,; Apul ,,'g fuey11,,

peueu ouootuos 's1uer1ed oseostp s,uosutlled o]
poqrJcsoJd {;uor-uluoc 6nlp e sl edoponel-edoplqleC
'e;durexe Jol 'socuel;edxe lreql 6urpte6el lor.,llo
Llcea qlrnn [l1ceJrp ]cela]ut osle upo sloquol4 'oos o]
snorxue ere 6nrp p poqt;cse.rd ueeq 1sn[ eneq oqnn
eldoed 1el,ll uorleturoJut sl slr.,ll 'qUoI os pue 'enr1ce1
-Je uooq seq 6ntp or.l] lao] [eq1teq1ol1n 'uooq aAEq
slcogo oprs or,lt leq/v\ '6nrp oL,l+ uo uooq en,[eq1 6uo;
nnoq 6urpnlcur 'elduexe lol 'On;p le;ncrped e qlrnn 6ut
-neq er,{eq} socueuedxe eq} oleL,ls o} s}uot}ed smolle
11 :redeep sllup osle ll 'oos ol slol,llo pue sJoquor! sU
Jol tuJo1 e1e6er66e ur plep srql s{eldstp uoLlt 1 'so^tl
Jlorll Ourlcege ole soseostp ltol-,;] A oq pue 'uo el,{eq1
suorlpcrpeur'6urcueuedxe el,{eq1 suoldr-u[s eq]
]noqP sjoqruor.u slr r.uoJJ uorleulolut poltelop slcolloc

osle lnq suorlcerolu! lo sed{} osor.l} se1e1r;rce1 {;uo

]ou ll ]eq] ul enbrun st octnros s,oy\olrlsluotled

'leuorsselord ;ecrpeu e {q poJo^ sue 6ureq ueql

roqler srpoj pue suorlotuo ol.l+ llp spuelslopun A1nr1 oqnn
pup oseoslp or..l+ seq oqn ouoor.uos {q perennsue oq lltA
uorlsenb srqf ,,eolorll +oO I uec A^ot.l pue lo1 edoq uec
I

auoclno lsoq oLll

s,lpl-,lnn 'sn1e1s

{u uenr9,, :st r.lcn-,ln

'enpq sosposrp qlrnn eldoed leult uorlsenb euo-lequlnu

olll )se o] olqe oq oslB llr^ euo po^ol ro puoul JnoA
,,aoseosrp eql ,to Ued lseueos or.,ll s,leqM aop lou pue
op ol olqe eq I ll!/v\ leqM astee^ e Joue olll ll s,]eqM,,
')se oI olqe oq llr^ ouo po^ol Jo puou] lno^ 'oloru lo
's;ee[ g; 's;ee{ g 's;ee[ e Jo] oseostp s,uosuryed r.,l]l/vl
6urnr; uooq oneLl oqnn eldoed qlrnn ]celolut o+ olqe oq
llrA uosJod teqt '!oy\elrlsluotled uO teplosrp ;ecr6ogo.r
-nou E 'eseesrp s,uosurlred r.{}l/v\ pesou6erp uooq spq
lnoqe erec no{ ouooulos [eg 's1ton U A or.,l s,oloH
'sror-,llo
lo so^tl eql enolduJ! o+
uorletuloJur orpr1s o] Uo#o pue otut] puedxe o1 6ur1;rnn ele
1e{ [6reuo pue our] u^ o ltor.,l] ]o leep 1eel6 E ou;nsuoc
+Brll sossoullr o^eq sjoqruoLu sll lo lsoul IEr.l+ ul leuotlej
-rdsur s,ll 'sroqlo dleq o] socuouedxe leq+ orer.ls [luedo

eldoed lerll selpconpe oy\oltlsluotled 'sleprnold erec

l71sten1u2 WBV sexol 'puelell ouen6 'H

I41steap1 alpls euoqeryO le6uureg 'U ocnrg

auat$tslufled@ :Jaillit*

ap1lr,$lllsluo.rred :Xoaqacel o utac'tttaXilswafled'nnm :eafill

al,lltpH pue lroddng

aEueqcxt pur raqloug'aug qlyur lcauuoC ol saseasIq
snorros qll{n aldood sulrUroilH : al^[a}IlTsluoltrd

z'l fsvc
9e

d|HSUnlNludfuJ_Nl

ot No[cncoul_Nt I

u]t_dvHc

36

PART

1 I

DECISION TO BECOME AN ENTREPRENEUR

sleepy, but over time my body adjusted and I no longer

have that side effect." lf you've just been prescribed
Carbidopa-Levodopa, you can send a message to
Mary O. and ask her, "How sleepy did you get? Was it
so bad you couldn't go to work? How long did it take
before your body adjusted? Did you try caffeine? Did
it help?" Mary O. would then respond and answer the
questions. ln addition, as a result of this exchange, you
and Mary O. may start to regularly correspond, and
Mary O. may become for you an important source of
information and support.
What's remarkable about PatientslikeMe's value
proposition is that the information its members exchange and the manner in which it aggregates and
displays data aren't available anywhere else. The
degree to which its members are willing to be transparent about very personal health-related issues is
also compelling. Along with maintaining its website
and member communities, PatientsLikeMe has also
become an authoritative voice in the medical community. lt has published over 30 peer-reviewed research
studies. ln 2013, PatientslikeMe's vice president for
advocacy, Sally Okun, made a highly visible presentation at TEDMED about the idea of building a "patient
lexicon" to make it as easy for patients to talk about
their conditions and compare notes as it is for doctors. The eight-minute talk titled "Does Anyone in
Healthcare Want to Be Understood?" is available at
www.tedmed.com. Simply type "Sally Okun" into the
search bar.

Flevenue Driven
Although its services are free to users, PatientslikeMe
is a for-profit entrepreneurial venture. The company
makes money by aggregating the information its members share and selling it to its partners. lts partners
include members of the medical community such as
drug companies, medical-device companies, insurance
companies, and health care providers. For example,
the aggregate data of how patients with Parkinson's
disease are reacting to a particular medication would
be of interest to the company that makes that medication. The sharing of this information then circles
back and helps patients. For example, if the maker
of the Parkinson's drug finds that a large percentage
of people who take the drug experience fatigue, the
drug can potentially be tweaked to remedy that issue.
For patients, not experiencing fatigue as a side effect
of the drug may not only translate into feeling better,
but may mean fewer days missed from work or even
the ability to maintain a job rather than having to quit.
Because of these types of outcomes, most patients are
eager to have their personal data included in larger databases and passed along to companies in the medical industry. Finally, their experiences and their voices
become part of the data that medical companies study
when making decisions about patients and their care.
PatientslikeMe is very transparent about the fact that
it sells its patients' data, and it sees the sharing of
data as integral to its mission. lt does not share or sell

personally identifiable information without the explicit

consent of the member.
There are no ads or sponsorshiPs on
PatientsLikeMe's website. The company's sole intention is to align the interests of its members with the
medical community.
Chatrlenges Ahead

PatientslikeMe is expanding its reach. While its site

originally focused exclusively on life-threatening diseases, it now supports communities that focus on
issues such as infertility (for both men and women),
mood conditions (including depression), and hearing loss. Rapid growth is a challenge for all firms, and
PatientslikeMe is in a rapid-growth phase. ln fact, at
the time this case was written, PatientsLikeMe was
supporting communities for more than 500 conditions.
There are also several worries that surround a
service such as PatientsLikeMe. The company openly
acknowledges these worries but believes the benefits
outweigh the risks. One worry is that some employers may not want to employ people with a high-cost
or high-risk disease. Again, it's possible that some
people may reveal the existence of a disease on their
PatientslikeMe profiles that may jeopardize current or
future employment opportunities. Another worry is the
unknowns about changes to health care policies and
the overall health care system in the United States as a
result of the passage of the Affordable Care Act. How
changes brought about by that act will affect how information about patients is distributed and to whom is still
not entirely clear.
For now, PatientslikeMe is aggressively moving
forward. The company's overarching goal, along with
providing the value it currently provides, is to shift the

thinking of companies in the medical industry by providing them access to data they never had before. By better knowing the journey that patients are on, the hope is
that the medical community will increasingly go beyond
treating their patients' core diseases and create products that will impact all aspects-physical, social, and
mental-of their lives.

Discussion Questions
1-36. Of the three reasons articulated in Chapterl that
movitate people to start businesses, which of the
three reasons was the primary motivation behind
Jamie and Ben Heywood's decision to launch
PatientsLikeMe?

1-37. How do those who are leading PatientslikeMe practice "execution intelligence?"
1-38. What type of start-up firm is PatientslikeMe?
Sources; PatientsLikeMe website, www. patientsli keme.com
(accessed March 14, 2014); J. Comstock, "PatientslikeMe Has
200K Users, Calls for New Lexicon," mobihealthnews, April 17,
2O13, available at http://mobihealthnews.com/21 671 /patientslikeme-has-200k-users-calls-for-new-lexicon/ (accessed March 1 5,
2O14); R. Bradley, "Rethinking Health Care with PatientslikeMe,"
Fortune, April 1 5, 201 3.

JoI Br{eg IelJneueJderlug,, 'n/!\ 'H-'C pue

'sJe>Ieuuefl\ 'S 'JeUBd 'X 'S 'Fuop ep '1, 'd 'I' 'gg
6TV-qOV :(tIOZ) Z, 'otu'Lt a4lcD-d

puo fuoaqa dp4s tnauatda4ug

qceJ-qFIH go dpnlg

..'

dlqsJneue-rderlug
:dleurocslq peseg

-r{cJBaS pue p11deC uerunH,, '1ezlretr41 'U

'Lt

JuauDdouoyl

'hl '?g

'8r8-06Z :(rr0Z) 6'ou

TDuJnof ..'ecrretrrJoJJed eJnlue1

pue 'dFelBrls e^Elcug cuqlg eq] 's;neuerderlug

luBJFIuuL, 'ruelJd ',I 'u pue JoJopN 'V 'H 'gg
'ogz-rgG
(t I OU ) Z, 'ou 'gG duunluaA ssaulsr.q {o laurnof
,,es euroclno lueJeJJIC[ ecuelJedxg srneue.rde4ug
oIEI I prre elerued oCI :sseccns legneueJda4ug
poddns pue ]ueuqclrug sseulsng-o1-zfiIrued
Fup1u11,, 'uolselppg 'V'y prre Ilerrod 'N 'C '28

e^Ilcv se dlqsrneuerde-4ug Ipuollezlrtefi tg,,

'TUBIAI 'I pue 'dtreq 'g 'uossefuno3 'CI 'gI

'VqZ-LIZ tfuIOd Z, 'ou 'gt a4lcDrd puD

fuoaqa dpqstnauatda4ug .,'.ry\eIAeU cp{euy-E}el I
V :suonualul leuneue-rderlug ptre uollecnpg
dlqsrneua-rda4ug ueeraleg dlqsuolleletl eI{J,,

']eL{ 'O '1, pue 'oEII I 'C 'UBIO 'S 'eBg '1, 'I 'gI
'relltl elppes reddn)
o 0uyyolg lnoqvL7nrJ aqa 'rcBugJeg 'A 'Vl

'(OOOZ 'serulJ IBIcueuId :1'N

ssar.4sng

'

@tOZ'g

r{crBIA[ pessecce)

uols o g ) lla O ol

p o o m 6p

a1y4

'Ig

tuo; { rynt J,s rautn suo C

fo Touno p,,' sJepunod

..'

''l

'LZ,

'

eu4l :{ro1

raaN)

filtutdttl

fryttr

6u7su7

'8I

'uosuerg 'U 'ZI

'sserd u['VIOZ
6u1tn7u all

s sau?

sn g'

{o

1ouno p

1eop ernlue1Jo eIoU Fullerepory

..'

}Lreur}Fuuro C

eql

:d11sue1u1

UoJJg elgneuerde-r1ug pue dllgqepren sserFo-rg

pe^IecJed,, 'seIU 'tI pue 'ood 'C[-'I I'dn'V'ru

L lpuJno

dpqs tnauatda4ug

'II

'08r-69r :(8roz) t'ou

46a1o4g

..'

selurouocg

FulF-raurg uI ,tFalerls ptre dlqs.rneue;de4ug,,

']qFM'W pue 'IS 'S 'AeqclolBl-r.{ 'I 'uo}rug 'C 'C 'OI
'9rG-602, :@tOZ)
Z, 'or-r 'gt a4lca-d puo fuoaqa dn4stnauatda4ug
,.' dlqsJneuerdarlug peseg-ecueppg yo ecueF-reurg
erIJ,, 'punp[-r yr prrE 'neessnotl 'w 'c 'eseJd 'trN '6
'78r-69r tftroz)
I'ou' 8g a4lcoJd puo fuoaqa dnqstnauatda4ug
*'uollellely dpazrod pue selllunpoddg
'g '1- prrB zeJBAlV 'V'S '8
'r r6-668 t(troz) ?

IelJnauaJderlug,, 'deu.reg

pe se g - eJnsler-I

'gZg-0It tfutod Z 'ou'67

6u1tn1ua11

ssauJ sn g' {o 1ouno p,,' s oI}IAI}oV Fuldderls}oo g

Jo secrod FutztuO se p11de3 IEIcoS prre rrerunH

ug puodag,,']-reF1uelAtr
''I 'uuerrr{culJg '1, '{uqcIJC 'CI '9

:d11crecg IelueruuoJl

'vIoz'9

cB' uroc' saellJelulsseulsng

'vloz'I

'S pue 'I{FUIS

uroc' seFedellq/y\
'gZ,

'OV s4utouocg-olcog

'rg-vzr :(r roz) z'ou

Toumop ,.'druouocg ]o{JBI I

B o] uotllsuerJ Fugnq s-rneue-rdeJlug Fuoury

sepnlmv {sRI pue'dcecIJJg-JIeS'uoI}BAI}oIAL,
'o{cBtrN 'V puB '}EJntuoC 'V 'e[SeIC 'p 'eqzsz(1 '; '9
'90r-88
'ou '66 6u1tn1uay ssauts'ng{o lournof

'ZZ,

qcrBIAI pesseccE

11'raltM ..'pBetl o} uroog,, 'e1pedr,r117y1 '16

.OTOZ ,OZ,

'O7,

d.renuep 'saq1od..'>IooJ JeAg d.ql >ISRI ]seleeJC

eqJ :seJnlcId uL, 'uBJeuuld 'y u! .'plJot!\ eql
aFueq3 o] ]JosorcIIN Fupree-I Jo ror{}nv pue peeU
tuoou Jo Jepunog '87 'poo1v\ ul{of',, 'poo/!\ '?
o1

uroc'qcunel

-oqd\serpBl'/y\rruyr 'eFed eluoq qcunB'I oLIIK selpe'I

'(O6Of 'reured\

o1

'lgZ,-ZtZ t{VTOd Z 'ou '6G dutrnluaA ssautsng

.,'sJeIJJEg clylcedg-rtrlsnpuJ pue rftlug

p lounop

dlqsrneue-rde-r1ug :sJeqlo uer{J sJerLKO sseulsng

-IIBurS eruoceg o1{a>111 arolN e1doe6 etuos erv
dq/11,, 'Ja{JBd 'C 'S prre 'se}Bg 'J'uro4sJo'] 'ru

'maN wDrg 'uqeoy 'o8

'(1OOZ 'sserd Iooqcs sseulsng prB^rBH
:

paurog stnauatdatlug moH :maN pupJg 'uqeoy 'N '62

'9OOZ 'gI IudV pessecce 'ruoc'qcunel
-oqlrr\selpel'ry\ rly\ 'eFed etuoq qcune'I or{^&\ saIpB'I '82

'09 :866I
.(1nf 'ssaJms ..'sozeg JJoC :eIIJoJd,, 'uolelzeH

'sse.rd lul' VI OZ 6u1tn7ua1

ssaulsrl g

'ou 'Iv sTutouocg' ssauls7rg ll?,tus .,'eJnleJelll eql

ruo4 s errpce dsJed s{roarr1eN dlqs-rneuarde-4ug
peseg-eFpelr\or.ry FuplpnldecuoC,,'re1de11'S'C .L

prre leuollue^uoC ueaffqag secuareJJICI {UIqBIA

sseulsng pue sse-rFo.r4 le-reg erII snsJa1 esIoUoI
er{J,, 'uueurddll 'S pue '1seFuol 'C 'y 'ruDI 'H'd 'gZ,
'OIOZ,'7I dln1- 'Japlsul ssaulsrrg' ,.'suo11ce[e11 3n
oo8 uBqJ eJoIN peAI Jns EJoprred /!\oH,, 'Ie1!\ '1!\ '92
'
VOOZ'IIIH-rrBrCcIN :{ro1 /Y\eN)
aLD ul 'z1;-l;O 'U prre reFe1' '61'ig 'VZ
qcrBl I pessec

sluul7 fo fiuodtuoS
-

'Jepunod 'reFlv xely qlua ar\el Jelrrl, 'rrBArIInS 'lN

'(tOOZ 'sserd gporal1y :yro raeN)
a6y1oymauatda4ug' 'ilerred 'C '1 pue IIerrB.g'y^

'Fro'elpedr{I

'6I

UJdV'ssaecns ..'rrosueJg pJBqcIt[,, 'doure3 'CI

ttVIOZ)

..eIEeU Jo ]uarueJnseerusll1 :elzzfid sFulu-reg

IIJneueJde-r1ug er{J,, 'ueqC '1. pue oJqe}sv 'J 'v

'608-682 :futoz,)
Z, 'ou'66 6ultn7uaA ssaulsngfo louJno1r ..'selels
pel1un eql q lueurdoldueun pue dlqs;o1egdor4,,
'I.) prrE urrBurr{oc 'd 's 't
'puelFug'uopuo'I'(gtOZ

't9-2,9'866I

'vloz,'I

'zepueute.{

TICJBIN pesSeCCB'uroC'eleC

-npeole?eercl'/yv\/y\'eFed eruog alecnpg o] eleeJCI

'bloz,'9 r{cJBI I passeccP 'ruoc's \erareul sseulsng

.,'Fuge>1cld EssIIeI J r{}py\ ltr\el Ja}frl, 'TTBAIIInS 'W
'sse-rd

'8I

'w

'ollorrcseq Iep pBpISre^IufI pue eFe11o3 uosqeg)

yodag luqol9 t t OG rolluolg dlt4stnauatda4ug

'LI

sororuv'g 'fl

]'7o.qolc'Erusog 'N prrE

'8IOZ'O8
IIrdV 'tnauatda4ug ,,',rtrlsnpul e{Ig uoHIIg g$ eq}

uI '?I OZ acnrord puo fuoaqa dpqstnauatda4ug

*'fiulcrnoslno lsupFy elFFn.rrs V :ecrrelslseg

u1 LueC B epel4 spualJd go

dnorg

B ./y\oH,, 'de1eq '1,

.Z

.I

seloupug
Le

drHSUnrNrHdrHrNr

or NorrcnoourNr

HrrdvHc

g8

pART

1 I

DECtstoN To BECoME AN ENTREpRENEUR

in Organizations: Does Job Design Matter?"

Entrepreneurshtp Theory and Practice 20 | 4,
in press; R. A. Baron and J. Tang, "The Role
of Entrepreneurs in Firm-Level Innovation:
Joint Effects of Positive Affect, Creativity, and
Environme ntal Dynamis rn," J our rrc.l oJ B us tne s s
Venturtng 26, r:lo. 1 (2O11): 49-60.
36. The Hartford 2013 Sma1l Business Success
Study, October 13, 2013. Available athttp:/ /
www. thehartford. com/ our -company/ success study-2O13. Accessed March 13, 2014.

37. D. Miller and C. Sardais, "Bifurcating Time:

How Entrepreneurs Reconcile the Paradoxical
Demands of the Job," Entrepreneurshtp Theory
andPracttce 2014, in Press.
38. C. Angle, "Iterate Again," in D. Cohen and B. Feld
(eds.), Do More Faster (Hoboken, NJ: John Wiley &
Sons, lnc.,2O11), 50.
39. C. Williams, Lead, FoLLotu, or Get Out oJ ttrc Wag
(New York: Times Books, 1981), 111.
40. S. Walton, Made tn Amertca: Mg Story (New York:
Doubleday , 1992).
41. The Kauffman Foundation and LegalZoorn
Startup Environment Index 2OL2, Ewing Marion
Kauffman Foundation, February 2013.
42. D. H. Hsu and R. H. Ziedonis, "Resources as
Dual Sources of Advantage: Implications for
Valuing Entrepreneurial-Firm Patents," Strategtc
Management Journal 34, no. 7 (2013): 761-781;

J.

Zhartg, "The Advantage of Experienced

Start-Up Founders in Venture Capital Acquisition:

Evidence from Serial Entrepreneurs," Small
Bustness Economtcs 36, no.2 (2O1O): L87-2O8.
43. SBA, Small Business Trends, available at www.
sba.gov/content/sma11-business-trends,

accessed

March L3,2OL4.
44. American Express OPEN, "The 2013 State of
Women-Owned Business Report, American
Express Corp.

45. U.S. Census Bureau, www.census.gov, accessed

March L3,2OL4.
46. Count Me In home page, www.countmein.org, accessed March 13,24L4.
47. MrBDA. "Minorit5r-Owned Business Growth &
Global Reach," MBDA, available at www.mbda.
gove, accessed March 13,2OL4.

48. MBDA, "Minority-Owned Business Growth &

Global Reach," MBDA, available at www.mbda.
gove, accessed March 13,2014.

49. The Kauffman Foundation and LegalZoorn

Startup Environment Index 2OL2,
Ewing Marion Kauffman Foundation,
February 2013.
5O. Gallup, "U.S. Students' Entrepreneurial
Aspirations Still Undeveloped," available at
http : / /www. gallup. co m / poll / 1 60O4O / studentsaspx,
accessed March L4, 2OL4.
51. Lemonade Day home page, http:/ /lemonadeday.
org, accessed March L4,2OL452. Babson College home page, www.babson.edu,
accessed March L4, 2OL4.

entrepreneurial-aspirations-undeveloped.

53. Entrepreneur, "With Entrepreneurship

in Vogue, Colleges Beef up Offerings
(Infographic)," available at www.entrepreneur.
com / article / printthis / 2 3 0 27 4 .httnl, acce sse d
March L4, 2014.
54. J. A. Schumpeter, TheTtrcory oJEconomic
Deuelopment (Cambrid$e, MA: Harvard University
Press, 1994).

55. R. Klingebiel and C. Rammer, "Resource

Allocation Strategy for Innovation Portfolio
Management, " Strategtc Manag ement J ournal
35, no. 2 (2014): 246-268; W. J. Baumol,
"Formal Microeconomic Structure for Innovative
Entrepreneurship Theory, " Entrepreneur shtp
ResearchJournat 1, no. 1(2011): 1-3.
56. SBA, "Small Businesses Lead the Way in Green
Technologr Innovation," available at www.sba.
gov/advocacy/8o9 /29201, accessed March 14,
20L4.
57. C. Bialik, "sizing up the Small-Business Jobs
Machine," WaLL StreetJournal, October 15,

zOLL,42.
58. A. D. Cruz, C. Howorth, and E. Hamilton,
"Intrafamily Entrepreneurship : The Formation
and Membership of Family Entrepreneurial
Teams," Entrepreneurshtp Theory and Practice 37,
no. 1 (2013): 17-46.
59. B. Barringer, Prepartng Effecttue Bustness
Plans (Upper Saddle River, NJ: Prentice Hall,
2OO9).