Start-Up Saga, Part 2: Unveiling a Mission
Editor's note: In December 1999 Knowledge@Wharton and inc.com published "Anatomy of a Start-Up, Part 1: The Climb Begins." The article described how Richard L. Thompson and Lawrence G. Braitman, cofounders of Flycast Communications, an Internet-based advertising firm, teamed up with Wharton professor Arie P. Schinnar in October to launch E*Entity, a business accelerator that helps jump-start fledgling Internet businesses. This is the second part of a series that will follow E*Entity in its evolution.
One of the toughest things about starting a new business is defining its mission. Equally difficult is the act of writing its mission statement -- a handful of words that state, simply and clearly, the company's reason for being. For Larry G. Braitman, Arie P. Schinnar, and Richard L. Thompson, this was one of their first challenges in launching E*Entity. They knew that they wanted a business accelerator, whose goal would be to help Internet ventures go from concept to market as rapidly as possible. But this still begged two key questions: What was E*Entity's mission? And how would it differ from that of competitors playing in the same arena?
After a good deal of discussion, Braitman, Schinnar, and Thompson finally arrived at a common mission statement that they prepared to unveil in late January. E*Entity, they decided, would be a seed-stage investment fund that would focus on Internet and E-commerce ventures coming out of the university environment. "Some entrepreneurs and businesses coming out of top schools are ready to hit the ground running," says Thompson. "They don't need or desire the coddling of an 'incubator' environment. We will provide venture financing, coaching, and contacts to assist such companies, but for the most part we expect them to grow quickly and stand on their own feet."
At least three factors persuaded Braitman, Schinnar, and Thompson to define E*Entity's mission the way they did. First, they recognized that "the quality and maturity of ventures being hatched in university settings is getting stronger and stronger," says Braitman. For example, Google, a search engine company launched by Stanford students, last year landed $25 million in venture funding. Second, Braitman's and Thompson's own experience with Flycast Communications, whose business plan was written on the University of Pennsylvania campus, convinced them that ventures coming out of schools could be potentially successful. After all, Flycast Communications was sold to CMGI, a Massachusetts-based investment firm, for some $740 million in September 1999.
The third factor was the need for E*Entity to differentiate itself from rivals. Established incubators and accelerators such as IdeaLab and Garage.com have long been trying to lure entrepreneurs, while more entrants are now starting to enter the field. "We see major consulting firms like McKinsey entering this business," says Schinnar. "Redleaf has launched a digital incubator, as opposed to a physical one, exemplified as eCompanies. Digital Ventures, another firm, seeks to develop an incubator that will cater to the international market. We felt the need to differentiate ourselves in this emerging market."