How has your thinking on entrepreneurship changed in the past 10 years?
Small Business Is Cool Now
Small business is cool now, and I don't mean that lightly. It wasn't so long ago that our heroes were lawyers or journalists like Woodward and Bernstein. But now things are different. Lawyers are no longer seen as a force for good. People are seeing that the stuff making our lives better comes from business more often than it comes from government.
It used to be that there was an exciting part of big business that attracted people. But today it's the reverse: small companies are the heroes. It used to be that business schools turned out investment bankers and consultants, but now the entrepreneurs get the attention.
Only a few years back, small businesses were trying to act like big businesses. Well, now big businesses are trying to act like small businesses. Small companies are experiencing great victories.
-- Scott Cook, cofounder and chairman of the board of Intuit Inc., a provider of financial software and services in Mountain View, Calif.* * *
As a person who grew up in a mostly blue collar community, where my parents were products of the postwar era, all I heard at the time was "Get a job with a big company, a secure company. Even get a civil service job." Being an entrepreneur is much more culturally acceptable now than it was. It's a worthwhile, laudable, realistic career alternative for so many people. Today people say, "I want to work in an entrepreneurial environment." Twenty years ago, believe me, you didn't have many people saying that.
-- Jim McCann, president of 1-800-FLOWERS, a florist and gift company, with headquarters in Westbury, N.Y.* * *
I know more students who have decided to "go entrepreneur" than specialize in anything else in business school. There's a lot of interest in our organization. Everyone -- from architecture majors to computer-engineering majors -- wants to know how to start up his or her own business.
-- Ursula Hessenflow, president of the USC Entrepreneurs Society, University of Southern California, Los Angeles* * *
When I started in this business 25 years ago, business schools were training people mainly for the Fortune 500. That's simply not the case anymore. Younger people today are interested in getting into smaller enterprises -- not necessarily in founding them but in being a part of them. That's quite positive for smaller-scale enterprises and for the innovative process.
-- Patricia M. Cloherty, president, Patricof & Co. Ventures, an international venture-capital firm, with offices in the United States and Europe* * *
Entrepreneurship has become a much more viable and socially acceptable career option than it used to be. Today it's at least as feasible as medicine or law. It opens up possibilities for older people as well. We've had a steady accretion of support structures for entrepreneurial ventures. We've got more risk capital and more private investors who are comfortable with such ventures. And we know much more about the process of starting a company. Before, it was almost like alchemy. Essentially we've democratized the possibility of becoming an entrepreneur in this country.
In the future we'll see people broadening the conventional definitions of entrepreneurship to address economic self-sufficiency. We're going to see people becoming entrepreneurial by buying companies. The "buy-a-company" route is especially viable for the 50-year-olds who were booted out of Fortune 500 companies. They know how to run something. We'll be seeing more corporate refugees going off and setting up their own colonies.
-- Jim Collins, management educator and coauthor of Built to Last: Successful Habits of Visionary Companies (HarperBusiness, 1994)* * *
Small-business owners have come to realize that they must take the time to be involved politically. In the last Congress, for the first time in more than 40 years, the freshman class had more people with business backgrounds than with legal backgrounds. In the future you'll see more small-business owners willing to become volunteer legislators, to serve and then come home. There's a feeling around America that maybe someone who's made a payroll can do a better job of balancing the government's books than someone who's never signed the front of a paycheck. It's the ultimate sacrifice for small-business owners to take time away from the business because it's their blood, their life. But it is starting to happen.
-- Jack Faris, president and CEO, National Federation of Independent Business, a small-business advocacy group* * *
The World Will Beat a Path to Your Door
The most important story of the past 10 years is the same one that will dominate the next 10: the globalization of small business. Unlike ever before, a small business now can be an international player. What'll be different in the near future is that a small business will have to be an international player. Any businessperson who's used a passport has seen the change. Travel is easier, faster, and cheaper; and new tools and amenities have made travel time useful. Even more responsible for the international boom are the rapidly decreasing costs and rising quality of communications -- trends that will be accelerated by the Internet.
But the single biggest reason we'll all have to go global is that English has emerged as the common language of international commerce -- which means that the most formidable market barriers are gone. Five years ago when I went to Holland, Sweden, or France, I had to plan on having a translator -- and forget about Asia. Now I can go to Europe or to Tokyo and count on the average businessperson to speak English. Recently I was at a convention of Common MarketÃ‘country representatives who could claim 17 different native tongues, and what language was the conversation held in? English. It's everywhere. They've had to make the leap because it was either communicate or starve.
Big American companies don't have much to gain from all this. They've been multinational for ages. When they needed to do business in Germany, they just hired 300 locals to do their bidding in the native language. But small companies now have access to similar international markets. The founder of a little company I never dreamed could go international told me, "We're over there trying to establish a European market. We've gone from zero to 50% of our sales overseas while the U.S. market got saturated."
Combine this phenomenon with the Internet as an incredibly cheap and far-reaching distribution channel. All a small company has to do is be good, and the world will beat a path to its door. That's never been true before.
Of course there's a flip side to the elimination of market barriers. Just as other markets are no longer safe from you, neither is your market any longer safe from others. In the short term, Americans will have an advantage: the big foreign multinationals are already here, and there isn't enough of an overseas small-company economy to come at us. But in the longer term, new competitors will enter. And even sooner, your domestic competitors who succeed at tapping foreign markets (often at better margins) will be stronger and therefore tougher to handle at home.
-- David Birch, founder and president of Cognetics Inc., an economic research company in Cambridge, Mass.* * *
I was driving through a mountain village in Portugal recently, and all of a sudden my car phone rang. It was my secretary, catching me on a cellular phone in the middle of the night. I mumbled "unbelievable" for about half an hour. Ten or 15 years ago, a phone call like that took days.
-- Gordon Segal, founder and CEO of Crate & Barrel, a chain of home-furnishings retail stores with headquarters in Northbrook, Ill.* * *
Many small companies will face a competitive disadvantage in the so-called borderless world of free trade and investment, where the size, access to capital, and political influence of the global giants will be more decisive than in the past.
-- Richard J. Barnet, Distinguished Fellow at the Institute for Policy Studies, in Washington, D.C.* * *
We've got people with the knowledge, the dream, and the education. And the money has been there. The public has been financing them. There will be more of that. The 1946 crop of baby boomers hit 50 this year. They make more of their own investment decisions, and they are inclined to buy smaller companies. The NASDAQ volume exceeds the New York Stock Exchange volume on certain days. As public vehicles, those companies will have a better ability to get ahead. If they need additional capital and they are performing, they can raise it in 10 days. And they can use different tools to do that: additional equity, convertible debentures, straight debt. We're going to see more of those companies continue to grow, and some of them are really going to break out. It's wonderful.
-- Muriel Siebert, founder of Muriel Siebert & Co., a national discount brokerage firm with headquarters in New York City, and the first woman to own a seat on the New York Stock Exchange* * *
I expect more start-ups will be merged with larger companies because they will not have the staying power to become big companies by themselves. I don't expect to see many new companies joining the ranks of Hewlett-Packard, Intel, or Microsoft. What could change my opinion is an invention of the magnitude of the steam engine or the electric motor. The last such invention was the transistor in 1948.
-- Arthur Rock, principal of Arthur Rock & Co., a venture-capital firm in San Francisco* * *
Keep Your Eye on the Angels
All the attention that's being paid to the availability of credit for small businesses is going to fade, and we're going to have to pay a lot more attention to the availability of early-stage risk capital. Entrepreneurs just don't fit into what debt providers are designed to do. And venture-capital funds have left the start-up field, particularly when we're talking about less than $1 million.
But one of the real changes is going to be the enormous explosion in the participation of private equity investors in emerging companies. Those private equity investors are the self-made entrepreneurs of the past generation. For the past 10 years I've followed the Forbes 400 richest people in the United States. In 1984 something in the neighborhood of 40% of the Forbes 400 were described as self-made megamillionaires -- or what you might call "first-generation money." By 1994 that number had doubled.
The capital and know-how of our country's self-made millionaires are two of our least understood and largely untapped economic resources. Self-made entrepreneurs love to nurture other entrepreneurs. And they typically bring their know-how as well as their capital to the table. In many cases that know-how is more powerful in building a company than the capital itself.
The participation of the growing population of "angels" is going to become more visible. The market mechanism right now for angel financing is really very inefficient and random: who knows whom, who mentioned something on the golf course, who talked to his or her accountant lately about who's looking for money. That marketplace is also horribly time-consuming. Next to capital, time is the scarcest resource entrepreneurs have.
-- Bill Wetzel, director emeritus, Center for Venture Research, University of New Hampshire, Durham, N.H.* * *
In computer markets, companies must get big very quickly, or they don't make it at all. That means that we as venture capitalists have to think of management structures that can deal with very quick growth. You can't build the team one person at a time. We encourage our companies to get their complete management teams together early on so they don't end up doing it on the run.
-- Bill Hambrecht, chairman, Hambrecht & Quist, a San FranciscoÃ‘based venture-capital and investment-banking firm specializing in high-technology investments* * *
When the Internet can reach out and touch you and hug you and kiss you and make you feel great about what you're buying, we will no longer have to go to a particular market-place to shop. For the moment, we need both the technology and the human touch.
-- Joan Helpern, cofounder, president, and CEO, Joan and David Helpern Inc., a manufacturer of shoes, clothing, and accessories in New York City* * *
As technology evolves, we shouldn't lose the element of play that makes using such things as laptops and cell phones so much fun. And as we grow more familiar with those materials, we'll begin to find that our view of sound, time, and space will have to change since now we can work anytime, from anywhere, without worrying about those three boundaries.
-- Red Burns, chair, Interactive Telecommunications Program, Tisch School of the Arts, New York University* * *
Technology Moves Mountains
New small-business owners are taking advantage of technology to become more agile than their larger, corporate competitors. A business process that is inefficient or broken does not disappear by adding technology. But the integration of technology often includes a closer scrutiny of the business process. Small companies can manage their finances, plan for the future, and produce high-quality output, just as a big company can. The integration of technology gives business owners a chance to put checks and balances in place, which was simply not possible with a manual system or with older technology. An example of how automation can provide significant improvements is networking. A company can purchase computer equipment and give people individual workstations, but that doesn't mean that people have better access to information. But if the company takes the next step and networks the computers and printers, then everyone has access to applications, files, and printers. An application server can ensure that customer-account information is readily available to the appropriate people in an organization even if the accounts-receivable manager is on vacation.
-- Bill Gates, founder and CEO of the software provider Microsoft Corp., Redmond, Wash.* * *
Technology has pushed more power to the front-line workers in all businesses. Small business may have taken better advantage of the opportunities that creates than big business has. Small business has led the effort to empower, train, and share information with employees, which has contributed to a surge in company founding and job creation.
-- Robert B. Reich, Secretary of Labor, Washington, D.C.* * *
In the 1990s we have seen a complete warp-drive shift into a new technology-based entrepreneurship arena, which is in many ways the most exciting and daunting I've witnessed in my 20 years of studying this sector of the economy. Look, for example, at the Internet and the opportunity for someone with relatively modest capital to start what might be a potentially large enterprise in a relatively short time. There are many more such opportunities. They're related to the same thing that helped create the personal computer in the late 1970s and the microcomputer software revolution in the early to mid-1980s. It's really the next logical step, which is the transformation of data into information, communication, and processing ability.
There have always been massive amounts of data in the economy. The information was completely overwhelming until relatively recently, when people began to get their arms around how to make it accessible to those who needed it, in the form they needed it, at the time they needed it, and at the price they were willing to pay. Well, now it's easier to handle massive amounts of data and to make them accessible in some reasonable way. It's easier to process those data, to manipulate them so that they reveal things of value.
I look at technology, and I say, "Okay, well, the customers are different, the tools are different, and most of the existing companies aren't going to get it." And that's partly why there's enormous opportunity for the entrepreneurial sector.
We're in the early stages of what will be a large opportunity wave. And the surfers tend not to come from the older part of the community. Some people are going to use software tools to get on top of this information world and make it accessible to other people in useful ways. That won't happen overnight, but it will happen relatively quickly, and it's the entrepreneurial sector of the economy that will take advantage of it. Then those companies will turn into the dinosaurs, and the next wave of entrepreneurs will come along and say, "Well, you guys are doing it wrong. We'll do it."
-- William A. Sahlman, professor of entrepreneurial finance and senior associate dean, Harvard Business School, Boston* * *
When our company started doing projections, using database and spreadsheet management in something as simple as Lotus 1-2-3, we were forced to ask questions about what we were really doing and why we were doing it. The process turned executives from coaches into player-coaches. Computers, and Lotus 1-2-3 in particular, made people realize that they could do a lot more work themselves. Empowerment grew out of that. Empowerment wasn't somebody's saying, "Give people freedom." It was getting a taste of freedom. People realized that they could move their own mountains, and then they tried to encourage other people to get the same feeling.
-- Michael Koss, president and CEO of Koss Corp., a manufacturer of stereo headphones in Milwaukee