What Business Would You Start?
If you were to launch a business today, what would it be? That's the question Inc recently posed to some of the sharpest minds in the business world today.
Published March 2002
EMAIL THIS ARTICLE
PRINTER FRIENDLY
COMMENT ON THIS ARTICLEWe put that question to some of the brightest minds in the business world and asked them to let us in on the thinking behind their choices. We talked to people with a wealth of hands-on experience -- CEOs and company founders whom we consider "masters of business." We went through our address book and contacted people who spend their time evaluating the viability of companies: angel investors and venture capitalists who've made a name for themselves picking companies that fly. And to get a slant on how to bring the big picture into focus, we turned to business futurists who have a knack for forecasting economic and technological trends.
Of the dozens of people we talked with, only one said emphatically that he would not start any business in this economic climate. As for the others, the comments ranged from Michael Dell's saying that passion must be the driving force behind starting a company, to founder Terri Lonier's very specific idea for educational centers for soloists, to futurist Paul Saffo's advice to look for a technology that's been failing for 20 years. Taken together, their comments provide a detailed view of the changing entrepreneurial landscape.
FORGET MARKET TIMING
Name: Michael Dell
Age: 36
Location: Austin
Background: Chairman and CEO of Dell Computer Corp., a top 50 Fortune 500 company with sales in excess of $31 billion, which he founded as a freshman at the University of Texas in 1984 with a $1,000 investment
"I was pretty oblivious to the fact that the economy was in a state of turmoil when I started the company. That didn't really concern me too much. I mean, what I saw was the opportunity and the beginnings of the personal-computer industry. And the fact that the economy wasn't doing so well, there was a recession, and the following year would be the worst year ever for the PC industry -- those were just sort of insular facts, and I wasn't worried about any of that.
"You know, when you're 19 years old, the worst thing that can happen to you is you go back to college. So I didn't see starting the company as a huge kind of bet-your-life decision. I wasn't particularly worried about whether I was going to make a lot of money. It just didn't really bother me very much.
"I'm not really a market timer when it comes to entrepreneurship. I think you do it when it feels like it's the time to do it. I mean, I did it when I was a freshman in college because that, to me, seemed like the perfect time to do it because I saw the opportunity.
"I think there are opportunities everywhere. The question is, which ones are the right ones, and which ones are the ones that will make a success? The simple answer to the question 'How do you do this?' is, you find a really large market -- or one that's going to be large -- that's inefficient, and you come up with a breakthrough way of delivering value to customers that nobody has ever done before.
"My personal opinion about the last three or four years is that a lot of people were sort of going and starting these companies because they could. There wasn't any reason why they couldn't, and there were incredible amounts of capital. I would say the worst thing you could do to a new business is to give it too much capital. And that's exactly what we did in the last three or four years with all these new businesses. 'Oh, here's $20 million, $50 million. Go start your own.'
"When it's so easy to raise capital and anything can raise capital, the good side is you get all kinds of experimentation. But the bad side is you get people who try to spend that money. They forget what the fundamentals are in terms of customers and creating value and being disciplined with capital, and you get pretty horrific results. What you have now is more like what the world has been like for most of history and capitalism. The last three or four years were sort of a one-of-a-kind event.
"What business would I start today if I were 19, I don't know. I'd look for a different market. Going into the market that we're in, it's not clear to me that there's a lot of inefficiency. If I were in my dorm room 12 miles away from here and I were trying to think up what is a radically better way of doing this business that Dell and others haven't figured out -- well, we would have already done that because that's our job. Now, maybe there's a college student out there who's figured it out and we haven't.
"All markets will continue to be under pressure in terms of efficiency and pricing. The principles that Dell is applying in this business, in connecting suppliers and customers together -- that's going to happen in just about any business. And those pressures are going to drive down cost. I think it's going to vary a bit by industry. Certainly, if you look at the services industry, efficiency there is measured a little bit differently. It's utilization. It's skills and those kinds of things. But there's a lot of inefficiency that is still being squeezed out of our economy.
