Technical entrepreneurship

8/4/2019 Technical entrepreneurship

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HUMBOLDT-UNIVERSITT ZU BERLIN

INSTITUT FR INFORMATIK

TECHNICAL ENTREPRENEURSHIP

Vorlesung 1

INTRODUCTION

Wintersemester 1999

Leitung: Prof. Dr. Miroslaw MalekBetreuer: Peter K. Ibach

www.informatik.hu-berlin.de/~rok/entrepreneurship

TECHNISCHE UNIVERSITT BERLININSTITUT FR INFORMATIK


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THE GOALS

Development of a viable Business Plan Team Formation Idea Development Initial Presentation

Midterm Report Final Presentation Prize Award Ceremony for the Winning Team

Guest speeches on Sources of Financing Marketing

Tax and Legal Issues Management Success Stories


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TECHNICAL ENTREPRENEURSHIP

1. Introduction2. Entrepreneurial Processes and Models3. Creating a Successful Business Plan4. Creativity: the Product or the Service

5. Business Management6. Financial Projections and Sources of Financing7. Marketing8. Legal and Tax Issues9. Intellectual Property10. Ethics

11. Special Problems and Who Can Help12. Advanced TopicsLectures by: M. Malek, Students, Guests


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Quelle:

Der Spiegel 38/99

Internet Revolution (Worldwide)


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Internet Revolution (Germany)

0

5

0

5

20

25

30

999 2000 200

GeschtzteUmstze mit E-Commerce inMrd. DM

(Deutschland)

Quelle:Berliner Wirtschaft

Aug./Sept. 99


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E-COMMERCE IN GERMANY

Quelle: Wirtschaftswoche 42/99


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USEFUL SITES COLLECTION

Books Struck, Uwe: Geschftsplne, Voraussetzung fr erfolgreiche Kapitalbeschaffung, Schfer Verlag,

Reihe: Kompaktes Wissen fr Fhrungskrfte, ISBN: 3-8202-0562-4

Magazines www.infoquelle.de - Infoquelle Online Wirtschaftsmagazin, informiert u.A. ber die Erstellung eines

Business-Planes

www.bizz.de -Bizz

Online Kapitalmagazin mit Artikeln rund ums Thema "Existenzgrndung" Websites

www.gruenderstadt.de - Suchmaschine und Informationsplattform speziell fr Existenzgrnder. smallbusiness.yahoo.com - Entrepreneurial site of Yahoo with many hints and links

Conferences and Workshops Organizations and Societies Venture Capital Companies BP-Competitions

www.berliner-sparkasse.de - StartUp Grndungswettbewerb zusammen mit McKinsey.

(exhaustive lists in Appendix)


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3 Ms of ENTREPRENEURSHIP

MONEY

MARKETING

MANAGEMENT


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ENTREPRENEUR

A person who destroys the existing economic order byintroducing new products and services, by creating new forms oforganizations and by exploiting new raw materials

(Joseph Schumpeter)

Someone who perceives an opportunity and creates anorganization to pursue it

A person who organizes and manages a business undertaking

A creator of a new company


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ENTREPRENEURSHIP

=

Creation of a new company

The Entrepreneurial Process

involves all the functions, activities and actions associated withperceiving opportunities and creating organizations to pursue them


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Fast Growing Areas Specific Topics

Electronic commerce / virtual stores:buying online and picking up physicallyproblem (3 cs: community, content andcommerce).

Auctions, flea market, e.g., used books (www.ebay.com) Auctions for B2B competitions Email to media (letter, book, photo, poster, CD, DVD) gatewaycity net including delivery, e-commerce infrastructure, logistics

Security Biometrics Cyber cash

Firewalls Encryption Operating system extensions & tools

Telecommunication, mobile computing,communication networks, wirelesscommunication

Wireless Internet access (www.sandner.net)

Remote control, observation,diagnostics Intelligent building Remote housekeeping/controlling Video control

Audio/video streaming, protocols,visualization, 3D, entertainment,games, leisure, education

Internet video/TV (broadcast) Video distribution (music: www.mp3.com) , Online photo- and copy center Online training center

Games over (wireless) networks

HOT TOPICS (1)


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HOT TOPICS ( )

Healthcare, medical applications, bioinformatics, remote patient care

Online expert locating and consulting Online drugstores www.drugstore.com Virtual experiments by processing the Human

Genome database

Transportation, aerospace, defense,airlines, aviation, automotive, travel,package delivery

Collision avoidance Logistics Packing chip, tracking systems

Robotics, intelligent control, micromechanics, embedded systems

Autonomous coordination Remote control

Financial services, banking,insurance, trust center

Online stock markets Venture Capital: Capital network for startups und

business angels (www.garage.com)

Billing/charging systems Micro payment systems Internet payment systems

Smart cards & wearable computers Payment systems, e-purse Security New applications(www.microsoft.com/smartcard)



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HOT TOPICS (3)

Matchmaking: people matching Competition server matchmaking between peopleengaging in any kind of on- or offline games/sports Reverse auctions for services (painter, carpeter, ITexperts, etc.), taking care of information asymmetries.

Agency for self-employed IT experts: www.career-central.com

Matchmaking: product matching Price broker (books, CDs, DVDs)www.powershopping.de Specific search engines (music, photos:www.ditto.com, videos)

Work over net, market research,

customer feedback

Remote secretary

Internet call center: redirect incoming calls to homeoffices via Internet www.epinions.com



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Entrepreneurship is the engine of growth forthe turn of 21st century

Entrepreneurship is the best hope for aneternal economic springtime


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STATS BUT REMEMBER

1 business in 10 will reach its 10th birthday. Starting businesses is like starting love affairs (paraphrasing George

Bernard Shaw) "Any fool can start one, it takes a genius to end one successfully."

U. S. Examples:

JOBS 10.000 jobs have to be created every day (= 2,5 million jobs per year) In the 80's 5% of the young companies created 77% of jobs 15% of these companies created 94% of jobs Fortune 500 companies eliminated 3.5 million jobs in the 80's

GROWTH 500,000 small companies grow by 20% per year

ENTREPRENEURSHIP AT UNIVERSITIES - MIT Over 4,000 businesses established by alumni 1.1million jobs $ 232 billion in sales


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WHAT MAKES AN ENTREPRENEUR?The Ten Ds (1)

Dream

Entrepreneurs have a vision of what the future could be like for them andtheir business. And, more importantly, they have the ability to implementtheir dreams.

Decisiveness They don't procrastinate. They make decisions swiftly. Their swiftness is a

key factor in their success.

Doers Once they decide on a course of action, they implement it as quickly as

possible.

Determination They implement their ventures with total commitment. They seldom give

up, even when confronted by obstacles that seem insurmountable.

Dedication They are totally dedicated to their business, sometimes at considerable

cost to their relationships with their friends and families. They worktirelessly. Twelve-hour days, and seven-day work weeks are notuncommon when an entrepreneur is striving to get a business off theground.


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WHAT MAKES AN ENTREPRENEUR?The Ten Ds ( )

Devotion

Entrepreneurs love what they do. It is that love that sustains them when thegoing gets tough. And it is love of their product or service that makes themso effective at selling it.

Details It is said that the devil resides in the details. That is never more true than in

starting and growing a business. The entrepreneur must be on top of the

critical details. Destiny

They want to be in charge of their own destiny rather than dependent on anemployer.

D-Marks Getting rich is not the prime motivator of entrepreneurs. Money is more a

measure of their success. They assume that if they are successful they willbe rewarded.

Distribute Entrepreneurs distribute the ownership of their business with key

employees who are critical to the success of the business.


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IDEA

The idea per se is not most important. In entrepreneurship,ideas really are a dime a dozen. Developing the ideaimplementing it, and building a successful business are theimportant things.

Perhaps the biggest misconception about an idea for a newbusiness is that it must be unique, obsessed with the thoughtthat the idea might be stolen.

"Always invest in a grade A man with a grade B idea. Neverinvest in a grade B man with a grade A idea.

Georges Doriat


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O p p o r t u n i t yE n t r e p r e n e u r

F i ts & G a p s U n c e r t a i n t yU n c e r t a i n t y

R e s o u r c e

U n c e r t a i n t y

U n c e r t a i n t y

ENTREPRENEUR, OPPORTUNITY AND RESOURCE


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KEY TO SUCCESS

The crucial ingredients for entrepreneurial success are a superbentrepreneur with a first-rate management team and anexcellent market opportunity.

Would-be entrepreneurs who are unable to name customers arenot ready to start a business. They have only found an idea andhave not yet identified a market need.


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SOURCES OF STARTUP CAPITAL (USA)

PERSONAL SAVINGS (78,5%)

BANK LOANS (14,4%)

FAMILY MEMBERS (12,9%)

EMPLOYEES / PARTNERS (12,45)

FRIENDS (9,0%)

VENTURE CAPITALISTS (6,3%)

MORTGAGED PROPERTY (4,0%)

GOVERNMENT LOANS (1,1%)

OTHERS (3,9%)


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SOURCES OF STARTUP CAPITAL (GERMANY)

Quelle: DtA, Hochschul-Anzeiger 44/99

staatliche Eigenkapitalhilfe

berbrckungsgeld vom Arbeitsamt

Kredite und Brgschaftenvon Verwandten und

Freunden

75%

normale Bankkredite 75.8%

38.4 %

33.3 %

Wagniskapital 2.5 %


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STARTUP CAPITAL

25% start with less than $5,000



Less than 5 % with $ 1,000,000 or more


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INGREDIENTS FOR A SUCCESSFULNEW BUSINESS

The Ten Fs (1)

Founders Every startup company must have a first-class entrepreneur.

Focused Entrepreneurial companies focus on niche markets. They specialize.

Fast They make decisions quickly and implement them swiftly.

Flexible They keep an open mind. They respond to change.

Forever-innovating They are tireless innovators.


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INGREDIENTS FOR A SUCCESSFULNEW BUSINESS

The Ten Fs ( )

Flat Entrepreneurial organizations have as few layers of management as

possible.

Frugal By keeping overhead low and productivity high, entrepreneurial

organizations keep costs down.

Friendly Entrepreneurial companies are friendly to their customers, suppliers, and

workers. Fun

It's fun to be associated with an entrepreneurial company.

Fanatic Completely devoted to the cause


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PRODUCTIVITY PER EMPLOYEE (1 )IN COMPUTER INDUSTRY

Nintendo $1,000,000

Apple $451,600

Compaq $317,500

NEC $198,200

IBM $184,600

Siemens-Nixdorf $106,700


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TECHNOLOGY TRANSFER AT FOURLEVELS OF INVOLVEMENT

C o l l a b o r a t i o n C o m p l e x i t yL e v e l I V

A p p l i c a t i o n

L e v e l I I II m p l e m e n t a t i o n

L e v e l I IA c c e p t a n c e

L e v e l IQ u a l i t y R & D

G. Kozmetzky, UT-Austin


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KEY FACTORS IN THE DEVELOPMENTOF A TECHNOLOGY TRANSFER INFRASTRUCTURE

Talent

TechnologyTransfer

Infrastructure

Capital

Kn

ow-H

ow

Tec

hnology

G. KozmetzkyUT-Austin


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ENVIRONMENTAL CONDITIONS

Climate

Environment

Push/Pull

Factors

BusinessTalent

R&DPerformers

Nature ofTechnolo-

gicalInnovation

PrivateCapital

Institutions

Technical

TechnologyTransfer

Infrastructure

Capital

TechnologyVenturing

Institutions

K

now-How

Tec

hnology



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Techno-

Profe-ssionalSupportOrgani-zation

POLICY IMPLICATIONS

ClimateEnvironment

Push/PullFactors

Business

Talent

R&DPerformers

Nature of

logicalInnovation

PrivateCapital

Institutions

Technical

Technology

Transfer

Infastructure

Capital

TechnologyVenturingInstitutions

GovernmentFunding

TechnologyTransfer

ScienceParks

Consortia

IntellectualProperty

Venture Capital PoolsTax AdvantagesR&D Limited PartnershipsSmall Business Investment Corp.

Business Angels NetworkGovernment Programs (SBIR)State Venture Capital Funds

Culture for InnovationQuality of life

Local infrastructureAccess to other areas

Successful role models

Incubators

EducationalPrograms

TechnicalSupport

Programs

Local

Advisors

BusinessNetworks

K

now-How

Te

chnology



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SUCCESS FACTORS FOR TECHNOLOGYTRANSFER

AcademicBusiness

Government

Community

Talent Technology Capital Know-How

Market - Need

SuccessfulValue-Added

Technology TransferG. KozmetzkyUT-Austin


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ELEMENTS OF THE TECHNOPOLIS

Newtechnologies

Governmentservices

Businessservices

Globallinkages andrelationships

Airporttele-communicationinfrastructure

Quality-of-life support

Universityandotherinstitutions

Technology-related

industries

Technopolismodel

Program Marketing

Land use allocation and site requirementsG. KozmetzkyUT-Austin


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CASE STUDY: TIVOLI SYSTEMS INC.

ONE OF THE HIGHEST PRICES AFTER ONE YEAR ON THEWALL STREET:

IBM PAID $743 MILLON

PRODUCT: NETWORK MANAGEMENT SOFTWARE

HEADQUARTERS:

AUSTIN, TEXAS


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TIVOLI SYSTEM INC. In 1989, 12 IBM engineers left the company and founded Tivoli Systems Inc. in

Austin, Texas

Summary Financial Information (In thousands, except per share data)

1 1 1 1 1 3 1 4 1Statement of Operations Data:Total revenues $542 $--- $4,699 $12,746 $26,878 $50,000Operating income (loss) (653) (3,808) (1,904) (735) 1,539Net income (loss) (590) (3,732) (1,885) (735) 1,397Pro forma net income per share 1 0,11Pro forma weighted

average commonshares and equivalents 1 13,239

Shares Purchased Total Consideration Average $Number Percent Amount Percent Per Share

Existing stockholders2 11,845,038 85,6% $11,089,925 35,7% $0,94

New investors 2 2,000,000 14,4 20,000,000 64,3 10,00

Total 13,845,038 100,0% $31,089,925 100,0%Pro forma as of December 31, 1994, to give effect to the conversion of the Companysredeemable convertible Preferred Stock.

Assumes the conversion of all outstanding shares redeemable convertible Stock into anaggregate of 9,025,006 shares of Common Stock upon the closing of the offering. The net effect ofsales by the Selling Stockholders in the offering will reduce the number of shares held by existing

stockholders to 11,520,038 or 83,2% of the total number of shares held by new investors to2,325,000 or 16,8% of the total number.


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TIVOLIS BALANCE SHEET (1)PERCENT OF TOTAL REVENUES, YEARS ENDED DECEMBER 31

1 1 3 1 4Revenues:

License fees and 100% 91% 85%other services no 9 15Total revenues 100 100 100

Cost of revenues:

License fees and 21 13 10other services no 9 11Total cost of revenues 21 22 21Gross margin 79 78 79

Operating expenses:Sales and marketing 42 40 43

Product development and engineering 63 34 22General and administrative 14 10 8Total operating expenses 119 84 73

Operating income (loss) (40) (6) 6Interest and other income (expense), net no no (1)Net income (loss) (40)% (6)% 5%

Total expenses 140 106 94


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THE U.S. ENTREPRENEURSHIPSUCCESS STORIES

FIRST COMPANY WHICH ACHIEVED $ 100 MILLION SALES IN THEFIRST YEAR:

COMPAQ INC.

PRODUCT: PORTABLE PCS

HEADQUARTERS: HOUSTON, TEXAS

FIRST COMPANY WHICH ACHIEVED $1 BILLION SALES IN THREEYEARS:

SUN MICROSYSTEMS INC.

PRODUCT: WORKSTATIONS + SOFTWARE

HEADQUARTERS: MOUNTAIN VIEW, CALIFORNIA

FIRST COMPANY WHICH ACHIEVED $4 BILLION SALES AT INITIALPUBLIC OFFERING

NETSCAPE COMM. CORP. (BOUGHT BY AOL IN 1 )

HEADQUARTERS: MOUNTAIN VIEW, CA www.home.netscape.com

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Technical entrepreneurship

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