Monthly Archives for July 2014

Who is an entrepreneur, founder or incentivised manager?

Just as in medicine, we need to use latin terms to identify the different entrepreneurs.  My latin is a little rusty so I will leave the terms to others.

There is the entrepreneur like me who started a business on a kitchen table – no plan, no product and no customers.  The first step was to find a customer, and then a second customer and then another.  Slowly the business evolved to meet the market need.  Jonathan Milner created Abcam from similar humble beginnings and is a great story.  How he used trade credit to fund the initial losses instead of raising angel/VC funds accounts for his major shareholding explains why he retained such a good shareholding plus, of course, the explosive growth, very high margins and positive cash flow when the business took off

There are the entrepreneurs who started ARM and call themselves founders as if they started something new.  Development of the RISC computer started in Acorn Computers in t.

The early 80s and it was not until ten years later that a market for a RISC computer was slowly found.  RISC computers use little power and only came into their own when mobiles took off in the 90s.

ARM is a amazing story and the vision to sell a design and the execution of the plan was brilliant.  I remember Sir Robin Saxby saying “I found twelve guys in a shed in the Fens and “only” two million pounds in the bank”.  There were two corporate shareholders, Olivetti and LSI(?).  That is a very different start-up than a kitchen table.

Then there are the start-ups funded by VCs with multimillion pound investments with the founders having tiny shareholdings and receive their rewards by options.  In terms of an Equity Fingerprint, the founding team’s shareholding goes up from near 0% usually at the time of a trade sale.

Then there are the academics spinning out of universities funded by the enterprise department at their universities.  When the university starts with 60%, the team are left to share the balance but probably also retain research positions so they are not taking the full entrepreneurial risk.

There are many different types of entrepreneurs based on their equity holding at the start.  We need better terms to define each category and I have not even mentioned the important class of social entrepreneur and company entrepreneurs.

Ignite 2014 at Judge Business School

Fun talking to the delegates at Ignite 2014. Entrepreneurs from many nations coming together to dream.
A professor from Stanford made a comment at an event I attended in Oxford a few years ago along the lines of: we must remember that teaching entrepreneurship is more than about helping people to start businesses, it is about education – making sure more and more people were aware of the process of starting a business so that in whatever career they followed, they would have some idea about the business process.
This applies to these delegates. I guess that few will start but they all had a fantastic education and the buzz at the final dinner was “awesome”!