Archive for October, 2010

Over the past few weeks I’ve presented to four classes at Thunderbird – all focused on some aspect of entrepreneurship. These lectures and the resulting Q&A have introduced me to the students interested in starting a business (or improving the one they have already started) and resulted in a steady flow of meetings in my role as Entrepreneur-in-Residence.

In addition to providing my background during the class presentations, I shared some thoughts about the “F’s” that students need to be successful but that may not get much attention in school. 

The “F’s” are part of the foundation for startup success and in some cases hold the key to important lessons and experiences critical to entrepreneurship and even sanity! The “F’s” and some context for each one follow.

• Failure – Fail and learn to adapt quickly (and see the Michael Jordan video below for perspective).
• Friends and Family – They are caught up in the whirlwind of the fledgling business one way or another – consider your impact on them before making the leap and consider how they can help provide guidance and even direct impact on your business.
• Focus – Is everything… narrow the business focus to sustain competitive advantage, and tune-out distractions. Nearly everything but the business is a distraction so choose your “time investments” carefully.
• Funding – Do you really need/want it? When can you reasonably attract it? How do you pitch the business?

Though “failure” may be the most referenced of these points among experts on entrepreneurship, I especially liked the emphasis that this Nike commercial provides on Michael Jordan’s many failures and how they led to his success.

During the talk I also provided resources (links) for the students to reference as they pursue their entrepreneurial dreams. Here they are, with some of them oriented toward the Arizona market.

• Kauffman Foundation – the world’s largest foundation devoted to entrepreneurship.
• National Venture Capital Association
• Angel Capital Association
• TiE – the world’s largest network of entrepreneurs
• Arizona Interactive Marketing Association – (AZIMA) – all entrepreneurs need to market their business to someone and this Arizona non-profit’s membership is free for students.
• Mastering The VC Game – I referenced this book and its value whether one decides to raise money or not. From the book’s website, “A VC reveals how startups can successfully finance and launch their venture.”

 I’m looking forward to helping the Thunderbird entrepreneurs and, of course, to learning from each of them as they challenge me with their needs and opportunities.

Jeff recently blogged about a Thunderbird student entrepreneur in his blog, read more about Mayu here.

 Jeff Walters is the Catalyst of Strategy Outfitters. In roles ranging from entrepreneur to consultant, Jeff has built brands and businesses large and small. As a result, two of the companies he co-founded are now leaders in marketing with data. Strategy Outfitters helps businesses build brands through business analysis, marketing strategy and digital marketing. Mr. Walters serves as an Entrepreneur-in-Residence at the Walker Center for Global Entrepreneurship at Thunderbird, School of Global Management.

From Professor Ernesto Poza at the World Family Business Forum in Buenos Aires, Argentina

650 family business leaders from all over Latin America congregated in HSM´s Foro Internacional de Empresas Familiares.  I had the distinct honor of addressing these leaders in the opening and closing keynote presentations of the day. I collaborated on this impactful event with Professor Guillermo Perkins of IAE Business School in Buenos Aires and Professor Josep Tapies of IESE Business School in Barcelona, Spain.

Here is some of what was said:

• Family firms are complex enterprises.
• The superimposition of family and ownership on the management of an organization gives rise to significant challenges – how family enterprises manage these challenges in turn, equip many of them to be long-lasting engines of economic growth and true models of long-run sustainability.
• Family firms represent the leading-edge of business management and not the economic dinosaurs that family business stereotypes would have us believe.
• The required adaptations for the family firm lead many of these firms to deploy idiosyncratic strategies that shed light on what company leaders can do to promote the sustainability of both family-controlled and management-controlled companies.

The keynote addresses I delivered were anchored in a longitudinal quantitative research study of 79 firms whose results were published in a peer reviewed journal in 2004. My remarks reflected the most recent findings of global research on the financial performance of family enterprises. These findings were confirmed by a centennial family company qualitative research effort begun in 2005( that includes companies like Smucker’s, Timken Company and American Greetings in the US, Osborne and El Caballo in Spain and Grupo Ferré Rangel in Latin America. Preliminary results of this on-going study have been published as a chapter in a book (Hisrich, R., Global Entrepreneurship, Sage, 2010).

1. Family enterprises are financially outperforming management controlled enterprises all over the world. Research done in the US, Spain, France, Germany, Chile, Poland, Japan and most recently China, show a 6.65% to 16% annual outperformance in return-on-assets over a ten-year period by family enterprises.
2. They constitute 80% of all firms in the developed economies and 90% of all enterprises in the emerging economies. And account for between 64% and 80% of the GDP of the free economies of the world.
3. While continuity across generations, particularly beyond generation III remains a challenge, family enterprises are lasting longer and display a model of corporate sustainability marked by long-term investment horizons, 18-year CEO tenures (versus the 3-year tenures now common in corporate America) and numerous displays of generosity and corporate social responsibility in their respective communities.

In closing, I had the opportunity to call these leaders to action. Because family enterprises are the source of great societal wealth and not just owning family wealth in Latin America, two leadership imperatives awaited them on their return home:

1. Growing the family business – whether by taking it global, through digital strategies or product line extensions. In the absence of business growth, growing extended families run the risk of zero-sum dynamics that destroy an owner family´s capacity to sustain the enterprise.

2. Communications, financial transparency and family unity – because family unity is the source of the “patient capital advantage”. Patient family capital gives rise to a family firm´s ability to compete differently, idiosyncratically, and win (as shown above) in a hypercompetitive world economy.

Ernesto Poza is a world renowned expert on family enterprise. He is a clinical professor of global entrepreneurship at the Walker Center for Global Entrepreneurship at Thunderbird School of Global Management in Glendale, Arizona and the author of Family Business, 3^rd edition.

by Robert D. Hisrich Ph.D.

I am in one of my favorite cities in the world, Vienna, Austria. The art, music, people and of course, the kitchen and wine are excellent. I have been coming to Vienna since 1984, first as a tourist, then each month in 1989 while living in the Soviet-controlled Hungary, and then regularly thereafter doing research and seminars at Wirtschafts University, the Vienna University of Economics and Business, and the Technical University of Vienna.

Vienna is well geographically positioned to engage in business in many of once-controlled economies such as Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Bulgaria, Romania and even Russia and Ukraine.

I am presently doing seminars for two days in a program I helped create on Entrepreneurship and Innovation. This is a 30-hour master’s program, which I call a vertical. Many European universities have introduced these in a variety of functional areas such as finance, marketing, supply chain, human resources and outsourcing. MIT in the U.S. just introduced a 30-hour master’s degree program in finance and I hope to introduce a 30-hour master’s degree program in Global Technology Entrepreneurship and Management in Fall 2011.

The 30-hour master’s program is an alternative to the MBA program and allows a participant to lock step through a specialized curriculum with no electives in less than one year. I am convinced this is the future of business education, as many individuals, particularly those with science and engineering backgrounds, want shorter specialized degrees instead of the MBA.

Students in this program mainly have science, math, statistics or engineering degrees and want to innovate and either be an intrapreneur in their present company or start their own company as an entrepreneur. This is the same appeal and type of student who would be attracted to our proposed Master of Global Technology Entrepreneurship and Management. As you can imagine, they are a fun group to teach.

Robert D. Hisrich, Ph.D. is the Garvin Chair for Entrepreneurship and Director of the Walker Center for Global Entrepreneurship at Thunderbird School of Global Management.  His textbook Entrepreneurship is the most widely used text on the subject and is published in nine languages.  A self described serial entrepreneur Hisrich has established and sold numerous companies.

by Jim La Marche, TPEC

After nearly 24 hours and several layovers, the TPEC team successfully arrived in Ho Chi Minh City, Viet Nam for the Thunderbird Southeast Asia Private Equity Investing Conference. The team of alumni, faculty, and staff has been preparing diligently for Thunderbird’s first private equity symposium in Southeast Asia, so our arrival was much anticipated.

Thunderbird alumni Ryan Galloway, Takeshi Kamada, Jessica Tartell, Loan Ma, Hao Diep, Tavy Long, and MaiLuong, have led the effort in developing a stronger presence in Indochina by representing Thunderbird as TPEC Chairs in Viet Nam, Cambodia, and Japan.
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Last week, President Obama signed the Small Business Jobs Act of 2010, which includes several benefits for small businesses and also a benefit for angel investors. This benefit relates to investments made between September 27 and December 31, 2010.

The new law includes a 100 percent exemption for gains made in Qualified Small Business Stock, and this new bill effectively means that you pay no taxes on gains from your investments that meet several criteria below and Alternative Minimum Tax does not apply.
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By Melissa Beran Samuelson

Microfinance has become a trend that’s catching attention across the world.  This Wednesday, October 6th, the New York Times reported on Vinod Khosla, an Indian Angel Investor who was also co-founder of Sun Microsystems, and his support of microfinance as a powerful social enterprise tool.  In fact, he believes more wealthy Indians should look to these businesses as opportunities and invest (rather than donate) to combat poverty.  It’s a compelling argument, supported by the evidence of SKS’s success with its IPO in August.
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by Jim La Marche

The recent publication of a joint report by PricewaterhouseCoopers and the National Venture Capital Association has resulted in a flurry of articles in Arizona newspapers—two articles to be exact. Unfortunately the limited media coverage is analogous to venture capital’s (VC) role in Arizona’s economy. The MoneyTree report cited a grim picture for Arizona small businesses, where only six companies received venture financing worth $33.8 million. Though this number pales in comparison to other regions around the nation, it is indeed reflective of the difficulties that confront the venture capital industry.

Venture capital has existed almost as long as business. Where there was an entrepreneur, there was an investor financing the venture. However, venture capital only became an industry shortly after World War II, under the direction of the innovative Harvard professor Georges Doriot, now recognized as the father of present day venture capital.
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