1984-198919901991-19941993-199619962002~2004~2005~2006.8~2007.7

Ph.D. Auburn University http://cm.nsysu.edu.tw/~cyliu

PC ABC

30% 30% () 40%

2002

Jeffry A. Timmons and Stephen Sppinelli, McGraw Hill, 2004Dollinger, M.J. () 2006Jeffry A. Timmons and Stephen Spinelli, New Venture Creation, 7th edition, McGraw Hill, 2006

1970s --- 30 years1990s --- 15 -- 20 years2000s --- 10 -- 15 years 510 years ????

70%40

It was the new and growing smaller firms that created 81.5% of the net new jobs in the economy from 1969-1976.Since 1980, America has created over 34 million new jobs but the Fortune 500 lost over 5 million jobs.

The poor are moving on up and getting richer faster

Percent in Each Quintile in 1991

Income Quintile in 1975

1st

2nd

3rd

4th

5th

5th (hightest)

0.9

2.8

10.2

23.6

62.5

4th

1.9

9.3

18.8

32.6

37.4

3rd (middle)

3.3

19.3

28.3

30.1

19.0

2nd

4.2

23.5

20.3

25.2

26.8

1st (lowest)

5.1

14.6

21.0

30.3

29.0

The Poor Are Getting Richer Faster* Figures are in 1993 dollars

Income Quintile in 1975Average Income in 1975 *Average Income in 1991 *Absolute Gain5th (highest)$45,704$49,678$3,9744th22,42331,2928,8693nd (highest)13,03022,3049,2742nd6,29128,37322,0821st (lowest)1,15326,47525,322

Six Largest Economies 20052050123456unit1000 billions USDUS

Japan

German

China

Britain

France

China44.45US35.17India27.8Japan6.67Brazil6.07Russia5.87

This pictures shows american cities at night.

GRADUTE GLUT(30% unemployment in 2004)02 03 04 054

3

2

1

0MILLIONSSTUDENTS GRADUATING FROM CHINESE UNIVERSITIESData: Education Ministry (china).

200641014

NATIONAL ENTREPRENERUSHIP RESEARCH CENTER

---- 1605024412%30%

Time for New Technologies to Reach 25% of the U.S. Population

Household electricity (1873)46 yearsTelephone (1875)35 yearsAutomobile (1885)55 yearsAirplane travel (1903)54 yearsRadio (1906)22 yearsTelevision (1925)26 yearsVideocassette recorder (1952)34 yearsPersonal computer (1975)15 yearsCellular phone198513 yearsInternet19957 years

What is New Venture Creation ?

ActionManagement TeamworkRadical innovationNew venture creationEntrepreneurship

= +New Venture Creation = Innovation + Entrepreneurship

= Innovation = Invention + Commercialization

() / /

Thomas Alva Edison (Innovator)1000

What is Entrepreneurship?

Entrepreneurship is the creation and/or recognition of opportunities, followed by the will and initiative to seize these opportunities. It requires a willingness to take risks -- both personal and financial -- but in a very calculated fashion in order to constantly shift the odds to your favor, balancing the risk with the potential rewards. Typically, entrepreneurs devise business operations to marshal their limited resources to generate profit for employees, shareholders, and himself .

()

Theory does matter

Information model of scienceS1T1S2T2Circumstance-based Theory in Social Science

(Intellectual Capability)

Cisco 1984 1984 1987 1988 1990 IPO1990 1995 1995 2000 2001 --

Bill YeagerMulti-ProtocolCisco

(scientists)(engineers), entrepreneurial businessperson

Xerography Chester F. CarlsonEngineer and Inventor 1935 19381939-1944Russell Dayton CEO of Battelee Memorial InstituteIncubator and product development) 1944--1947Joseph Wilson CEO of Haloid Company Commercialization, funding, and entrepreneurial businessperson) 1947 ---The Xerox Model 914 Copier (in 1958)

ActionManagement TeamworkEntrepreneur

Cisco

Angel Fund Winning Angels by Stevenson & Amis, 2001

niche marketmass marketoperation efficiency

ActionManagement TeamworkSustaining innovationEntrepreneur

AC 1 2BD

20011Lucent, Gateway CiscoDellCiscoCisco202000

ActionManagement TeamworkSustaining or disruptive innovationBusiness Model InnovationEntrepreneur

Centocor Centocor197919971999Johnson & Johnson4520 CentocorJ.P. Schoemaker18

Entrepreneurship = ParadoxesAn opportunity with no or very low potential can be an enormously big opportunity.To make money you have to first lose money.To create and build wealth one must relinquish wealthTo succeed, one first has to experience failureEntrepreneurship requires considerable thought, preparation, and planning, yet is basically an unplannable event.For creativity and innovativeness to prosper, rigor and discipline must accompany the process.

Think Big or Think Small ???

Think Big or Think SmallPro Think Big

Survival Rates by Firm Size

Think Big or Think SmallPro Think SmallThink Big Think Big

Age of starting new venturesNFIB,1997,USAAge of entrepreneurUnder 25 11.0%25-29 16.7%30-39 33.2%40-49 25.1%50-59 9.8%Over 60 4%

(The secret of US economic success has been and continues to be its innovative and entrepreneurial culture.)

Howard SchultzCEO of Starbucks Coffee

Question 1?

937 56

Chart4

00.026

0.230.63

0.340.064

0.410.235

0.020.039

Sheet1

0.410.59

0.230.44

3.

0.000.230.340.410.02

0.030.630.060.240.04

7.0.160.15

8.0.460.14

Sheet1

Sheet2

Sheet3

7.

8.

2007

2006

2005

2004

2003

2002

2001

20004.753.663.553.683.333.853.933.45()()4.544.503.823.374.084.452.993.44

70%86%MBAMicrosoft, Netscape, Dell, Apple, Nike, DEC, Gateway 2000, Federal Express, Lotus, .., all start new ventures in their 20s.

(.)

2008/3 51

2008/3 51

2008/3 51

2008/3 32

2008/3 32

2008/3 32

2008/3 32

2

Entrepreneurial FinanceEntrepreneurial Management, Entrepreneurial Marketing50001. 2. Professional Services, Running and Growing the Small Company1. 2. 3. Entrepreneurship, Creativity, and Organization, 1. 2. 3. 4. 5. 6. Venture Capital and Private Equity1519805019992000Starting New Ventures,

.

Question 2?

Question 3?

less averse to risk

risk aversionSome economists have suggested that less risk averse individuals become entrepreneurs (Kihlstrom and Laffont, 1979)less risk averse individuals

risk neutral

The cholesterol drug project

Valuation method

NVP(million)

1993

1994

1995

Method A: DCF using most likely scenario

-$11.4

Method B: DCF with only market uncertainties included

-$9.0

Method C: DCF when both market and technological uncertainties included

-5.4

-6

Method D: Options

+$2.2

_1132749613.unknown

_1132749699.unknown

_1141116584.unknown

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_1132749812.unknown

_1132749659.unknown

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(Timmons)

Some Basic ConceptsIn the past, entrepreneurs started business. Today they create opportunities and invent new business models. That is a big difference!There is shortage of quality entrepreneurs and opportunities, not money.In the world today, there is plenty of technology, plenty of money. Whats in short supply is great teams. Your biggest challenge will be building a great team. Rounding out the model of the three driving forces (opportunity, resources, team) is the concept of fit and balance.

NANOWIN TECHNOLOGY CO., LTD.

200568

20075

200340002004DEJ1200300020057

IndividualsResources & Capabilities.

EnvironmentOrganization

New Venture Creation

--- PROFIT PhysicalReputationOrganizationFinancialIntellectual & humanTechnology

2485C

85C85C15002555013118701351803506505%30%1.332006200

85C24

by

(Entrepreneurs)Propensity(Motivation)(Entrepreneurship)(Capabilities)(Opportunities)(Resources)(Teamwork)(Business Model)(Networks)(Environment )(Execution)

$100 USD

MIT

1963-2005AMJ

Ireland, Reutzel and Webb2005Academy of Management Journal (AMJ)Entrepreneurship Research in AMJ: What has been published, and what might the future hold?AMJ

cyliu

Chart2

3

2

1.5

3

4

12

25

Sheet1

1963-693

1970-752

1976-811.5

1982-873

1988-934

1994-9912

2000-pressent25

Sheet1

0

0

0

0

0

0

0

Sheet2

Sheet3

(1) (Busenitz et al., 2003; Shane & Venkataraman, 2000)

(Venkataraman , 1997; Shane & Venkataraman, 2000) Busenitz et al., (2003)Ucbasaran, Westhead & Wright (2001)

(2)Busenitz et al., (2003)

Gartner (1985) (process)

20

Q&ADiscussion

It requires a willingness to take risks -- both personal and financial -- but in a very calculated fashion in order to constantly shift the odds to your favor, balancing the risk with the potential rewards. Typically, entrepreneurs devise ingenious strategies to marshal their limited resources.

Timmons

_1054938772.vsd

()

()

20304050

FedEx (Fred Smith)Nike (Bowerman and Knight)DELL (Micheal Dell)

1940J.C. Penny751945 --- Ben Franklin1962Wal-Mart810123Wal-MartWe sell for less.

Overall Startup Failure Rates* Startups are defined as firms that are one year old or less.

Startups* Tracked IndustryStartups 1998 Q1Survivors 2002 Q2Survival (percent)Failure (percent)Total for industries565,812303,51753.6%46.4%Agriculture15,5649,23959.440.6Finance14,8998,00353.746.3Manufacturing32,23618,92158.741.3Real estate16,22910,26163.236.8Retail142,50472,51250.949.1Wholesale37,30719,17151.448.6Technology28,57513,15946.153.9Computer Hardware48522145.654.4Computer Software/Services18,7338,38744.855.2

2831978~20052904774251373910.919.4108.313

19771983199019984420012006

1995199812300200032200200020012

MBA

1995519986199811

199561997112.11998623%1.5199941999520004

Why?

..

=

69%40%

19701991200035%200119.95%5%

Creativity and InnovationGeneral business skills, business know-how, and networkLowHighHighLowInventorEntrepreneurManager, Administratorclerk

Q&ADiscussion

0 10 20 30 40

Guess which schedule belongs to Jack ?9:00 Internal Meeting 10:00 Internal Meeting 11:00 Internal Meeting 12:00 Lunch2:00 Internal Meeting 4:00 Internal Meeting

9:00 Customer Meeting 10:00 Customer Meeting 11:00 Customer Meeting 12:00 Lunch with Customer2:00 Customer Meeting 4:00 Customer Meeting

WTOIC3C

Schumpeter personal traits[1] [1] Schumpeter, J.A. 1934, The Theory of Economic Development, New Brunswick, NJ: Transaction.

Kirzner1979

Entrepreneurial Mindset and Entrepreneurial Opportunity Identification

Ideas groupPotential OpportunityIdentify OpportunityMotivationOpportunity RecognitionOpportunity IdentificationSocial NetworkPrior KnowledgePersonal Trait

Action = desire (motivation oriented)+ believe (knowledge oriented)

RiskOpportunityOpportunity imbedded in risk and uncertainty

?? NB????Web2.0

, , , , (Value Network), , , , , ,

Quick ScreenThe ability to quickly and efficiently reject ideas is a very important entrepreneurial skill.1. Market and Margin Related Issues2. Competitive Advantages3. Value Creation and Realization Issues4. Overall Potential

overall potential

Timmons Four Anchors Assessment CriteriaAdd significant value to customerMeeting a significant want or need for which someone is willing to pay a premium.Having robust market, margin, and moneymaking characteristics.Good fit with founder and management team and with risk/reward balance.

//

/

SW.

WHY?

Discounted Cash Flow Incremental Innovation(Option)

1* *

2007 13.3 0.22

OEM/ODM

$20,000$6,000$1,500IEK/MIC

On Sales: 3500 USDSales Price: 10000 USD

Low-end Disruptive Customer NeedDisruptive innovationSustaining innovationLow-end disruptionOver Supply

, , 199720061400

1200

1000

800

600

400

200

0

2006 --- Person of the Year

2007

Q&ADiscussion

10483.3%

(teamwork)(founder)

12870

(1)(2)(3)(4)groupthinkgroupshift

groupthinkgroupshift

core ideologyenvisioned future (core value)(core purpose)

vs.

85%(15%)15%

Q&ADiscussion

ABC

CMOSIC---144176pixelICIC2.2

(1)20%(2)5%(3)15%(4)50%(5)10%30%20%ABCF30%ABCABCABC

1.CMOSASIC CMOS2.Realtime CODEC3.Intelligent Image Sensor

ABC6.630% 2 A 2.210% 1B 2.210% 1 4.420% 2 2.210% 1 20%

(1) ;(2) (3) (4) (5) (6) (7) (8) (9) (10)

ABC () ABC CMOSCCD3CCMOS CMOSVVL30CMOS 20% ABCABCF

ABC ()ABC CCD(Pixel)CCDCCDCCDIntelMMXCCDCMOSABCCMOSCCDCMOS(0.15-.028m)2000CMOSCCDCMOS144176(pixel)30CMOSABC30%

business modelABCABCABC

CMOSCCDSGeoffrey Moore2.2

Sheet: Chart1

Sheet: Sheet1

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1995

1995

1995

1995

NKK 2000

NKK 2000

NKK 2000

NKK 2000

2000

2000

2000

2000

2000

2000

2000

2000

2000

2000

2000

2000

24000.0

4000.0

8000.0

4000.0

15000.0

6900.0

6000.0

2100.0

6959.999999999999

6959.999999999999

5040.0

5040.0

12400.0

2800.0000000000005

3000.0

1800.0

13000.0

2000.0

2000.0

3000.0

1995

24000.0

4000.0

8000.0

4000.0

40000.0

NKK 2000

15000.0

6900.0

6000.0

2100.0

30000.0

2000

6959.999999999999

6959.999999999999

5040.0

5040.0

24000.0

2000

12400.0

2800.0000000000005

3000.0

1800.0

20000.0

2000

13000.0

2000.0

2000.0

3000.0

20000.0

Hitting the Wall of Diminishing Profit ActionWorkHardContinuous ImprovementHitting the Wall of Diminishing Profit

Driving Investment

(Enabling Investment ) (Emergent Investment) (Passive Investment )

0 -- 5% > 15 %

0 -- 5%

> 15 %

6.9% 12.3%

25.8%

9.5%

1. 2. 3. 4. 5. 6.

37%28%

13%28%75%41%4%

AT&T1984AT&TAT&T74NCRAT&T199650AT&T19941996400

1234

1. 2. 3. 4. 5. 6.

/

1.CMOSASIC CMOS2.Realtime CODEC3.Intelligent Image Sensor

Deliberated planning vs. Discovery-driven planning(Deliberated planning )(Discovery-driven planning)

Some dangerous implicit Assumptions in new venture creation1. Customers will buy our product because we think it is a good product.2. Customers will buy our product because it is technically superior.3. Customers run no risk in buying from us instead of continuing to buy from their past suppliers.4. The product will sell itself.5. Distributors are desperate to stock and service the product.6. We can develop the product on time and on budget.7. We will have not trouble attracting the right staff.8. Customers will agree with our perception that the product is great.9. Competitors will respond rationally.10. We can insulate our product from competition.11. We will be able to hold down prices while gaining share rapidly.12. The rest of our company will gladly support our strategy and provide help as needed.

(1) ;(2) (3) (4) (5) (6) (7) (8) (9) (10)

t 2 ()XYZt 3 ()t 1 (1)T121121

The cholesterol drug project

191950~19601970~198019801990