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Scale Up™ Ecosystems for Growth

We provide regional economic development consulting services and educational programs to stimulate economic growth.

If more and more companies grow more and more rapidly in your region, your economy will grow.

Background. Since 2010 we have been pioneering new methods for using entrepreneurship to drive regional economic growth. Rather than focusing on increasing the number of new firms, we are catalyzing local ecosystems which increase the firms with new growth – Scale Ups. Scale Ups are companies that enter into new, rapid growth trajectories. Our experience is that roughly 10-20% of existing businesses in any region have the business experience, customer base and operational skills to double their growth rate. What they are lacking is an environment – the entrepreneurship ecosystem – that supports new growth trajectories.

Our Scale Up™ Ecosystems projects have five core elements:

Consulting services. We offer interconnected series of educational programs and consulting services to impact every domain of the Scale Up™ Ecosystem, including:

  • The Scalerator™ – teaches business owners ($1-$10 million) how to scale their ventures
  • The ScaleCorps™ – connects experienced executives with Scale Ups for mutual benefit
  • The CEO Forum – helps CEOs of $.3 to $3 billion companies stimulate innovative growth
  • Leader’s Language – teaches mayors (and other civic leaders) how to encourage growth
  • ScaleServe™ – engages professional service firms with Scale Ups
  • Financial Engagement – impacts the profitable deployment of capital

Platform. In each location we help you to create, coach and collaborate with a compact execution team to:

  • Execute the Scale Up™ programs;
  • Build and deliver a communications program;
  • Implement an industrial grade project management platform; and
  • Continually innovate new programs

Governance. Another core element to our Scale Up™ Ecosystems projects is a clear and comprehensive governance system that blends transparency and clarity with flexibility to continually innovate.

Professionals. Our Scale Up™ projects use some of the top entrepreneurship professionals in the world from Babson College, MIT, Harvard, and beyond including Daniel Isenberg, Vincent Onyemah, Elaine Eisenman, Kevin Mulcahy, Mary Gale, Candace Brush, and others.

Principles. Through experience with diverse environments, we have distilled a set of Scale Up™ action principles, for example:

  • Focus on specific regions
  • Align the leaders from different sectors around common growth objectives
  • Get quick wins on the board showing that Scale Up™ works
  • Build communications platforms to amplify the spillovers from success

Contact our team for more information.

 

[Babson logo used with permission]

How to Finance the Scale Up of Your Company

Posted by on Aug 19, 2014 in Articles, Authored, Harvard Business Review | Comments Off on How to Finance the Scale Up of Your Company

Originally published in Harvard Business Review on August 18, 2014. Co-authored with Daniel Lawton. Tom Szaky knows well the meaning of the saying “Beware your dreams, for they may come true.” With the 2004 Christmas retail season rapidly approaching, he was trying everything he could to scale up TerraCycle, a two year old venture selling liquid worm poop as fertilizer in used PET bottles. So far, he had been successful distributing through lots of smaller retailers, but had encountered a flood of rejections from the big box stores. Undaunted, Szaky finally landed a 15 minute meeting with Walmart Canada’s buyer. Instead of telling Szaky to “drop off the face of the earth” (he had been warned this was likely) Walmart Canada placed a huge order — for every one of its stores. But as he recounts in his engaging book, achieving his dream quickly turned into a nightmare when he was confronted with a stark reality: they had sold to Walmart without having the necessary infrastructure in place to handle the huge volume increase. Fortunately for Szaky, he hadalready laid the groundwork of financing from suppliers, equity investors and others to allow them to double sales in two months. Contrary to conventional wisdom, the most dangerous period for entrepreneurs is not when they start up from scratch but when they scale up for growth. When you are a startup, there is relatively little to lose, mistakes are fixable, and a small amount of cash and a cohort of committed colleagues can go a long way. But when you suddenly accelerate and grow, whatever your company’s age, things get really hot really fast, largely because your need for cash explodes overnight. Most entrepreneurial ventures, whether they are startups, spinoffs, or smaller companies which have been around for awhile, haven’t given enough thought or planning to financing for rapid scale-up. Here are some ways to keep the heat of new growth from melting you down. Use multiple sources of finance. Many entrepreneurs who are propelled into a sudden growth trajectory think mostly about raising risk-sharing equity investment from venture capitals or private “angels.” But when you scale up, it is faster, more feasible and less dilutive to cobble together your financing from a combination of equity investors, banks, public funds, suppliers, credit cards, customers, and even employees who will take stock options in lieu of some cash. One retailer I know discovered that the $100 or so penalty to defer California sales tax by a month was actually a cheap source of financing. It doesn’t make as glamorous a story as “raising $5 million from top-tier Valley VCs,” but this is how growth financing typically works in reality. Cross-leverage money from one source into cash from others. It may seem counterintuitive, but owing money to banks often makes you more attractive to equity investors, not less. To the risk investors, bank debt means that very conservative and experienced eyes will be watching your performance so that you make every payment on time. The risk-friendly equity investor also sees the debt as a cheap way to leverage their returns. So when you get some equity investment, rather than looking for more of the same, immediately talk to the bankers, the state funding agencies and other more conservative lending institutions. Particularly with investors and lenders whose interest is in securing the viability of your...

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What an Entrepreneurship Ecosystem Actually Is

Posted by on May 12, 2014 in Authored, Harvard Business Review | Comments Off on What an Entrepreneurship Ecosystem Actually Is

Fostering entrepreneurship has become a core component of economic development in cities and countries around the world. The predominant metaphor for fostering entrepreneurship as an economic development strategy is the “entrepreneurship ecosystem.” It should come as no surprise, however, that as any innovative idea spreads, so do the misconceptions and mythology. Here is a quick true-false test that will serve as a reality check on entrepreneurship ecosystems, and on the connection between entrepreneurship and development more generally. It’s important to get this right, because the emergence of entrepreneurship as a policy priority has paralleled (and is at least partly in response to) disappointment with dictated industrial policy, barren “cluster” strategies, and the failure of a limited focus on a set of macroeconomic framework conditions (the so-called “Washington Consensus”). If we’re to prevent the enthusiasm for entrepreneurial ecosystems from also fizzling out, we need to get a better grip on what the term really means. You know that you have a strong entrepreneurship ecosystem when there are more and more startups. False. There is no evidence that increasing the number of startups per se or new businesses formation stimulates economic development. There is some evidence that it goes the other way around, that is, economic growth stimulates new business creation and startups. There is also some reason to believe that the number of small businesses is negatively related to national economic health and the Kauffman Foundation  recently reported that as the US economy is improving and good jobs are increasing, the number of startups is decreasing. In fact, encouraging startups may be bad policy. Offering financial incentives (e.g. angel investment tax credits) for early stage, risky investments in entrepreneurs clearly stimulates the entrepreneurship ecosystem. False. There are actually few, if any, good evaluations of the impact of near-ubiquitous angel tax credits. One study of one of the oldest such schemes, the Entreprise Investment Scheme, started in England in 1994, suggests that it stimulated a significant increase of small investments (less than $10,000) by inexperienced investors who believed they received worse returns than the alternatives. In fact, the majority of venture capital investments are in California, New York, Massachusetts, and Israel, with no direct financial incentives other than fully-taxable profits. Job creation is not the primary objective of fostering an entrepreneurship ecosystem. True. Because no one owns or represents an entrepreneurship ecosystem, there can be no one objective that motivates all of the actors. The motivation for fostering entrepreneurship entirely depends on who the actor or stakeholder is. For public officials, job creation and tax revenues (fiscal health) may be the primary objectives. For banks, a larger and more profitable loan portfolio may be the benefit. For universities, knowledge generation, reputation, and endowments from donations may be the benefits. For entrepreneurs and investors, wealth creation may be the benefit. For corporations, innovation, product acquisition, talent retention, and supply change development may be the benefits. Many stakeholders must benefit in order for an entrepreneurship ecosystem to be self-sustaining. In order to strengthen your regional entrepreneurship ecosystem, it is necessary to establish co-working spaces, incubators and the like. False. There is no systematic evidence that co-working spaces contribute significantly to growing ventures. There are many anecdotes of high-growth ventures in all segments which got their starts in incubators, but there are also many more examples, less visible perhaps, of very success ventures that made...

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Entrepreneurs don’t disrupt, they create value

Posted by on May 9, 2014 in Authored, Miscellaneous blogs | Comments Off on Entrepreneurs don’t disrupt, they create value

“We have dangerous confusions about what entrepreneurs do and how they do it.” In this guest blog, Dan Isenberg argues that Entrepreneurship is the creation and capture of extraordinary value; it is not disruptive innovation per se, and innovation is neither necessary nor sufficient for entrepreneurship. Have we forgotten that disruption is connotatively and denotatively negative? Creation and disruption are virtual opposites. This distinction is both practical and important, because people can create a lot of disruptive innovation while destroying value rather than creating it. Extreme (and painful) example to make the point: On September 11th, 2001, a group of 19 men disrupted life as many of us knew it, killing thousands, shaking our feelings of safety, and disrupting the normal course of events in the world’s most powerful cultural and commercial center while negatively impacting the lives of many millions. The masterminds of this terrorism used totally unanticipated and novel methods that defied detection by the best trained intelligence apparatus in the...

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Entrepreneurship Always Leads to Inequality

Posted by on Mar 10, 2014 in Authored, Harvard Business Review | Comments Off on Entrepreneurship Always Leads to Inequality

Originally published in Harvard Business Review on March 10, 2014 “Inequality is bad.” “Inequality is dangerous.” “Our system is at risk due to increasing inequality.” Wealth inequality is on everyone’s minds these days: citizens, political leaders, economists, policymakers and yes, business leaders. Unfortunately, simpleminded thinking and insensitivity are often clouding the conversation. Deservedly vaunted venture capitalist Tom Perkins’ callous, arrogant and elitist recent comments should not serve as an expedient excuse to overlook an important “dirty little secret” about entrepreneurship, the acknowledged engine of economic growth:successful entrepreneurship always exacerbates local inequality, at least in the short run. The $19 billion sale of WhatsApp’s to Facebook made Koum and Acton, overnight, vastly wealthier than their next door neighbors. The Boston Innovation District’s meteoric real estate prices are pushing the very entrepreneurs who made the district sexy towards neighboring districts where rents have not tripled since 2010. Tel Aviv’s “Cottage Cheese Protests” in 2011 stemmed in part from the entrance of newly-exited wealthy entrepreneurs into the city making it too expensive for “normal folk” to live in, with its nouvelle cuisine restaurants and ten million dollar Mediterranean penthouses blocking the views of the grandmothers whose parents settled the city a century before.  The brand new Google Buses protest movement is fueled by similar fears. Seniors and the disabled worry they’ll be evicted to make room for well-paid and well-paying urbanizing tech workers cum stock-optionees with Tesla parking spaces worth more than a room in a public retirement home. In Seattle, home of Amazon and Microsoft, a protestor waved a sign, “Gentrification Stops Here.” Inequality, in the broadest sense, is precisely, and perhaps paradoxically, what entrepreneurship is all about: entrepreneurs use their wit and grit to burst into new markets and generate extraordinary wealth, sometimes very quickly, more often over decades. Along the way, entrepreneurship rewards smart and risk-tolerant investors (who helped build the success) with wildly above-market (read: unequal) financial returns. The most successful entrepreneurship is disruptive — a term entrepreneurs these days have donned as a magic mantle: “We have a disruptive business model, a disruptive technology, and will disrupt the market” goes the startup pitch. Amazon has disrupted book stores and other retail chains, Zipcar disrupted car rentals, Netflix is disrupting cinemas and cable companies, Airbnb disrupts hotels, and Bitcoin may disrupt the payment industry. But the meaning of “disruptive” was never meant to be pure and all-positive: its synonyms include “troublemaking,” “disorderly,” “disturbing,” “unsettling,” and ”upsetting.” With all the buzz around disruptive innovation as a driver of business success in recent years, it’s important not to forget this original meaning. Entrepreneurial success is intrinsically lopsided, a natural outcome of creating extraordinary value for customers. Entrepreneurship — if it succeeds — will always be, by definition, about the top one or two percent. It is about being the best of the best, about jumping over hurdle after hurdle on the way to the gold medal in the Olympics of enterprise, and leaving competitors in the dust. Entrepreneurship, per se, can create many social goods. It can push innovation, can create dignified employment, can improve quality of life, can contribute to fiscal health through taxes, anddoes (at least in a few countries, including the US) dramatically boost philanthropy. As I have argued in my book, successful entrepreneurship can also make housing unaffordable, increase taxes, and elevate the cost of personal services; it can deplete public goods such as education and health by giving the newly wealthy a simple and immediate work around public systems...

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Not so Tech; Not so Startup.

Posted by on Jan 23, 2014 in Authored, The Economist | Comments Off on Not so Tech; Not so Startup.

Not so Tech; Not so Startup.

Originally posted in The Economist on January 23, 2014 Daniel Isenberg, who created the entrepreneurship ecosystem project at Babson Executive Education, thinks that our special report on tech startups, “A Cambrian moment”, promulgates the misimpression that entrepreneurship is exclusively, or even largely, about small, accelerated, lean social media startups. We invited him to write a reply. THE distinction between tech and non-tech entrepreneurship is false. Today, every business venture, entrepreneurial or otherwise, requires technology to be competitive, whether it is diamond trading, transportation, construction, or energy. There is nothing intrinsically more technological about Twitter and Facebook, say, than about Harley-Davidson or American Express. In fact, medical devices and alternative energy are arguably more technology-intensive, generically, than any of the report’s wide-eyed examples. Furthermore, for any business, anywhere, ignoring the opportunities and necessities presented by technology is backing light speed into oblivion, and no different than ignoring the existence of electricity or cars. And research is showing that as many, if not more, social and economic benefits of entrepreneurship accrue from non-tech entrepreneurship and that the new public policy focus on startups may be badly misplaced. Entrepreneurship and startups are not one and the same. Many startups are not entrepreneurial and much entrepreneurship is not about startups. In 1999 Icelander Robert Wessman came home from Germany, took over a badly teetering generic pharmaceuticals company with one product in the market, poured his life savings and house into it (and a lot of outside cash) and within eight years grew it 100 times into a global leader with 11,000 employees, 650 products, operations in 40 countries, over $2 billion in sales, and fifth in the world (ACT, now number 3, market capitalisation of $30 billion, not too far from Facebook’s about a year ago). In 2001 Ron Zwanziger founded Inverness Medical (now Alere) out of the leftover assets from the $1.3 billion sale of his glucose-monitoring business (OneTouch) to Johnson & Johnson: today Alere is worth $3 billion. There is a startup traffic jam. What seems to be clear is that there has been a sharp increase in the ranks of tech starts, a trend that may continue. What is less clear is whether this is generally beneficial to entrepreneurs or society, contrary to what the report strongly implies. Leaving aside whether iPhone-based lute-tuning is a market-maker (we’ll let the market sort that out), it is very likely that the on-ramp of startups has been jam packed, while the actual speed on the highway has not been impacted at all. In fact, the entire highway just may move more slowly as a result of the startup glut—that is, firms that have the wherewithal to scale into socially and economically valuable ventures, may just be slowed down by the on-ramp traffic build up, the hype, and the valuable resources startups tie up. Scaling up is vastly harder than starting up. What is much more certain is that, as anyone who has tried, as I have, can tell you, starting up a venture is just the first baby step on a long hard trudge to scale up. But without the ability to scale way beyond start, all the blood, sweat and tears (and money) will be flushed right down the drain. The Economist does warn us that starting up a venture is back breaking, but that start is such...

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The Unexpected Upsides To Business Failure

Posted by on Jan 22, 2014 in Interviews and Media Quotes, Miscellaneous blogs, Video | Comments Off on The Unexpected Upsides To Business Failure

Originally published on WGBH.org on January 22, 2014 If at first you don’t succeed, you could be better off in the long run. It’s not as catchy as the actual saying, but it may be just as apt. As part of this week’s in-depth FOCUS report on second chances, we’re looking at the benefits of failure. And as WGBH News reporterAdam Reilly shows us, some area businesses are embracing failure in surprising ways. GUEST Daniel Isenberg is a professor of entrepreneurship at Babson College, an adjunct professor of management at Columbia Business School, and the author of “Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary...

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4 Big Myths About Starting Your Own Company

Posted by on Jan 21, 2014 in Authored, Bloomberg Businessweek | Comments Off on 4 Big Myths About Starting Your Own Company

4 Big Myths About Starting Your Own Company

Originally printed in Businessweek on January 21, 2014 Entrepreneurship has become faddish of late, and business school students are not immune to the fervor. I have devoted more than 30 years to the study and practice of, and investment in, entrepreneurship, and here’s my advice: take a gimlet-eyed look at what the entrepreneurial life entails before you take the leap. Entrepreneurship is almost never about working in flip-flops in an incubator; it is tough work that requires extraordinary effort. It is super full-time and super risky. In today’s tough job market, “doing a startup” may sound better than “unemployed,” “getting my third master’s degree,” or “staying with my folks awhile.” But entrepreneurship is for those who are laser-focused on building a company that will scale; it is a marathon, not a sprint, usually requiring a decade or longer of commitment. Students, like the rest of us, should be prepared to separate myth from reality. Like most fads, entrepreneurship has its own mythology. Here are some of my favorite examples: Having a startup makes you an entrepreneur. Saying that starting a new venture automatically makes you entrepreneur is a little like saying that if you put on skates and grab a stick, you’re a hockey player. The vast majority of startups are founded by people who do not see themselves creating a new market or who lack the managerial skill to go the distance. It is not a coincidence that the Kauffman Foundation coined the phrase jobless entrepreneurship, words I would recommend putting as a warning label on every startup idea. Entrepreneurship is for the young. Not only are many valuable ventures started by people 40 and up, there is reason to believe that industry knowledge, wisdom, managerial experience and a rich contact list can help get a venture off the ground faster and with better backing. Even if launched by a student, grey-haired mentors, investors and partners are almost always required to get into the marketplace and the stamina to stay there. Primesense, a maker of 3D sensorsreportedly bought by Apple (AAPL) for $350 million, was founded by thirty-somethings, but they were closely coached by Dr. Orna Berry, a prominent Israeli tech executive and venture capitalist who is over 60 with 30 years industry experience. Entrepreneurship requires passion. If by “passion” you mean energy, commitment, hard work, and self-confidence, well, yes, of course. But passion can make you blind.  An entrepreneur who is going to conquer or create a market must have the ability to face facts without blinders, and course-correct or drop out when those facts force reconsideration. When Microsoft (MSFT) stopped using Primesense technology in the Xbox 360, the startup made the dispassionate (and painful) decision to slash payroll in half and shift its strategy to focus on smaller, less expensive devices. Entrepreneurship requires innovation. The vast majority of successful ventures are based more on amazing execution than invention or innovation. Many are even outright copycats, pasting a proven business from one side of the globe to the other. Others are minor tweaks of an established winner. To be sure, there are many examples where new technologies, inventive business models and novel processes have been a key component of an entrepreneurial venture. Even in those cases, amazing execution is a sine qua non of growth and success. But often value is unlocked with an incremental twist on a tempered template (something I have called...

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If I was…setting out to be an entrepreneur

Posted by on Jan 15, 2014 in Authored, Financial Times | Comments Off on If I was…setting out to be an entrepreneur

Originally published in Financial Times on January 15, 2014 By Daniel Isenberg Daniel Isenberg has several roles, including professor of management practice at Babson College, founding executive director of the Babson Entrepreneurship Ecosystem Project, and founder and chief executive of Entrepreneurship Policy Advisors. He has just published “Worthless Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value”. Here, he uses his experience to set out what he would do if he planned to be an entrepreneur: If I were setting out as an entrepreneur today, I would buy an existing company to scale up rather than build a start-up from scratch. I would make incremental tweaks of improvement rather than innovate, exercise cool judgment rather than hot passion and build my departure plan from day one. Why would I not launch a startling new start-up from scratch? Because many wild-eyed start-up ideas are shopping plans that are “dumpster-destined” from the outset. It is a romantic myth – one promulgated by experts like myself – that start-up entrepreneurs launch great ventures, reap millions and make the world a better place. A few do, but frighteningly few. Most start-ups (more than 95 per cent) burn out or, more likely, just flatline after the first year or two, when founders are no longer motivated by a no-salary day job. In reality, a lot of great businesses, such as PayPal [the online payments system] and Kaspersky [the internet security company] are carved out of, or combined from, existing assets, or are family businesses taken sky-high by the second or third generation. Rather than start a new company, I would buy a rusty old business to fix up and grow as fast as I could. I want a discarded company that is undervalued but can be dusted off, refurbished with vision and talent, and scaled up. I would be talking to venture capitalists. I would look for something simple yet compelling. I read the other day that start-ups should be “paradigmatic” based on whiz-bang technology. But I know that proprietary technology is not a market maker by itself. Great marketing and management almost always trump big innovation. Minnovation – small tweaks on existing products – is what moves the ball of economic growth forward. Neither Facebook nor Google, for example, were technology pioneers. Big innovations are few and far between and are often the stuff of large companies with long patience and deep pockets. Next, I would drain my venture of passion and replace it with commitment, hard work and realistic and relentless self-assessment. If I had a dollar for every optimistic first-timer who capped his or her pitch to me with: “And it is an idea that I am so passionate about,” I would be long retired. Instead, my next venture would stand the stark test of harsh neon lights, exposing every flaw and crack long before the market does so that I can fix them before the customers vote with their feet. Finally, I would plan my passionless departure from the start, creating a platform to allow the talented people and partners I hire to outperform me very soon. This does not necessarily mean I will leave, but it will impose the discipline of a self-sustaining organisation. The cemeteries of entrepreneurship are full of founders who were “irreplaceable” or did...

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Daniel Isenberg: “if it’s predictable, it’s not entrepreneurship.”

Posted by on Jan 6, 2014 in Miscellaneous blogs | Comments Off on Daniel Isenberg: “if it’s predictable, it’s not entrepreneurship.”

Originally published in Startup Tel Aviv by Natalie Edwards / January 6, 2014 Daniel Isenberg is an expert on how the public and private come together to create environments that foster entrepreneurship. IsraelDev invited Daniel to come to Tel Aviv University to talk about the opposite of that, how entrepreneurship can spur economic development, not just about how it’s happened in Israel but also how it could happen in emerging markets. Daniel Isenberg talking at Tel Aviv University Daniel is an important guy – he’s taught at Harvard, written books (“Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value”), worked on policy at forums and summits, and founded an institute, the Babson Entrepreneurship Ecosystem Project, which reflects his expertise and professional mission. He’s also been an entrepreneur, venture capitalist, and angel investor since he moved to Israel in the late 80s. Unlike the popular narratives on display in “Startup Nation” and others, Daniel said the development of entrepreneurship in Israel “has been far from a straight line. It’s evolved differently.” And by extension, it will evolve differently everywhere else. He quoted early 20th century thought: “the principle of indeterminateness means that economic development is intrinsically unpredictable.” And vice versa, “if it’s predictable, it’s not entrepreneurship.” Entrepreneurship may be a driver of economic development, he said, but it occurs in “jerks, cracks, and leaps.” And “despite the fact that I sound confident,” he continued,”this is murky business” and that “should make us humble.” Daniel spent a lot of time trying to define exactly what is entrepreneurship. He compared two possible entrepreneurs: one, Dean Kamen, whose segway was supposed to “revolutionize personal transportation” with the help of loads of internal and external financing and ended up being called by Time Magazine one of the 10 biggest technological failures; and two, Robert Wessman, a twenty-something Icelander who refinanced his home over and over to turn a shrinking pharmaceutical business called Actavis into a global powerhouse. One is an example of organic growth; the other is an example of growth through acquisition. So which venture is more entrepreneurial? Let’s compare them to a third company, Tough Mudder, a quirky running competition for gladiator types that originally failed a startup competition at Harvard. In their first year, Tough Mudder earned $20M in revenue, in their second year, $72M, in their third, $120M. All from a total investment of $20k in plastic. Now, thanks to what’s probably a 50% gross margin range, the people at Tough Mudder have started their own internal venture capital fund. “Today, entrepreneurship is a buzzword,” Daniel said, “but what is it? A lot of young people think it’s mobile applications.” “What it is is the creation and capture of extraordinary value.” “By definition, all these examples after the fact are obvious. Before the fact, investors, partners, consumers, everybody thinks they’re worthless, irresponsible, stupid. In order to create extraordinary value from the marketplace, you have to be ready to create risk, and also buy low and sell high.” Israel’s own path to becoming the startup nation was turbulent. In the mid-70s there was a boom and a lot of optimism with Elson, Israel’s first public company, and Sidetech. The 80s also witnessed a slew of companies spinning off from the security industry. And now there’s another boom with unprecedented levels of...

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‘Entrepreneur’ Has Become a Buzzword. Let’s Reclaim It

Posted by on Nov 14, 2013 in Book Coverage, Interviews and Media Quotes, Miscellaneous blogs | Comments Off on ‘Entrepreneur’ Has Become a Buzzword. Let’s Reclaim It

Originally posted in Inc. on November 14, 2013 Daniel Isenberg says entrepreneurship has become a fad. His book, Worthless, Impossible, and Stupid, seeks to dispel the modern myths that surround the word. Worthless. Impossible. Stupid. Safe to say those are three words aspiring entrepreneurs probably doesn’t want to hear assigned to their idea, right? Wrong, says Daniel Isenberg. The author of the aptly-titled book Worthless, Impossible, and Stupid argues that anything entrepreneurial–truly entrepreneurial–shouldn’t be perceived as valuable, feasible, or smart. That’s because entrepreneurism, rather than referring to anybody who starts a business, is all about seeing value where nobody else does, he says. Entrepreneurship is contrarian. Isenberg is the founding director of the Babson Entrepreneurship Ecosystem Project and a former professor at Harvard Business School. His book was published earlier this year, and he took some time to speak with Inc. about it. Inc.: Nobody wants to hear about their idea as worthless or impossible, and certainly not stupid. But you’re using those as positive terms. What is behind that framing? Daniel Isenberg: It’s something very fundamental about entrepreneurship. Because entrepreneurship has become a buzzword in the last five years or so, people do with it what they want. I think we’ve gotten very confused as a society about what is important about that term. One (confusion) is that it has to do with startups, that every startup is entrepreneurial and every entrepreneur has a startup. The second confusion is that every entrepreneur is innovative and most innovations are entrepreneurial. What I’m trying to get back is what entrepreneurship really means: doing something that is out of the ordinary in terms of value creation. Entrepreneurs are creating extraordinary value by, in the most general sense, buying low and selling high. They’re beating the market by taking something that looks less valuable to everybody else. It gets at the very heart of what entrepreneurs do. They’re doing things to create extraordinary value to the marketplace by finding things the market doesn’t appreciate. So what is the market supposed to say? What are investors supposed to say? “This is wonderful, this is great, why didn’t I think of that?” No. They say something between apathy and rejection and derision. That’s the experience of the vast majority of entrepreneurs who later, in hindsight, people say, “What a great idea that was!” How do we know if something’s going to be good or not? The point is, we don’t. There’s something about entrepreneurship that is intrinsically unpredictable. Inc.: One example you reference in your book is Tough Mudder, the fitness challenge that is conducted in, well, very muddy terrain. Isenberg: It’s literally people running through the mud doing these ridiculous things. And it’s interesting because the two co-founders competed in the Harvard Business School Business Plan Competition. And they were trounced in the first round because the judges said, “This is too narrow. It’s a niche concept. It’ll never be scaleable. It’s a little blip.” Well, this year they’ll do $120 million in revenues. It’s their third full year. And that’s with $20,000 they invested in the company. Inc.: So if you’re telling us the modern definition of an entrepreneur–somebody who starts a business, basically–is misplaced, where do you think the misperception came from? Isenberg: Oh, I don’t know. How does any fad emerge? The flames have been fanned by (political) leaders who don’t know what they’re talking about and have latched...

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