Choosing a business partnera framework for the entrepreneur

A new venture with a team is more likely to succeed

• The lone entrepreneur is a popular myth• A team approach is proven more likely to

succeed1

1. Timmons, J & Spinelli, S 2007, New Venture Creation: Entrepreneurship for the 21st Century 7th ed., McGraw Hill Irwin, New York; Schutjens, V & Wever, E 1999, “Determinants of new firm success.” Papers in Regional Science, vol. 79, no. 2, pp. 135-153.; Baron, R & Markman, G 2000, “Beyond social capital: How social skills can enhance entrepreneurs' success.” Academy of Managment Executive, vol. 14, no. 1, pp. 106-116.

2. Baron, R & Markman, G 2000, “Beyond social capital: How social skills can enhance entrepreneurs' success.” Academy of Managment Executive, vol. 14, no. 1, pp. 106-116.

“What there is in our business is plenty of plans, plenty of entrepreneurs, and plenty of money. What there’s a shortage of is great teams.”2

John Doerr, partner in a Silicon Valley venture capital firm

So what makes a good entrepreneur?

• Developed an approach that looks at the qualities of a good leader and a successful entrepreneur

• Leadership and management models• Studies on successful entrepreneurs• Personality type

Good leadership vital – and it’s a tricky balancing act

Positive framingConnecting

EngagingManaging

energy

Meaning

Impact: PresenceResilienceBelonging

Centered leadership: how talented women thrive1

1. Barsh, J, Cranston, S & Craske, R 2008, “Centered leadership: How talented women thrive.” The McKinsey Quarterly, vol. 4, pp. 35-48.

A good social network gives your start-up a competitive advantage

• People will help you out, proving the economic theories wrong1

• A good network can get you opportunities not available on the market, or resources cheaply.2

• Have to obey the laws of reciprocity3

1. Witt, P 2004, “Entrepreneurs' networks and the success of start-ups.” Entrepreneurship and Regional Development, vol. 16, pp. 391-412. 2. Baron, R & Markman, G 2000, “Beyond social capital: How social skills can enhance entrepreneurs' success.” Academy of Managment Executive, vol. 14, no. 1, pp. 106-

116. 3. Witt, P 2004, “Entrepreneurs' networks and the success of start-ups.” Entrepreneurship and Regional Development, vol. 16, pp. 391-412.

Social networks are only built through excellent social skills

• Vital for success once you are ‘through the door’

• Venture capitalists place great weight on social skills1

• Critical skills2:– Social perception– Impression management– Persuasion and influence– Social adaptability

1 & 2: Baron, R & Markman, G 2000, “Beyond social capital: How social skills can enhance entrepreneurs' success.” Academy of Managment Executive, vol. 14, no. 1, pp. 106-116.

Make sure you are compatible – the Myers-Briggs Type Indicator1

Extraversion Introversion

IntuitionSensing

Thinking Feeling

Judging Perceiving

1: Krebs Hirsh, S & Kummerow, J 1998, Introduction to Type in Organizations 3rd ed., CPP, Inc., Mountain View.

Soft skills are not enough, there’s an entrepreneurial skill-set too

• Management or entrepreneurial experience is a predictor of success1

• Need a generic set of hard skills in the venture2

MarketingOperations and productionsFinanceEntrepreneurial managementLaw and taxesInformation technology

1 . Schutjens, V & Wever, E 1999, “Determinants of new firm success.” Papers in Regional Science, vol. 79, no. 2, pp. 135-153.2. Timmons, J & Spinelli, S 2007, New Venture Creation: Entrepreneurship for the 21st Century 7th ed., McGraw Hill Irwin, New York.

Who’s in charge? Choose the right ownership structure

• Democratic models mostly don’t work1

• Whoever has ownership has the power2

• Rewards need to be:– Differentiated– Performance based– Flexible3

1. Timmons, J & Spinelli, S 2007, New Venture Creation: Entrepreneurship for the 21st Century 7th ed., McGraw Hill Irwin, New York. 2. Lansberg, I 2009, Succeeding generations: realizing the dream of families in business, Harvard Business Press, Boston. 3. Timmons, J & Spinelli, S 2007, New Venture Creation: Entrepreneurship for the 21st Century 7th ed., McGraw Hill Irwin, New York.

Choosing a business partner

Start your venture with a team, you’re more likely to succeed

Does your potential partner have the skills to lead?

Do they have a useful social network?

Is it backed with excellent social skills?

Are your personality types complementary?

Do they have the right entrepreneurial skills?

Can you agree on who’s in charge?