Un-breaking Entrepreneurship:

Releasing the Silicon Valley in You.

Michael LeatherbeeChile California Conference, 2012

3 cases.

1 new theoretical perspective.

1 audacious Chilean policy.

3 cases

USA BHAG, munificence, talent attraction, culture.

Japan Lowering barriers to failure.

China Lowering barriers to growth.

USA

Silicon Valley: From 0 to 60mph in 40 years. in 40 years.

Frederick Terman

•Formed in electrical engineering at MIT under Vannevar Bush.

•Returned to a cash-constrained Stanford in 1925.

•USA engages in WWII.

•Chosen to head the Harvard Radio Research Lab in 1940.

•Returns to Stanford in 1946 with 11 of the top scientists... and powerful government connections.

WWII Office of Scientific R&D Funding

MM$117 MIT

MM$83 CalTech

MM$30 Harvard & Columbia

MM$0.05 Stanford

“When we set out to create a community of technical scholars in Silicon Valley, there wasn’t much here and the rest of the world looked awfully big...

—F. Terman

...now, a lot of the rest of the world is here.”

Silicon Valley: From 0 to 60mph in 40 years.

Route 128:The established knowledge powerhouse.

versus

Clues for sustainable growth:

•Industrial systems...

•Where experimentation and learning is not confined to individual firms.

•That reward value creation vs. bloodline.

– AnnaLee Saxenian

Japan

Barriers to failure:

• 2003: Reduction of bankruptcy costs.

• Natural experiment in Japan.

• Significant changes in:

• Founding rates

• Types of new ventures

• Types of entrepreneurs

- Eberhart, Eesley & Eisenhardt, 2012

Eberhart, Eesley & Eisenhardt, 2012

Eberhart, Eesley & Eisenhardt, 2012

Public policies that lower the barriers to failure encourage more and better entrepreneurs to found ventures.

(Eberhart, Eesley & Eisenhardt, 2012)

Barriers to failure:

China

Barriers to growth:

• 1988: Policy reducing barriers to entry.

• 1999: Chinese constitution amendment reducing barriers to growth.

• Natural experiment in China.

- Eesley, 2009

Eesley, 2010

Increase in propensity of individuals with high human capital to become entrepreneurs

Eesley, 2010

Larger, more profitable and innovative firms.

When barriers to growth of entrepreneurial firms are reduced, individuals with higher human capital become entrepreneurs.

(Eesley, 2009)

Barriers to growth:

3 cases

USA BHAG, munificence, talent attraction, culture.

Japan Lowering barriers to failure.

China Lowering barriers to growth.

1 new theoretical perspective

Behavioral Strategy of Opportunity Discovery

Classic Economic TheoryHigh-value opportunities do not exist.

Bounded RationalityHigh-value opportunities are non-obvious and cognitively distant.

How can we discover the non-obvious?!

Idea-networkingExperimentingObserving/alertnessChallenging the status quoExpert improvisationBricolageSerendipity & pseudo-serendipity

Idea-Networking

Homophily

Knowledge Brokerage

Start-Up Chile: An Audacious Public Policy

The Economist - October 13, 2012

Thank you!

Michael LeatherbeeChile California Conference, 2012

References• Creative Commons• John F. Ptak• Wikipedia• Simon le Nippon• Francisco Diez• Ryan Craney• Saxenian, AnaLee - Regional Advantage• Eberhart, Eesley & Eisenhardt (2012)• Eesley (2010)• Gavetti (2012)• Aldrich & Fiol (1994)• Sine & David (2003)• Hsu, Roberts & Eesley (2007)• Steve Blank