Technology Entrepreneurship

Chuck EesleyManagement Science & Engineering

Stanford University

The Story of 4 Dinners, 3 big ideas, and a President

3 Points for the Future

1. Experimentation

2. Unique to scalable, technology-based startups?

3. Technology Entrepreneurship outside the US? (policies, institutions, culture)

Dinner #1

To Jobs . . .

… Not you, Steve.

Any ideas on how to create a few million new jobs?

FarmVille subsidies?

E&I?

E-Lab?

G-Lab?

D-Lab?

I-Teams?

What’s with the short names???

Dinner #2

Arnold Cooper

Fiona Murray

A. SaxenianT. Stuart

Diane Burton

Ed Roberts

S. Shane

K. Eisenhardt

D. Hsu

M. Cusumano

In the early 1960s, studies of tech. e-ship began with my work on MIT-related firms and Cooper’s work on Silicon Valley…

Most looked at entrepreneur characteristics.

We dug into the firm-level.

Fiona and Toby looked at networks, AnnaLee at culture, Diane at TMT and org. modes, Kathy did decision making, David looked at entrep. finance, Michael at software.

Where have we been?

• Began in early 1960s with Roberts, MIT-related spin-offs, Arnold Cooper, Silicon Valley co’s

Who becomes an entrepreneur?

• Relatively small lit on tech-based e-ship

But how do I get my millions of new jobs?

How am I supposed to use this to create a few million new jobs?

Let’s try a different group for dinner.

Dinner #3

Big Idea #1

Risk, Failure, and Experimentation

Experimentation

Which piece of the model to test first?

ExperimentationThis is something we should have a lot to say about!

Theory• Startups = Economic and social experiments

– How do founders “theorize”? What improves theorizing?– Convince others of their findings?– Learn faster?

Scientific method analogy• Experimentation/Iteration – search for scalable business model

– What experiments to run first?– Implications for founders + Private Co. Boards– Separate: Idea, execution, resource acquisition

Experimentation

Methods – experiments, mobile/web, incubator• Understand causal impact of strategic choices, networks,

skills

• Intermediate data– User acquisition costs– Viral coefficient– Customer lifetime value– Monthly burn rate– Product/market fit– Average selling price

But the success rate is so low . . .

Big Idea #2

Most lit not on tech. entrepreneurship

Big Idea #2

• Finding new markets and business opportunities:– Stumbling around effectively with probing, real time

information and some luck

• Shaping new markets and businesses:– Claiming, demarcating and controlling

• Demarcating industry architecture:– Advocating an architecture, joining would-be partners,

probing key uncertainties

• Innovative, technology-based entrepreneurship – why different, why important?

Fundamental differences with Large Co

Phenomenon Importing Theory (Context) Novel Theory

And they are NOT small versions of large companies

William C. Durant vs. Alfred P. SloanE-school vs. B-school

How am I supposed to use this to create a few million new jobs and compete internationally?

Let’s try a different group for dinner.

Dinner #4

Big Idea #3

Big Idea #3

Setting the Table(for entrepreneurs)

Not this table

Big Idea #2

Barriers to growthNon-competes,

Michigan

Financial intermediaries

Big Idea #3Just like a good dinner party . . .

• High tech, high growth entrepreneurship– Institutions, property rights, universities, basic R&D,

contract enforcement, etc. – Also, informal institutions, social norms, practices . . .

(StartupChile)

• Strategies in different environments– Bubble vs. downturn

3 Revolutions That Will Change Entrepreneurship Research

What lies ahead?

Takes revolution in the world to drive revolution in academic research

• Computer revolution, Dotcom boom

3 revolutions that will drive the coming years of tech. entrepreneurship research– Web/mobile/accelerator revolution – petri dish/fruit fly – New engineering-based industries– Globalization

Mobile internet

Clean tech & similar technologies

Globalization

In Closing

Have to get outside of traditional management/strategy ways of thinking

• E-school vs. B-school• Durant vs. Sloan

3 Points for the Future

1. Experimentation as model for process of building a successful, innovative firm

2. What is unique to scalable, technology-based startups (not small business)?

3. Technology Entrepreneurship outside the US? (policies, institutions, culture)

What lies ahead?

• Academics are lagging behind the theorizing of practitioners– Models of Entrepreneurial Performance– Search for scalable business model

• Many say opportunity recognition, but may not be possible - Disentangle good idea from execution

• Long R&D cycle vs. web/app startups• Theory and Methods – experiments, mobile/web,

incubator– Intermediate data