Tuesday, October 16, 2012

How Do You Start a Business?

It is conventional wisdom that the best way to start a business is to find a problem and then solve it. The bigger the problem, the bigger the potential solution and of course, the bigger the payoff. Simple, right? Uh, maybe not. Sometimes even though the problem is huge and staring us all right in the face it may not be that easy.

Take batteries for electric vehicles. We all know the chief issue holding back electric vehicles is range. The best can only go about two hundred miles before needing a charge. Plus, charging takes time. There are literally hundreds of companies working on this problem, with a wide variety of solutions or rather possible solutions. 

Case in point, according to today’s New York Times: “The troubled battery maker A123 Systems filed for bankruptcy on Tuesday, dealing a blow to the Obama administration’s program to jump-start a domestic battery industry and spur development of electric vehicles

The company’s bankruptcy filing was unexpected, since it struck a deal in August to sell a majority stake to a Chinese auto parts manufacturer. That agreement, with the Wanxiang Group, provided an apparent lifeline to the company. But A123, which has received federal grant money, said the Wanxiang deal was never completed, and on Monday, it failed to make a debt payment due on $75 million it had borrowed from Wanxiang.” Oops.

A three year old startup, Better Place (http://www.betterplace.com/) decided to make an end run around the problem. Rather than inventing a long range battery, they mitigate the predicament by putting up a network of battery exchange stations. No problem, just drive in and your batteries will be swapped in less than two minutes. Great idea; they have even starting building their first set – in Israel, a small, small country that obviously has issues when it comes to getting oil. Will Better Place ever even come to America?

So, it is quite a challenge to place bets on winning technologies. After all, the best venture capital firms on Sand Hill Road are shooting for a one out of ten success rate. I would wager that the success rate on batteries to solve the range issue will end up at one out of a hundred, if that. Yet, we all keep trying, because when that special someone hits it; it will be a home run that will change the world.

And that folks is one of the key reasons why entrepreneurship is so cool.

Full article: http://www.nytimes.com/2012/10/17/business/battery-maker-a123-systems-files-for-bankruptcy.html?hpw

Wednesday, October 10, 2012

How to Make it in the Modern World

Those of you who have paid attention in class (there are a few of you) know that I often cite the work of New York Times columnist, Thomas Friedman who has written a number of marvelous books about globalization and how it governs the world economy. Just the other day he was writing about the presidential campaign and made the following statement:

All of this made me think Obama should stop using the phrase — first minted by Bill Clinton in 1992 — that if you just “work hard and play by the rules” you should expect that the American system will deliver you a decent life and a chance for your children to have a better one. That mantra really resonates with me and, I am sure, with many voters. There is just one problem: It’s out of date. 
Friedman argues that although it sounds good, it’s wrong. Why? Because when Clinton was talking – in the early 90’s – there was only a fledgling Internet, almost no email; let alone smartphones, tablets, Skype and all the other technological breakthroughs that we take for granted. According to Friedman:

That world is gone. It is now a more open system. Technology and globalization are wiping out lower-skilled jobs faster, while steadily raising the skill level required for new jobs. More than ever now, lifelong learning is the key to getting into, and staying in, the middle class.

To my mind, it’s not just about staying in the middle class. Lifelong learning is essential to anyone who wants to be a successful entrepreneur. The next time you get a chance to speak with someone who has “made it” ask them how much reading they do. I'll bet you find they are up on any number of web sites, newspapers (online to be sure) and other sources.
Friedman, by the way, also cited the following, which I think pretty much sums it up. 

There is a quote attributed to the futurist Alvin Toffler that captures this new reality: In the future “illiteracy will not be defined by those who cannot read and write, but by those who cannot learn and relearn.” Any form of standing still is deadly.
So, it’s not just about reading, but thinking about and learning what you have read as well.

Source for the above quotes: http://www.nytimes.com/2012/09/09/opinion/sunday/friedman-new-rules.html?_r=1&ref=opinion