22nd Feb 2007
Entrepreneurship 2.0
I have recently come across several interesting ventures and opportunities that have made me think of the long way we need to go until we reach the level of competitiveness you can find in the U.S. Market (let’s face it, most successful companies are either American, or are based in the U.S). It all starts with education and attitude.
I came across this blog post by Emily Chang a couple of days ago. She writes about interesting initiatives related to women and girls in technology. One of those is Entrepreneurial Night by Girls’ Middle School. Ten teams of 7th grade girls (12 years old), presented Powerpoints on stage to a panel of Silicon Valley judges and an audience of parents, teachers and students. In a post on BusinessWeek Rob Hof writes:
It was pretty amazing to see these young entrepreneurs slinging PowerPoint slides in front of a huge conference room screen in front of more than 400 people–including the VCs from whom they were asking for real investments of $100 and up. I’d be scared to death, but they all had their pitches down cold
Go and talk to any number of employees, students and managers in the high-tech industry in Israel. You will find that our so-called “entrepreneurial” industry is actually rather conservative. The notion of quitting your job and starting a new company is still considered by most to be an act of supreme self-confidence (or foolishness, take your pick). Our education system inspires innovation only within the corporate or military environments and the truth of the matter is that while people realize money can be raised for a venture, they don’t believe that they themselves can raise it. Instead of thinking in terms of success, people are thinking in terms of failure.
Those 12 year old girls are certainly not going to think in terms of failure. To them, building a business plan and presenting it to potential investors is something to be learned along with math, literature and sports.
VCs want talented, experienced and motivated people to approach them with great ideas. Give them that, and they will provide funding and coaching. That is very understandable; I wouldn’t want to give out my money to someone who has a low chance of success. But, such people are relatively hard to find. We need to invest in avenues for talented, motivated and less experienced entrepreneurs to learn and develop their skills. I believe that there is a huge difference between an entrepreneur’s first and second ventures (even if he fails both).
Personally, I am waiting to see a venture such as Y Combinator started in Israel. What they do is quite simple: they have a website where you fill out an application form (not a business plan, mind you) and after reviewing all of the forms they pick out any team that seems to have potential to build something. Each team gets 5000$ plus another 5000$ for each member. They also take care of incorporating a company for you and provide counseling along the way. Selected teams are expected to move to Cambridge for the duration of the venture and should demonstrate an initial non-trivial product within 3-4 months. I like their attitude:
How do we choose who to fund? The people in your group are what matter most to us. We look for brains, motivation, and a sense of design. Experience is helpful but not critical.
Your idea is important too, but mainly as evidence that you can have good ideas. Most successful startups change their idea substantially.
The downside is that the VC will ask for 1%-10% of holdings in the new company, which is rather a lot for such a small sum of money.
I see Y Combinator as a representation of an entrepreneurial spirit that thinks in terms of success rather than in terms of failure. I am positive that many current employees from various high-tech companies would be willing to quit their job and give it a go if they could get $20k-$30k for the couple of months it takes to see whether you have a good business or not. And VCs have control because they get to review the team and the idea before committing to anything.
I think this “lightweight” funding model could work very well here in Israel. Let’s hope someone picks it up.
It starts with Education and Attitude, and continues with quasi-endless resources, a huge local market (which you can relate to on the cultural level).
In addition, it is the fucking Roman Empire – there are some powerful forces at play making sure that the majority of big companies
will remain American.
Another thing is that emergence comes in – do you know how many brave souls failed to become a big success? The strongest survived, and if you
survived in America you’re in a much better position to win over the world, especially compared to the best in other, smaller lands.
It’s true – you need the dreamers, the believers, the evangelists. No VCs will handout money to people just cuz they are talented, innovative and hard working.
But you have to be a certain kind of person. And don’t tell me “an American”. Most Americans are poor, uneducated, fat people. There are a lucky few that actually live the American dream.
There are courses and guidance available in Israel too. I don’t know too much about it but I have a friend who’s taking such a course (by misrad haavoda, sth like “idud iazamim zeirim”)
Do americans have a distinct advantage as a nation? Oh, ya.
And I agree that many americans are far from the entrepreneurial lifestyle.
But those that have the drive will find avenues to success. I’m saying we need to make sure there are enough of those avenues in Israel.