Technology Entrepreneurship:
Curiosity, Opportunity, Risk, and Money
L4. Capitalism and the Technology Entrepreneur
August & September, 2013
T. Russell Hsing
National Chiao Tung University, Taiwan
Email: [email protected]
What Problems Do You See
As Important to Address and Why?
References:
•
“Technology Ventures: From Idea to Enterprise” By
Richard C. Dorf and Thomash H. Byers, McGraw Hill, 3rd
edition, 2011
• This lecturer is about Capitalism and
Technology Entrepreneur in the context of
Technology Ventures
-The entrepreneurs combine innovation with
technology to create new and effective means of
activity in all facets of life. They play critical roles in
creating new business that fuel progress in global
societies
-There are having four types of entrepreneurship used
to respond to opportunity : incremental, innovative,
imitative, and rent-seeking
1. The Entrepreneur and the Challenge
2. Entrepreneurial Activity Based on Innovation
and Technology
3. Entrepreneurial Capital and the Value of a
Venture
4. Building an Enterprise
5. Economics, the Entrepreneur, and Productivity
6. The knowledge Economy
7. The Firm
8. Dynamic Capitalism and Creative Destruction
9. Summary
1. The Entrepreneur and the Challenge
 An entrepreneur is a person who undertakes the
creation of an enterprise or business that has the chance
of profit
 The entrepreneur is a bold and Imaginative deviator
from established business methods and practices who
constantly looks for the right opportunity to commercialize products, technologies, processes, and
arrangement
 Entrepreneurs can create successful firms that exhibit
performance, leadership, reputation, and longevity
 Entrepreneurs seek to achieve a certain goal by starting
an firm that will address customers’ needs and the
market
What are the Challenges for An Entrepreneur?
 For an entrepreneur, a “challenge” is a call to respond
to a highly challenging and difficult task and the
commitment to undertake the required enterprise
 Elements of the ability to overcome challenges:
- Able to deal with a series of tough issues
- Able to create solutions and work to perfect them
- Able to handle many tasks simultaneously
- Resilient in the face of setbacks
- Willing to work hard and not expect easy solutions
- Well-developed problem-solving skills
- Able to learn and acquire the skill needed for the
task at hand
What Does an Opportunity Mean to Entrepreneurs?
 An opportunity is a favorable juncture of
circumstances with a good chance for success. It is
the job of the entrepreneur to locate new ideas and
put them into actions
 Entrepreneurs respond to opportunities by exploiting
changes, needs, or new skills or knowledge within the
content of their industry
 Entrepreneurship can be defined as the identification
and exploitation of previously unexploited
opportunities
 Generally speaking, only about 1/3 or fewer new
ventures survive their first three years. To avoid the
realm of daydream and fantasy, one needs to start the
practice of experimenting, testing, and learning about
his (her) entrepreneurial self.
2. Entrepreneurial Activity Based on Innovation and Tech
 Four types of entrepreneurship
– Incremental Venture
– Innovative Venture
– Imitative Venture
– Rent-seeking Venture
 Four steps to starting a business
– The founding team or individual has the necessary skills
– The team members identify the opportunity that attract them
and matches their skills.(Create Solution matches Opportunity)
– Get financial and physical resources (which are necessary to
launch the business) by locating investors and partners
– Complete an arrangement or contract with their partners,
investors, and founding members to lunch the business (share
the ownership and wealth created!)
How to Evaluate Potential Opportunities?
 The successful entrepreneurs will always look for a
timely, solvable, important problems with a favorable
context that can lead to “profitability”
 Five characteristics of an attractive opporunity
– Timely- a current need or problem
– Solvable- a problem that can be solved with accessible in the
near future
- Important- the customer deems the problem or need important
- Profitable- the customer will pay for the solution and allow the
enterprise to make profit
- Context- a favorable regulatory and industry situation
What are the skills an entrepreneur should have?
 Entrepreneurs initiate and operate a purposeful
enterprise
 Entrepreneurs operate within the context and
industrial environment at the time of initiation
 Entrepreneurs identify and screen timely opportunities
 Entrepreneurs accumulate and manage knowledge
and technology
 Entrepreneurs mobilize resources- financial, human.
 Entrepreneurs assess and mitigate uncertainty and
risk associated with the initiation of the enterprise
 Entrepreneurs provide innovative contributions
 Entrepreneurs enable and encourage their team
members who have necessary capabilities and
knowledge for success
3. Entrepreneurial Capital and the Value of a Venture
 Entrepreneurial competence is the ability of: (1) to
recognize and envision taking advantage opportunity,
and (2) to access and manage the necessary
resources to actually take advantage of the opport.
 Economic Value (EV) = Opp.X Entrepre. Capital (EC),
where EC = Ecompetence x Ecommitment
= Opp x Ecomp x Ecomm
 Expected Market Value (MV) for an enterprise
(After a period of time)
= Management (M) x Context (C) x EV
= M x C x Opp x Ecomp x Ecomm
4. Building an Enterprise
 Example 1:
Sun Microsystems was founded in 1982 by a team of
four young men (age of 20s), then……….
Example 2:
Broadcom’s story……
Example 3.: “Social Networks” Movie
5. Economics, the Entrepreneur, and the Productivity
• Entrepreneurs are the people who arrange novel
organizations or solutions to respond to the social
and economic needs. They are the ones who
make our economic systems thrive. For instance,
new ventures and start-ups have been the source
of estimated 1/2 to 2/3 of the new jobs created in
US over the past decade.
• The entrepreneurs turns a social problem (such as
low un-employment rate and low GDP) into an
opportunity, a productive organization, and new,
well-paid jobs
• (Natural Capital, Financial Capital, and IP)
>> Economy (Entrepreneurs as agents of Progress)
>> (Beneficial Outputs, Undesired Waste outputs)
6. The Knowledge-Based Economy
• Idea >> Knowledge >> Actions
• Ideas are filtered and transformed into knowledge, which
can be used to guide the actions of entrepreneurs. Ideas
are raw material from which knowledge is produced.
• The flow of knowledge from science and
Technology in products, processes and services
(the essence of business)
• Knowledge can be defined as the awareness and
possession of information, fact, ideas, truths, and
principles in an area of expertise
• Intellectual Capital (IC) = Human Capital (HC) +
Organization Capital (OC)+ Social Capital (SC),
which is the organization’s most important asset.
• IC will determine success or failure for most firms
in the current knowledge-Based Economy
The Firm’s Role: Inputs >> The Firm >> Output
•
The rols of a firm is to transform inputs into
desirable outputs that serve the needs of
customers!
Inputs (raw materials, component and modules,
financial capital, physical assets & technologies)
>> The Firm (transformation based on: IC and EC)
>> Output (i.e. Business: products and services)
• Many talented people leave their jobs to join startup firms because they seek achievement,
independence, and opportunity
7. The Firm (organizations, enterprises, and corporations)
• The purpose of a firm is to establish an objective
and missions and carry it out for the benefits of the
customers
• A firm acts to develop, attract, and retain
intellectual capital
• A firm uses intellectual capital to design and build
products and/or services
• A firm provides a place where people can
collaborate, learn, and grow
• A firm’s theory of business depicts how it
understands its total resources, activities, and
relationships.
8. Dynamic Capitalism and Creative Destruction
• “Change” appears to be certain in current knowledgebased economy. Entrepreneurs match ideas for change
with opportunity. These changes include adoption of
new, better and cheaper sources of input supplies, the
opening of new markets, and the introductions of more
profitable forms of business models and organizations.
• Dynamic capitalism is the process of wealth creation
characterized by the dynamics of new, creative firms
forming and growing, but old and large firms declining
and failing- the disruption of existing markets by new
entries – that makes capitalism lead to wealth creation
(e.g. Bill Gates’ Microsoft)
• Change >> Dynamic Disequilibrium >> Discontinuity
>> Opportunity >> Create Destruction
>> Significant Wealth Creation
SUMMARY
• Using a combination of intellectual and
entrepreneurial capital, the Entrepreneur
establishes an enterprise with the purpose of
creating wealth and prosperity for all participants
(investors, customers, suppliers, employees, and
themselves)
• The entrepreneur responds to an attractive
opportunity
• The entrepreneur sees “change” as an “opportunity”
• The entrepreneur uses an appropriate organizational
structure to achieve his (her) goals
• The entrepreneur knows how to use knowledge to
create innovation and new firms
9. Entrepreneur Test (from “Technology Venture”, p.7)
1. When I am faced with a challenge, I am confident that I
can work through it.
2. I want to be financially independent and be rewarded for
my accomplishments
3. Trying something new is attractive, even if I know the
risk of failure is significant
4. I would prefer to gain independence and control my
destiny
5. Building a new enterprise is important to me
9. Entrepreneur Test (from “Technology Venture”, p.7)
6. My experience during my youth and early career have
shown me the benefits of starting a new enterprise.
7. Starting a new business some day soon is always in my
thoughts.
8. I like working with others and can provide leadership
when called upon
9. Our society and my family provide a strong, supportive
base for my initiative
10. I posses strong technical and relationship skills in the
industry I wish to enter
Thanks !