Self-motivation, good timing, and conquering fear of failure are vital ingredients for budding entrepreneurs, a panel of company founders told an audience of students, alumni, and executives.
Speaking at a Chicago Conversation event on entrepreneurship at Booth's London campus on October 27, four panelists shared their hard-won knowledge on issues such as financing, working with partners, and coping with competition.
The entrepreneurs, two of them Booth graduates, started businesses in the UK in four very different sectors: financial services, publishing, e-commerce software, and health care. Moderator Liz Bolshaw, a lead writer at the Financial Times, quizzed them on their ventures.
Asked what motivated him to start a business straight after graduation, Jonathan Weiss, MBA '00, MD '01, cofounder of Bridgeview Partners, said, "The simple story is, I didn't want to get a job.
"When I was finishing up at university, I saw that now was the time in my life when I had the least amount to lose."
Ryan Regan, '99, co-founded Rangespan in January 2011, after spending eight years at Amazon.com and three at Last.fm. At both places, which operated from an entrepreneurial mindset, he watched people "taking a risk and building something from a blank sheet of paper.
"Despite a succession of very interesting, challenging, and comfortable positions, I reached the point where, if I wasn't going to do it now, it would be very hard to do later," he reflected.
Timing is clearly an important element in launching successful venture. Hans Hufschmid, a former partner at Long-Term Capital Management (LTCM), set up GlobeOp Financial Services, a hedge fund administrator, six months after LTCM failed in 1998.
He saw a niche. "Between 2000 and 2005, you had more hedge fund start-ups than in any other five-year period. Selling the right product at the right time is important."
Weiss likewise saw an opportunity when the UK government's Blair Administration decided to bring in international providers to manage clinical health services. "You want to put yourself in opportunity's way," he said of the timing of his decision.
All four panelists started their ventures in collaboration with partners. This raised questions about how to divide responsibility and ownership.
Hufschmid said, "Selecting your partner is the most important decision you will make if you are starting with somebody else."
Mark Smith, CEO of Quercus Publishing Plc, which he co-founded seven years ago, said it was clear from the outset that he and his partner had "complementary" skills.
Weiss, who has started four businesses, said he has always surrounded himself with people who have complementary skills to fill gaps in the organization.
However, he said, once the team was in place, it was "pretty critical" to ensure that equity ownership matched up with how each partner could drive value for the venture.
"There is a paradox here," Weiss added. "You often find that the time the venture is more successful than anyone thought it would be is when [partners] start going back and arguing about the equity."
One important challenge entrepreneurs face is how much control to hand over when seeking funding from institutions.
Regan urged entrepreneurs to be realistic. "You are not going to dilute yourself by 5 percent and raise the amount of money that you want to raise. It doesn't work that way."
All four agreed that the primary focus must be getting the business itself right before worrying about the competition. "You keep a paranoid eye on competitors, but you have to concentrate on what you are doing well," Weiss said.
But the bigger challenge is dealing with shocks or sudden changes in the market. "You have to be flexible to how the situation changes, or you're toast," he said.
Smith said that entrepreneurial companies were often better able to adapt to changes than more-established companies, citing the way Quercus had moved swiftly to exploit the shift from physical books to e-books.
"When the whole thing exploded, we were quite quick to turn the stories we had into e-books and get marketing them," he said. "We were able to steal a march on the incumbents."
Bolshaw asked why Britain had not yet produced a billionaire entrepreneur. Interestingly, all four highlighted the fear of failure. "There has to be a milieu that encourages people to take a risk and fail," Weiss said. "You can't outsource entrepreneurship."
Photo by Pete Jones