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Venture Days at IE Business School – Entrepreneurs learning from failure

Tuesday, November 30th, 2010

During the Venture Days at IE Business School many entrepreneurs came together and shared their experiences around the company building adventure. Throughout the different panels addressing topics like Women Entrepreneurs, Social Entrepreneurship and Raising Capital, entrepreneurs shared their major learning experiences around entrepreneurship.

Please read below about their 10 major learnings:

1. Don’t be afraid of making errors
Gabriel Aldamiz, co- founder of the fashion community Chicismo, said one of his major mistakes was being afraid of his own errors he would make whilst creating his company. As an entrepreneur it’s inevitable to make mistakes but you should take it as part of the adventure and not be afraid. Just try it – just “make it happen”.

2. Focus
Many times, entrepreneurs, especially the young ones who are just starting a company have difficulties to focus. They are passionate about their project and want to make it happen all at once. The risk is that you lose focus on what’s really important. As Dennis Bemmann, co-founder of the German pupil community StudiVZ recommends: “Don’t do too much. Just do a few things excellent.”

Also, many Start-Ups in the Web space try to be international from day one. This holds the risk of deviating your focus into different directions. Often it’s more recommendable to grow organically and consolidate into one market after the other.

3. Have a Sales Strategy in Place from Day 1
When setting up a company you should think about your sales approach right from day one. Carlos de Otto from Rockola says: “If you have an Internet company or a manufacturing company producing screws, it does not make any difference. What’s most important is to know how to do sales and to know who your clients are and how to approach them.”

4. Have measurable metrics in place
“Your calendar is your worst enemy. Time passes by and you need to make sure you advance in your company set up process. Make sure you have the right metrics in place and make sure that they “go up” and represent growth”, Gabriel from Chicisimo.

Even if you have metrics in place, make sure you use the right ones. The number of registered users on your website for example is no indicator for their activity. You might be running the risk of managing a “dead” site if you only refer to this number.

5. Lower your company valuation
When you look for investors it’s understandable that a high company valuation is beneficial for you. Though Gabriel made the experience that if you put your company valuation too high you lose the chance to get important investors on board. It’s risky and might close many doors; “Be investable and acquirable.”

6. Be present – Do Networking
Go out and meet the people in your own sector. You’ll learn the most from other entrepreneur’s when they share learning experiences with each other. Also if you’re looking for investors a personal contact is always stronger than knowing each other via phone or email.

7. Make sure you understand your target group
Jesus Miguel Gutiérrez, founder of the Spanish Social Network Sigojoven for +40 people, shared the experience of launching a product without really knowing what his target group really wanted. As Sigojoven is a place for 40+ people and he himself was under 30 when it launched, he realized that the expectations and user behavior of this target group was totally different from people his age. Even before you launch a product you should find out as much as you can about your target group, their needs and their objectives. Talk to them and ask them directly what they expect – you can do this either personally or use surveys to find out as much as you can.

8. Have the right team in place
Jesus also shares the value of having a great and reliable team in place. It’s important to have team members who challenge each other. It was important to him that his team made him think and reflect.

If you set up the company with partners it’s important to think about the company constitution from day one. If there are 4 partners it is not recommendable to distribute 25% of equity to each. Venturepreneur Rodolfo Carpintier (DAD) who is a serial entrepreneur and has many years of experience in investing into Start-Ups says: “ It’s good to start as friends but the share distribution has to be thought through right from day one so that you don’t enter any conflicts when you plan to take first investors on board.”

David, from Rockola adds that it’s also important to have partners that represent the industry you’re working in. He has set up Spain’s largest online radio site and it’s obvious that he needed to have good contacts in the music industry.

9. No need to totally Bootstrap
Many founders of Start-Ups do not pay themselves any salary and act according to the boot strapping theme 100%. David from Rockola also did this in the beginning and he says it’s a very difficult situation. You don’t need to feel sorry as “everyone needs to eat”.

10. It’s not as easy as it’s seems
This point speaks for itself. Even though your dream is big and everything looks very easy and clear at the beginning there will be a time when you’re facing difficult situations. In these times it’s important to be determined, perseverant and keep your hunger to win.

Roland Berger & IESE recognize the importance for Entrepreneurial Ecosystems

Wednesday, January 13th, 2010

It appears that Europe is lagging behind their Lisbon objective to become “the most competitive and dynamic knowledge-based economy in the world”. Innovative start-ups and entrepreneurs are crucial for the economy as they are the job and new growth creators.

Roland Berger and IESE Business School tried to find answers to the question how Europe can successfully stimulate knowledge-intensive start-ups learning from world-class European ecosystems. 1.000 entrepreneurs from 57 countries participated in their new study  “For Entrepreneurs, By Entrepreneurs” examining the mechanisms behind stimulating entrepreneurship.

The authors found that the key to fostering and accelerating knowledge-intensive entrepreneurship is to forget the idea that entrepreneurs are exceptional individuals who work alone, and focus on building more and better “ecosystems.”

The value of the ecosystem
Start-ups thrive specifically in ecosystems that provide the necessary support. The study cites IESE Business School and Delft University of Technology in the Netherlands as examples of successful ecosystems. Within an ecosystem, start-ups and corporations can interact and mutually benefit from each other’s knowledge and connections. In an entrepreneurial ecosystem (e.g. Silicon Valley ), entrepreneurs have immediate access to coaches, supporting professionals in different business areas, as well as a network of customers and companies with whom they are in frequent contact.

The study distinguishes between two levels of networks within an ecosystem: the “open network,” through which entrepreneurs get in touch with customers, suppliers and other supporters; and a “closed network,” with whom an entrepreneur shares his or her ideas and worries, in order to receive immediate advice or feedback. Considering that 90 %  of initial business plans are adjusted before becoming successful businesses, fast, critical and expert advice is a crucial element in the entrepreneurial process.

Main hurdles in setting up a company
The study identifies a start-up’s main hurdles and looked at possibilities how to stimulate and foster knowledge-intensive entrepreneurship.

1. Contacting and contracting clients
Getting to know their customers before starting a successful business is the Number 1 hurdle for 57 % of the interviewed entrepreneurs.
2. Acquiring resources
44% indicated sufficient fund raising as their main obstacle such as finding and contracting the right suppliers.
3. Building a team
Adding experienced people to the team is a major driver of success. Firms that add experienced people to the team think bigger, act faster and make more use of industry contacts,” the authors stress.

Six key insights leading to entrepreneurial growth
After assessing the hurdles, the authors highlight six key insights to building high-growth firms:

1. Entrepreneurial behavior is developed through personal and interpersonal competencies. Good entrepreneurs need more than business skills – personal competencies such as creativity, determination, integrity and self-criticism will enable entrepreneurs to make the right decisions in matters that are beyond his or her knowledge.
2. Ecosystems allow entrepreneurs to develop their initial ideas more quickly and, using feedback from networks, validate their business ideas.
3. Corporations can provide vital business know-how to start-ups, but can also benefit from the product, service and process ideas by participating in the start-up ecosystem.
4. Ecosystems create entrepreneurs by validating that one has or can develop the capabilities to start a firm.
5. Government support of ecosystems and start-ups should be faster, more targeted and less bureaucratic.
6. Knowledge centers, investors and business service professionals should take the lead in setting up platforms for interaction to facilitate the development of ecosystems.

This study gives further evidence of the importance for strong entrepreneurial ecosystems and validates the significance of the concepts and projects developed by Foundum.