So what are the ingredients of a high growth business or gazelle as they are commonly referred to? This is a question that I must be asked at least twice a week. As both a founder of several and adviser to loads I am still learning every day. As an obsessive researcher of their behavior, tactics and strategies, one conclusion is gazelles are not just the stereotypical university high technology spin –out, they are also well established organisations from mature sectors – with fire in their belly.
So how do entrepreneurs unearth the Gazelle spot for their business? This is the point at which rapid growth ensues, new markets open up, customers display a strong desire to buy and value is created for both the founder and stakeholders. For the economy they become job generators and employers of skilled individuals. The challenge is there are only a small proportion of these businesses, nationally and globally – why? because its really hard to grow a business, get the right people on board pointing in the same direction, raise and manage finance….the list goes. This G-spot takes time to find, as one member of the High Growth Foundation® muttered the other night – it has taken me 10 years to become an overnight success – or as Malcolm Gladwell puts it 10,000 hours of effort and practice are needed to become an expert at anything.
Lots of entrepreneurs talk a good game but many fail to cope with the roller coaster ride that so often accompanies growth – the high and the lows can be quite debilitating and at times the problems just “do your head in”. Having a resilient and positive mindset able to cope with uncertainty and unforeseen challenges is an ability too few have. High growth will usually equate to high risk (that’s why banks are scared stiff of high growth entrepreneurs), embracing fear and having the courage to see through immediate and longer term challenges is a skill high growth entrepreneurs have honed.
The Entrepreneurial G-Spot is a complex framework involving an eclectic mix of business, commercial and emotional components. Put very simply it’s the fusion of a sound business model with propositions and service that carry a market place edge – disciplined doers not talkers execute the plan to achieve the vision and everyone knows their role. The active ingredient is brilliant leadership, more specifically a culture of ambition underpinned by mental toughness and an ability to cope. All too often it’s the latter that is missing, so many entrepreneurs fail to truly realise their potential, they run out of steam and to put it frankly cant be bothered with the hassle.
You’re a long time dead, get stuck in, have a go, fail fast move on, get your head in gear and unlock the potential of your business. Only practice and iteration makes perfect!
The banks have had a bit of a kicking over the past few years. However, let’s be fair and look at some of the great things they are doing. Earlier in the week I was fortunate enough to judge and speak at the Lloyds TSB Enterprise Awards – an initiative designed to seek out the best university students and graduate entrepreneurial talent. It was an inspiration to listen to young people with ideas and the motivation to build a business rather than go down the traditional route of trying to find a job.
Universities have an important role to play in preparing individuals for the next stage of their career, equipping them with the ability to write a 5,000 word dissertation is just not enough. Conditioning graduates to consider the option of setting up their own business is vital – is it any riskier than trying to find a job? probably not!
The young entrepreneurs I met, had ideas, put them on paper and then rolled them out – they were generating revenue and jobs. The winner of the Best Enterprise, Adam Soliman of Charbrew was a top lad, his head in the right place. The Best Start up – Peter Van Neste of Stagetex had a clear handle on his sector and the finances of his company.
The reality was, all of the finalists were high performers and an inspiration to other graduates, more specifically the finalists :
-had clarity of what they wanted to achieve
-were innovative and displayed an edge
-displayed the invisible forces of passion, hunger and determination
-lived in their customers world
-had a grip on the importance of finances
The finalists must be showcased – they are role models and an example of what can be achieved if you just get your head around the idea of being your own boss. Come on universities wake up – Lloyds TSB, great, you have clocked the potential of graduates and their ability to create and generate wealth!
This was the title of yesterday’s speech delivered by David Willetts, Minister of State for Universities and Science. It was positive to hear that science and technology lies at the heart of economic growth policy, something which I passionately believe in. Even more encouraging was the recognition that science and the arts are truly complementary. My blog The Enlightened Company (20th February 2011) reflected on this very point, some of the global technology brands of today were formed by fusing the skills of arts and science graduates. It is diversity that drives innovation and hopefully this recommendation will stimulate debate between arts and science faculties, the resultant effect being new possibilities, innovations and products – maybe a Google or Twitter?
The speech also communicated the strength of the UK’s research on the global stage and the fact that we publish more articles per researcher than the US, China, Japan or Germany. Whist this maybe the case, I do seem to recall that we are not up there when it comes to commercialisation of this research. Enhanced entrepreneurial mindset and orientation lies at the core of economic growth fuelled by science and technology focus. Much to be learned from the West Coast of the States.
Science and technological excellence is fine but if the patents, know how and IP end up overseas or sitting on a shelf then it does no good for UK jobs and growth. Greater effort needs to be directed to getting HE to think more about the commercial impact of what they do. It’s not just about spinning out companies but…how do academic staff gain a better balance of research and selling their knowledge as consultants, attaining greater utilisation of assets that sit idle…… encouraging entrepreneurial thinking of post grads – creating more ideas and mind to market.
The reality is many university professors and academics frown upon enterprising forays and suffocate new possibilities even before they see the light of day.
A greater entrepreneurial culture will be vital to the successful execution of David Willetts’ strategy.
Last night we launched the HGF’s “Global Companies” initiative. Another great turnout of members with a fantastic and most distinguished panel of speakers. I feel really proud that the High Growth Community we have built over the past three years, has come together and attracted the support of some of the North’s most successful entrepreneurs. The HGF is about ambition and belief and last night a panel debate chaired by Michael Taylor, got to the heart of what it takes to create and build a company of scale. These are the key messages I took away:
Rob Cotton – Chief Executive NCC – go for it, if you don’t you will regret it. Set the agenda lead in your market and don’t follow the competition.
Robert Fine – Metabridge Silicon Valley network – embrace risk and immerse yourself in the financial networks. The mindset of Silicon Valley entrepreneurs is one where there is no ceiling on what can be achieved. Those businesses start with the end game in mind.
John Meiklejohn – Strategem – On the West coast of the US professors in the universities are not only academics but entrepreneurs as well. They have started companies, sit on the board of many businesses and they rub shoulders with VCs and financial communities. They are able to ‘speak each others language’.
Stephen Todd – Oxford Said Business School, University of Oxford – there is a fundamental lack of understanding of what going global means in the UK. It’s more than exporting, it’s about creating a business that can be scaled and have an international orientation from day one of starting up.
Richard Young – Enterprise Ventures – The universities in the UK have to rethink how they go about commercialising. There have been some massive successes but there is always an opportunity to do more. Quote of the night was “pitching gets up my nose!”. Richard’s view was how on earth can you get to know about an idea in a 3 minute pitch? You need at least an hour to talk to someone to get under the skin of who they are and what they are trying to do. When you speak to Richard you know “he’s present”- how refreshing for a VC.
Really great feedback from the evening was from a very successful early stage entrepreneur, she said “I am buzzing – really going for it now big time”!
The minute a gazelle starts to emerge from the UK, suddenly from nowhere it just seems to get eaten by a foreign gorilla. (42% of high growth companies in the Cambridge cluster were acquired between 1998 and 2008, half the acquirers were foreign) The recent acquisition of Autonomy by Hewlett-Packard of the US is a great example of an home-grown global star of the future getting swallowed up. Not only in IT but we also see this in other technology sectors e.g. bio sciences. When these rising stars put their head above the parapet they are swallowed up by overseas predators. This is great news for the investing VCs and founding teams and stakeholders as it gives them the opportunity to cash in their chips. However from a broader economic perspective do we lose opportunities from the IP ending up somewhere overseas? (as well as the jobs)
Is this stopping the UK from creating the next Twitter or Google? Lots of suggestions over the past few weeks suggesting UK plc needs to take a closer look at this issue.
165 University Avenue is a small rented office building on the main commercial street in the centre of Palo Alto, California – Silicon Valley. Also known as the “Lucky Building”, over the years it has incubated a number of “gorilla” businesses, names that include, Logitech, Google, PayPal, Danger, Inc, Milo.com, eye IO and Yummly. Silicon Valley cannot be replicated, its unique, however, I strongly feel that we can learn a lot from this vibrant world-class entrepreneurial region.
Through the High Growth Foundation I am particularly keen to work out what we need to do to create our own blockbuster businesses up North and throughout the rest of the UK. The Billion Dollar Club in the US acts as a forum for companies with a market capitalization of $1billion, no surprises that Silicon Valley companies are well represented in this list. In recent years most notable UK companies that would fall into this elite group would be the spin outs from Cambridge University, Autonomy and Biovex from UCL. How many of these have we created in the North West? I just can’t believe we have not got the talent, I think the environment is wrong.
We have some great incubator units in the Region, but would one in the heart of Manchester help to create a blockbuster as the West Coast of the States has repeatedly done. The external environment is crucial when you are trying to build a business, it supports creative thought and innovation – a place where there is a buzz, somewhere to go for a coffee, a pizza or a beer after work is so important. After all we are human beings and being stuck out on a limb in some Enterprise Zone I don’t think is the answer. Ambitious entrepreneurs want to be surrounded by like-minded high energy people with links to finance and capital. That happens in city centres.
We need a radical rethink about how we help the stars of tomorrow. The UK cities offer a great environment for breeding tomorrows superstars – but still we are keen to push new entrepreneurs out into the sticks where there is little energy and no spark. Maybe time for a rethink on where we encourage our beacons of tomorrow to set up. Do we have the equivalent of 165 University Avenue in Manchester? It’s not in the City Centre as it is in Palo Alto.
As a Nation we should be extremely proud of the contribution our Universities have made to the progression of science and knowledge and our educational prowess is both respected and recognised throughout the world. Whist this maybe the case, there is no avoiding the need to cut costs, a fate that other public and private sector organisations have failed to escape. Plugging the budget shortfall and creating financial game plans to secure long-term sustainable futures have become of paramount importance to senior university managers
The one advantage which universities have that others don’t is the rich seam of potentially commercial propositions these span the spectrum of patents and licensing, through to revenue streams created through consultancy, R & D collaboration and spinouts. However commecialisation still remains a relatively low priority for university faculties. At the extreme some senior academics frown upon entrepreneurial forays with many sensible suggestions dismissed at infancy. A mindset change is needed and when costs are being cut plausible options of how to secure revenue from the commercial realisation should be investigated. For many academics seeing the application of their research in practice is a significant motivator, more needs to be done.
The Government has made it clear that transforming research into innovation is a priority and whilst UK universities have a strong record more needs to be done. This involves building stronger links between the UK’s science and research base and the business community, to create more spin-out companies, consultancy projects and research-funded programme
For this to happen a fundamental change is needed in promoting an entrepreneurial culture. In all fairness academics are not trained or prepared for the life of commerce. Very few have the unique mix of business and technical skills. Setting up a venture or selling knowledge and expertise is far more than creating a business plan – it requires attention to a broader set of softer skill which cant be taught, however they can be coached. Is it time for change?
What is it about some companies that make them shine way above the rest? They have differentiated propositions, take a massive lead on competition, build a strong brand and just outperform others.
More specifically, I am really interested in some of those massive companies that have entered onto the world stage and become literally global phenomena in less than a decade. Great examples such as LinkedIn, Facebook and Google come to mind. These outstanding founders often become labeled unfairly as techie geeks. However when you probe further into their academic background some are obviously technical many have an arts degree. Reid Hoffman founder of LinkedIn – BA in Symbolic Systems and MA in Philosophy, his co-founder Peter Thiel also of PayPal fame BA in Philosophy, Chris Hughes co Founder of Facebook BA in History and Literature, and Eduaro Saverin also co-founder of Facebook BA in Economics.
For me it raises a number of questions that I would love to delve into further – would knowledge and technology based businesses benefit from a founding team that combines scientific/technical and creative talent. Does this create an enlightened company? – One that sees opportunities from different angles embraces ambiguity and curiosity and also one that is willing to explore various options and keep an open mind as to what is and what is not possible.
We are continuously being reminded that the UK needs to commercialise its R & D and knowledge assets and we massively lag behind the US in this arena. Equally we are told that academics and technologists need to become more entrepreneurial if we are to reverse the fortunes of turning IP into revenue. So what is the missing link?
In 1981 Roger W. Sperry won The Nobel Prize in Physiology and Medicine – he discovered that the left side of the brain was associated with analytical thinking the right with more creative thought. Is it fair to say that when the mindset of a founding team combines both; greater is the likelihood of success? So what are the implications on all those massively talented scientific individuals who are exploring a business idea – given they are probably dominated by left-brain thinking, would an injection of right brain support help to accelerate the idea to market process?
Just how important is the role of combining technical/scientific functional mastery with creative thinking. Would university incubators and others involved in stimulating high growth businesses and spin outs benefit from bringing individuals from humanities and arts faculties into the mix. After all diversity and interconnected thinking drives innovation.
It’s about time Manchester and indeed the rest of the UK started to create some of the Gorilla companies such as Facebook – after all we have the talent. Maybe we just need to get the so-called geeks talking to the creative’s – and throw an accountant in there as well!