Not so accidental entrepreneur

[drllau]

Passing through Singapore for a bunch of meetings, I had a chance to observe the NUS entrepreneur colocation space and (briefly) the Fri OpenFrog. This got me to pondering the role of the accidental entrepreneur. Quoting Neil Seeman, 

An accidental entrepreneur is someone who brings to bear a vision to change the world and possesses a rare combination of risk tolerance, charisma, empathy and demonstrable skills. My own anecdotal experience puts the average age of this special subset of entrepreneur at about 40, meaning that they have real-world experience and are motivated to solve real-world problems.

A “co-created” entrepreneur is someone, perhaps a taxpayer-funded post-doctoral student or academic, who is seduced into entrepreneurship by a government program, by a “centre of excellence funding grant” or by something entirely different – such as being unemployed. 

I understand and can sympathise with InfoComm (and rest of SG govt) the desire to change the risk culture. Youth brings with them energy, enthusiasm and e-imagination (not being stuck with prevalent logic) whilst us old foggies (you know it's that time of life when people offer to give you the reserved seats on MRT) are stuck with experience, execution and for passive investors, not much of a clue. So the trick is to separate out the ones with vision, and that rare combination of risk tolerance, market empathy, and operating skills to execute on that vision, and give right resources to those. Not easy, there's a reason why the success rate of VC funding is so low.

I just wonder what the intersection between accidental and co-created entrepreneurs is. Josh Lerner, author of Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It, has decimated the idea that there is any evidence to suggest direct government aid can help entrepreneurs. Certainly the new buildings are posh and spacious, and I applaud any govt which takes pro-active policies on key industrial enablers such as IP but the back of my mind lurk a worry that by fostering one model of entrepreneurship (co-created) it may be setting the stage for driving away the accidental entrepreneurs, leading to a sub-optimal strategy ... ie a lot of B-graders and lifestyle entrepreneurs but missing out on the world-class unicorns. 

The problem is that this is impossible to test. Self-selection gives rise to the success bias, in that broad patterns of rapid growth are identified and quickly replicated. This suits an exploitive phase of any new technology wave (80s PC, 90s internet, 00 ReadWriteWeb, 10 mobile) ... but question in my mind  is does it seed the next wave? Let me emphasise that a fast follower strategy is quite appropriate from the risk-reward analysis as it's the pioneers that get arrows in the back. Risk capital is anything but ... afterall the whole basis of metrics & traction is to pass the development risk to the startup team whilst being prudent on accepting market adoption risk. Yet this prudent approach fails miserably when the market doesn't yet exist. 

Let's take an example, sodium-ion stationary energy storage which is currently an R&D focus at NUS. Higher gravimetric energy density than lithium-ion and cheaper by x2-3 in the electrolyte materials. The worldwide momentum is still nascent but if the specs fufill their promise, likely to emerge out of the current niche of non-flamable batteries. All very planned, methodical and endorsed by respected scientists/technocrats ... in short the exemplar of Singapore. Yet I'm reminded of the start of the laser when a postgrad student realised that the cavity magnetron (or something, my memory is not exact ... probably the old foggie moment) could be adapted for visible light. So from a single insight, grew the direct illumination, scanners, LED multi-billion  businesses etc, markets that were never even imagined in the 50s. If that same student with same unknown market came to Blk 71 today would he be given a chance? In short would a top-down government fund prefer to invest in a cultivated or wild meme?

[Latiff]

Interesting article. Taking the spirit of entrepreneurship and experimentation, let both paths co-exist. Most important would be how does the innovation ecosystem here supports both, not similarly but differently suited to its manners. 

[drllau]

> innovation ecosystem here supports both, not similarly but differently suited to its manners.

not saying they can't co-exist but there's the problem of crowding out ... this has been an argument of the EU structured institutional funding mechanism in that govt supported initiatives is displacing private capital (whereas US opposite). As I said, my (admitted brief) observation is that the Blk 71 precinct is now endorsed by InfoComm, NUS, and probably quite a few other quangos (quasi-govt organisations). You can tell from the aspirational names Biopolis etc that Singapore has high expectations but as Malaysia shows, trying to foster industry clusters is non-trivial. However, in their favor I understand SG realises that culture is a significant component and I can't blame them for trying to shift the youthful energy from stable public service careers towards technopreneurship.

Perhaps as an outsider (NZ born) I can perceive things which are too obvious to apply critical thinking (like that spot in the eye where all optic nerves converge). 

Lawrence

http://www.linkedin.com/in/drllau

[drllau]

FutureAsia Ventures recently did a survey of corporate venture structures. These occupy the spectrum from downstream/ co-investment funds (eg Intel Capital) to in-sourced business development with outsider labor (co-creation). They have the advantage in the parent provides capital and often selected resources (internal R&D or sales channel) but have disability in inheriting portions of business DNA and often biased decision-making. This report makes the points

• in last 3 years, 50 corporate accelerators launched (pressure to innovate?)
• predominantly split by US (29) and Europe (27) with only 13 in Asia (broadly speaking)
• 3 asia cities form the club - Bangalore (eg Microsoft Ventures), HK, Singapore. with KL and Sydney having singleton
• focus on management experience (eg operating) rather than youth/enthusiasm
• still in experimental stage, starting from copying Y-combinator and now a possible alternative to M&A (accuhire?)

My particular observation is that given the choice of sectors (financial services, telecom, healthcare, media and consumer) it seems we are entering the mature/mainstream phase of the Innovator's Dilemma. Elsewhere I've pointed out that the term-sheet is the new employment contract, and the wider trend of "decorporatisation" in that horders of financial capital (which large companies retain from earnings) have no comparative advantage in a world flush with savings seeking alpha. Instead it is the Outlier, whether product visionary or the talented millenials abandoning the traditional ladder (or going into socialpreneurship) which is causing disruption or new entrants/disintermediation (cf price comparison). 

From this perspective, corporate ventures are an attempt to co-opt the new reality for the existing market encumbants (eg Teltras who want to avoid being related to lowest cost bandwidth pipe provider).  The observations from Josh Lerner (author of Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It) are even more relevant. The soft-skills which drive innovation (cf early days of Microsoft) are either deprecated in large MNCs or become toxic (eg grind). On the other hand, having a stable base would be highly advantageous for capital intensive startups (eg medtech) in the red-sea, green littorals (new tech into existing market) without the risk of going outside competences via blue ocean. It will be interesting to see what role corporate ventures will play in the existing eco-systems. especially those that have evolved their own indigenous identity (eg Silicon Beach Australia).

PS the original survey can be requested from fdesai@futureasiaventures.com

PPS. for UK discussion paper on startup factories