Tesla and Digital Media...Two Entrepreneurship Stories from the NY Times

Today’s business section in the NY Times carried several interesting articles on entrepreneurship. Two in particular that caught my eye were All Revved Up, but So Far to Go written by Claire Cain Miller about Elon Musk and his efforts at Tesla Motors. I also liked the article by Brooks Barnes, In Hollywood, Everyone’s a Digital Revolutionary. While the article was focused on the digital entertainment space, it was clear that the lessons learned in digital entertainment really can be applicable to other areas of entrepreneurship as well. For example, take this sentence: “But an awful lot of the companies angling for a piece of the action are long on goals and short on specifics.” That could certainly apply to any start-up business. Or how about this: “Remember SulSet.com, the behind-the-scenes subscription movie site? Oops: it quickly ran into problems with the Screen Actors Guild, which objected that the cast was not getting a cut of the proceeds. To resolve that, it had to start giving free access to the site, upending its business plan.” Business plan’s upended? Can happen anywhere. Or take the last sentence in the article: “Where the market stands today there are more digital opportunities than ever,” he (Brent Weinstein, head of digital media for United Talent Agency) said. “Those that will be successful are the ones who understand the unique aspects of the platform and the audience.” That could be re-written (with apologies to Mr. Weinstein for borrowing his quote) to say that based on where the business world is today, there will be more opportunities than ever. Those entrepreneurs that will be successful are the ones who see the need in the marketplace and can create a unique product/service to fill that need, mindful that it is all about serving the eventual customer.

Four Trends in Social Entrepreneurship

Because I work in the academic world but because I came out of the business one, I like to think in terms of customers....or who is my primary customer? For me, our students are the primary customers for the Falcone Center for Entrepreneurship…and currently our students are thinking about social entrepreneurship in a big way. We see that in the business plans that get submitted for our Capstone Business Plan Class and Competition, and in the ideas that students come into my office to talk about. So it is with great interest that I read on Just Means, Marcia Stepanek’s summary of the report. Echoing Green is a New York-based social enterprise investment nonprofit.

* Many social entrepreneurs want to tackle the world's most difficult problems early in their career. About 55 percent, or slightly more than half, of some 1,200 semifinalists for Echoing Green fellowships in social entrepreneurship since 2007 have identified themselves as being younger than 35.

* Social entrepreneurs are blurring the lines between the nonprofit and for-profit experience and are often "serial entrepreneurs." There was a 15 percent decrease over 2008 in the number of Echoing Green semifinalists who have worked in the nonprofit and government sectors. Thirty-seven percent of the 300 semifinalists this year have founded another organization and 71 percent of those organizations are still in existence.

* Social entrepreneurs are on the forefront of the trend to build for-profit/nonprofit social enterprises. This year, more than 37 percent of the 300 Echoing Green semifinalists structured their new ventures as hybrid organizations -- nonprofit/for-profit enterprises aimed at simultaneously fulfilling public duties and developing commercial markets for their activities. That's up 20 percent over 2007. Meanwhile, also since 2007, the total number of semifinalists structuring their organizations as nonprofits decreased by nearly 20 percent.

* Many social entrepreneurs are compelled to create social enterprises because of their personal experiences. Almost 40 percent of Echoing Green semifinalists since 2007 identify themselves as members of the communities they plan to serve.

Business Schools Reach Out to Military Veterans

As we get ready to kick-off the Syracuse University Entrepreneurship Bootcamp for Veterans with Disabilities program this Saturday, it was great to see Geoff Gloeckler’s article in Business Week, B-Schools Reach Out to Veterans. I particularly liked the paragraph that wrapped up the article because it was absolutely right on target:

The business schools say they benefit from the programs as much as the veterans. “It’s a privilege to work with disabled American veterans for the third year,” says Judy Olian, dean of UCLA Anderson, according to a press release from the Anderson School. “UCLA Anderson’s expertise in entrepreneurship is a way for us to provide resources to veterans who have sacrificed so much on behalf of the nation and who want to realize their own business dreams and desires to support their families and communities.

As Dean Olian said…it is our privilege to work with these fantastic vets in this outstanding program.

Sports and Entrepreneurship

The Orlando Sentinel yesterday ran a very nice story on a neat entrepreneurial company…XOS Digital. If you’re not familiar with the company, that’s probably OK but rest assured that all of your favorite college and NFL football teams, along with teams in the NBA and NHL know this organization very well. For those teams, XOS can be the difference between winning and losing. XOS was founded by Dan Aton in 1999 after he did some work for the Orlando Magic. Today, XOS is the dominant player in the digital sports space serving “more than 480 partners representing more than 900 teams in the NCAA, NFL, NBA, and NHL.” Dan is a great entrepreneur who took an interest and passion, and matched it up with a problem in the marketplace and in the process created a successful enterprise. For entrepreneurs and sports fans, the article is an interesting one to read: Lake Mary Company XOS Digital provides data for many college, pro sports teams.

Entrepreneurship in Fortune Magazine

While I understand that Fortune magazine is a (the?) magazine of corporate America, it’s nice to see that they are now starting to give a bit more notice to entrepreneurship. While I enjoy reading the publication, in recent years I was getting disgusted with their lack of coverage of non-tech entrepreneurship. In the current issue, there is a nice corporate entrepreneurship piece on one of my favorite companies, Williams-Sonoma. The article, Secret Sauce, discusses its growth from a struggling catalogue retailer to the position they now occupy in both the on-line as well as brick and mortar space.

There is also a short but fun piece showcasing three small entrepreneurial companies that are going head-to-head with some of the big guys in the publishing, hospitality and food space. The article by Jessica Shambora , is called, David and Goliath.

Entrepreneurship as a Road Forward for the Disabled

Wonderful story in today’s Wall Street Journal about the role that entrepreneurship can play for disabled individuals. The story, written by Sarah Needleman is entitled For Disabled, a Job Hunt Alternative and it highlights our Entrepreneurship Bootcamp for Veterans with Disabilities program. Thorugh our Falcone Center for Entrepreneurship, we also work with disabled entrepreneurs through our StartUp New York program and we seen amazing results. As our faculty like to say, entrepreneurship truly is a road forward for those who are disabled.

From the article:

Founded by the Whitman School of Management at Syracuse University, the boot camp starts with a 40-day distance-learning course, followed by 10 days of on-campus classes. Participants are also paired with mentors and have access to free resources such as legal and accounting services from corporate partners and the schools' alumni.

After graduating from the program in 2008, former Marine Brian Iglesias co-launched New York film-production company Veterans Inc. with a fellow veteran. Mr. Iglesias's neck and shoulder were injured during combat, causing permanent nerve damage to his right arm and requiring a metal plate in his neck. He says he previously spent five months searching unsuccessfully for a job in the entertainment industry—even failing to land unpaid internships. "I was begging people to work for free," he says.

The 33-year-old Mr. Iglesias, who has a bachelor's degree in film production from Temple University, suspects that some employers were uncomfortable hiring him because of his war experience. "Out of all the people who are candidates, they think, a year ago this guy was being shot at," he says.

With the poor economy further restricting employment options for the disabled, some organizations are seeing increased interest in programs designed to assist this group in starting businesses.

Comments from a Speech by Karen Mills of the SBA

From the Biz Box by Steve Viuker

On July 12, a forum called “Strengthening the Lending Environmentfor America’s Small Businesses”, was held in Washington, D.C.

It was sponsored by the Federal Reserve Board and featured comments by Fed Chairman Ben Bernanke. The Chairman urged banks and regulators to help the nation’s small businesses get the loans they needed to create jobs. Federal data indicate that lending to such companies fell to below $670 billion in the first quarter of this year from more than $710 billion in the second quarter of 2008.

Also speaking was SBA Administrator Karen Mills. Below are her comments to BizBox about small business issues and a link to her speech in Washington.

http://www.sba.gov/idc/groups/public/documents/sba_homepage/mills-fedspeech-7-12-10.pdf

Overview
Small business is at the heart of the economy; so it needs to be at the heart of the recovery. They were most affected by the credit freeze. Big businesses have other options. The SBA has been able to make a difference at the end of the credit spectrum. The Recovery Act has allowed us to provide $30 billion worth of credit access.
Initiatives
SBLF- The mainstay of the Recovery Act program was to increase our guarantees to 90% and to reduce and/or eliminate our fees. One aspect of the Small Business Jobs bill is the Small Business Lending Fund. Why aren't banks lending? There are two reasons. One is that they don't want to take the risk. That is why the 90% guarantee is important. The other reason is lack of capital. The SBLF is $30 billion into hands of Main Street community banks. The access to this capital to these institutions will be as low as one percent. That is providing they increase lending to small businesses. And it won't cost $30 billion because the banks will pay the money back and also invest these funds and have multiples returns.

Regulation
The job of the SBA's Office of Advocacy is to point out when the needs of small businesses have to be taken into account in terms of the cost that regulations would impose on them. We look at Sarbanes/Oxley and all other compliance regulations.
Green jobs
The SBA looks at small business from traditional dry cleaners and restaurants to the high-growth entrepreneurs. One aspect that has picked up momentum is the green sector. There are innovations and opportunities that are creating new jobs. We want to make sure that these businesses have access to capital and to programs such as the SBIR program. (innovation research grants)

BP Oil
We have 28 disaster assistance locations in the affected states. We offer advice and economic injury loans to businesses that have been affected by the spill and the ban on fishing. In addition, if a business has an SBA loan from a Katrina-related loss, that business can defer payments on that loan.

Political SupportSupport for Small Business jobs bill in front of Congress is coming from both sides of the aisle. Small business creates the jobs in this country; government is there to see they are aided in that process.

Lending Crisis or Not?

In preparing for a recent speech on entrepreneurship and the media, I started reading the Huffington Post. While it isn’t the first source I look to for news, it’s still a great place to see what’s going on around the world. Take a look at their current headline story written by Shahien Nasiripour on banking and small business credit. While the story is interesting, I would have liked to see a quote or two from a bank who isn't lending. As I talk to bankers, I keep hearing that government regulations are the primary thing that's keeping them from lending more to small companies.

After more than 40 summits held across the country to figure out why the nation's small businesses aren't getting the loans they need -- and qualify for -- America's central banker was no closer to a solution Monday than he was a year ago, when the Federal Reserve first identified a crippling small-business credit crunch.

With that in mind, Fed Chairman Ben Bernanke implored banks to free up credit, telling a conference in Washington that "lenders should do all they can to meet the needs of creditworthy borrowers."

The bankers aren't listening.

Bank loans to small businesses are down about $30 billion, or 4 percent, since last year, according to the latest figures from the Federal Deposit Insurance Corporation.
New loans guaranteed by the federal Small Business Administration fell off a cliff in June, dropping 66 percent to their lowest level in at least two years, according to agency data. The value of new loans in June -- $647 million -- is less than the total in February 2009, the month before the Obama administration's stimulus plan eliminated some fees on the taxpayer-backed loans and increased the federal guarantee on some of them to 90 percent, an incentive which has since expired. June's total loan figure was also less than half the total lent in September 2008, the flashpoint of the financial crisis.

The lack of credit is stifling the nation's ability to emerge from that crisis.

"Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges," Bernanke said in prepared remarks. "Small businesses are central to creating jobs in our economy; they employ roughly one-half of all Americans and account for about 60 percent of gross job creation. Newer small businesses, those less than two years old, are especially important: Over the past 20 years, these start-up enterprises accounted for roughly one-quarter of gross job creation even though they employed less than 10 percent of the workforce."

But nearly a year after the Fed's main policy-making body, the Federal Open Market Committee, first identified the difficulties small businesses face in securing financing, the Fed appears no closer to solving the problem than they did during that two-day meeting in August of last year.

In Monday's speech, Bernanke addressed the lack of available credit, the lower demand for it, lenders' tighter underwriting standards and the frustration banks are feeling when dealing with regulators who are keen to tighten the reins after years of loose supervision.

"The insights we obtained from small business owners, lenders and others in this series of meetings have given us a more nuanced understanding of the problem and will help us identify areas where we might be able to do more," Bernanke said of the summits that began in February.

Bernanke has delivered at least seven speeches since November in which he referenced the lack of available credit, including one in each month since April.

The subject's importance cannot be overstated. Small businesses can't grow without credit, and because small businesses are the nation's primary job creators it's critically important for them to secure the financing they need, experts say. "The formation and growth of small businesses depends critically on access to credit," Bernanke said.

It's hard to understand, though, what new information the Fed has learned over the past few months that hadn't been known by experts for some time. Industry consultant Bob Coleman of Coleman Publishing said there hasn't been much in the way of new information on the credit crunch.

But Coleman said he hoped the summits have helped attract attention to the issue, and could prod Congress to pass a much-needed small business lending bill.

"We need to get this done. Businesses are dying on the vine," he said.

Some banks, sensing opportunity, have taken advantage of others' retrenchment.

Nara Bank, a $3-billion community bank founded in 1989 to serve Korean-Americans in Southern California, has increased its lending to small businesses by $250 million, or 37 percent, since last year, FDIC figures show.

"It's been a focal point for us," said Paul Choi, a bank spokesman. "A lot of the mindset here was to switch towards a more marketing-oriented mindset as opposed to a more conservative approach," Choi said. "We really wanted to push our lending volume up," he said, so the lender's district managers focused on finding good loan prospects.

More than 99 percent of the bank's loans go to businesses, according to a May investor presentation. Supermarkets are the bank's biggest borrowers of commercial and industrial loans. Hotels, motels and gas stations are among its biggest borrowers of commercial real estate loans.

"It's always been a philosophy to grow," said Choi, and the SBA's stimulus-funded efforts to increase lending provided new incentives to push in that direction. Given those incentives, the bank "made a conscious effort to really improve" its small business lending, Choi said. "We are actively and aggressively seeking qualified candidates."

Nara hopes to reduce its commercial real estate lending this year and instead focus on increasing its commercial and industrial loans.

But the nation's biggest banks continue to reduce their lending to small businesses. Coleman blames the economy for the lack of available loans, pointing to near-double-digit unemployment and the lack of demand for goods that's causing businesses and banks to hold back. Coleman also said uncertainty over new regulations -- like those businesses will face as part of the recently-enacted health care law -- has made some think twice about borrowing.
"A lot of people are saying, 'Hey, I don't know what's going on here.' I want to know how much health care is going to cost me,' for example," Coleman said.

The National Federation of Independent Business, an advocacy group, reports that its members say financing continues to be difficult to acquire, yet it's far from their biggest concern. About 92 percent of small business owners reported that "all their credit needs [were] met, or they did not want to borrow," according to the group's most recent monthly report.

What, then, caused the most angst?

Poor sales, taxes, and government red tape.

Let's Raise Kids to be Entrepreneurs

Matt Gartner sent this over to me…a really neat speech by Cameron Herold talking about Let’s Raise Kids to be Entrepreneurs. It lasts about 19 minutes, but grab a cup of coffee, settle back and listen. You’ll love it!

Women and Growing Companies

As an entrepreneur, you can never have enough resources to help you out. In the New York Times, Adriana Gardella writes a short piece, Women and Growing Companies that provides a variety of resources to help out women entrepreneurs who are interested in growing their businesses. Besides the resources listed in the article, continue down through the reader comments and you’ll find other resources of interest.

Being an entrepreneur is a very lonely journey, and getting help, contacts or support from organizations like those mentioned in the article can make the difference between success…and well, that other thing.

Is The Internet Melting Our Brains?

I was all set to blog today about the article in Wired magazine dealing with the internet and how it affects how we think. The article from the new book, The Shallows: What the Internet is Doing to Our Brains by Nicholas Carr, and it is a very interesting look at how the internet impacts the move from short term to long term memory. But because the magazine’s website has such a clunky search function, after a few minutes of trying and being unable to find the article, I gave up. Now perhaps that is the exact point the article was making…that the web has caused us to be scanners rather than readers, which impacts our ability to truly learn. Maybe you’ll be better at it than me, or perhaps you’ll just help the media industry out and buy the magazine and the book, but the question I am left with is how could a magazine that deals with the brave new world of innovation have such a clunky search function.

Entrepreneurs Can Change the World

Last week we had the chance to celebrate both Canada Day on July 1 and Independence Day on the 4th of July, so it was a relaxing and fun week. Now that it’s time to get back to work, and for those of us who are entrepreneurs, it’s a good time to get juiced up again on what we do…and what better way to do it than with the Grasshopper video: Entrepreneurs Can Change the World.

I love the Grasshopper video and I use it in almost all of my speeches on entrepreneurship. It’s such a great piece that I also like to plug the company(no, I'm not getting paid to do so), which according to their website is “a virtual phone system for entrepreneurs.” And since they’ve been good enough to keep this video around on the web, take a look at what they can do for your business and then click and watch the video again. In fact, keep it handy, because whenever you need a little shot-in-the-arm to give you the energy to keep doing what you do to grow your business, watch the video and you’ll be ready to get back to work.