cyberlaxamana

by Tom Eisenmann I recently wrote some former students from the HBS MBA classes of 1999 and 2000, asking what advice they'd give to current students considering an entrepreneurial path. In a prior post , I shared their responses to the question, "Do you have any regrets about founding a firm upon graduation?" Below, I present their advice to current students. In 2000, Rod Harl co-founded GiftwareExchange, an online B2B marketplace that connected gift stores with product suppliers. The business never gained traction, and after several career twists and turns, Rod is now President of Alene Candles , a business he and a partner purchased in 2008 that manufactures custom candles. Rod shared this advice: Ample low-cost funding can compensate for founders’ weaknesses. In such periods I might endorse aggressively pursuing new businesses regardless of your experience or the quality of your idea. Playing musical chairs, you can make a lot of money. But outside those periods, entr...

by Tom Eisenmann Are we in a new bubble, as Steve Blank recently wrote, or do current high valuations for early- and late-stage consumer Internet companies reflect sound fundamentals, as argued by Ben Horowitz ? From an academic's perspective, this is a difficult question, and I won't tackle it here. Instead, I'll share some data on the performance of Internet startups launched during in the late-1990s boom. The table below compares the  market value at the end of 2001 —the trough of the valuation cycle that began in the mid-1990s—to total capital raised since inception (private and public) for all 2,121 U.S-based Internet companies that had ever got funding from VCs or public markets (see appendix below for my definitions and methods). The firms had an aggregate market value of $99 billion at the end of 2001, and they had raised $85 billion of capital. This doesn't imply an attractive return for someone who invested pro rata in all rounds, especially if you consider ...

by Aldi Haryopratomo “The very first company I started failed with a great bang. The second one failed a little bit less, but still failed. The third one, you know, proper failed, but it was kind of okay. I recovered quickly. Number four almost didn't fail. It still didn't really feel great, but it did okay. Number five was PayPal .”    Max Levchin's (Co-Founder of PayPal) quote on failure is one of my favorites. It shows how important failure is to Paypal’s success. Unfortunately, most wannabe entrepreneurs learn by reading the success stories of start -ups that got bought by Google or completed a multi-million dollar IPO. A few spectacular failures such as Boo.com, an online grocery company that raised $375 million before folding, are well known, but few of the “common” failures are published. It’s not surprising as entrepreneurs don’t like publishing them, because students don’t enjoy learning about them either. HBS cases like Cake Financial, where the entrepreneur...