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  • 1.  Entrepreneurial Success

    Posted 03-08-2008 11:45
    Good morning -

    I am an early doctoral student and have been asked to come up with a couple items to include on a survey to get at the success of an entrepreneur.  Is there a standard metric (one or two questions) used in the field to get at the level of success?  Sales?  Assets?  # employees?  E years in business?  Any related citations would be appreciated, and I can post a summary of replies.

    Thank you in advance,

    Doan Winkel
    PhD Student
    University of Wisconsin - Milwaukee
    Sheldon B. Lubar School of Business - S360
    PO Box 742
    Milwaukee, WI 53201
    Need to know the score, the latest news, or you need your Hotmail®-get your "fix". Check it out. ************************************** This message is from ENTREP which is sponsored by the Entrepreneurship Division of the Academy of Management. Please do not post messages with attached files. Commercial messages or spammed messages are not allowed on the list. The use of auto-responder "out-of-office" messages may also lead to your removal from the list. You can manage your subscription options, including joining or leaving the list here: http://aomlists.pace.edu/scripts/wa.exe?SUBED1=entrep&A=1 If you have questions or need help, please contact Dr. John Bunch jbunch@benedictine.edu. Ventures HO!


  • 2.  Entrepreneurial Success

    Posted 03-08-2008 13:08
    Hi Doan - my coauthor and I wrote a paper that was published in a special
    issue of International Marketing Review on international entrepreneurship.
    We had multiple measures of success - it might be helpful to you: Kropp,
    Fredric, Noel J. Lindsay, and Aviv Shoham (2006), “Entrepreneurial,
    Market, and Learning Orientations and International Entrepreneurial
    Business Venture Performance in South Africa,” International Marketing
    Review, 23(5), 504-23. If I had only one measure it would be survival :)

    Greetings from an airport lounge in New Zealand.

    Fredric

    DOAN WINKEL <doanemil@MSN.COM> writes:


    >Good morning -
    >
    >I am an early doctoral student and have been asked to come up with a
    >couple items to include on a survey to get at the success of an
    >entrepreneur. Is there a standard metric (one or two questions) used in
    >the field to get at the level of success? Sales? Assets? # employees?
    >E years in business? Any related citations would be appreciated, and I
    >can post a summary of replies.
    >
    >Thank you in advance,
    >
    >Doan Winkel
    >PhD Student
    >University of Wisconsin - Milwaukee
    >Sheldon B. Lubar School of Business - S360
    >PO Box 742
    >Milwaukee, WI 53201
    >
    >---------------------------------------------------------------------------Need
    >to know the score, the latest news, or you need your Hotmail®-get your
    >"fix". [ http://www.msnmobilefix.com/Default.aspx ]Check it
    >out.************************************** This message is from ENTREP
    >which is sponsored by the Entrepreneurship Division of the Academy of
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    >http://aomlists.pace.edu/scripts/wa.exe?SUBED1=entrep&a=1 If you have
    >questions or need help, please contact Dr. John Bunch
    >jbunch@benedictine.edu. Ventures HO!

    =================================================
    See the invisible, capture the intangible, do the impossible
    =================================================

    Fredric Kropp, PhD
    Associate Professor of Marketing and Entrepreneurship
    Fisher Graduate School of International Business
    Monterey Institute of International Studies
    460 Pierce Street
    Monterey, CA 93940 USA

    TEL (831) 647-6684 FAX (831) 647-6506
    E-MAIL fredric.kropp@miis.edu

    =======================================

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  • 3.  Entrepreneurial Success

    Posted 03-08-2008 18:00
    I might suggest you take a peek through Shane's recent book - Illusions of Entrpreneurship.

    The point being, why entrepreneurs start busineses would perhaps point to different measures than sales, size and even profit when the measure of interest is something as multi-faceted as success.

    david touve

    On Mar 8, 2008, at 10:44, DOAN WINKEL <doanemil@MSN.COM> wrote:

    Good morning -

    I am an early doctoral student and have been asked to come up with a couple items to include on a survey to get at the success of an entrepreneur.  Is there a standard metric (one or two questions) used in the field to get at the level of success?  Sales?  Assets?  # employees?  E years in business?  Any related citations would be appreciated, and I can post a summary of replies.

    Thank you in advance,

    Doan Winkel
    PhD Student
    University of Wisconsin - Milwaukee
    Sheldon B. Lubar School of Business - S360
    PO Box 742
    Milwaukee, WI 53201
    Need to know the score, the latest news, or you need your Hotmail®-get your "fix". Check it out. ************************************** This message is from ENTREP which is sponsored by the Entrepreneurship Division of the Academy of Management. Please do not post messages with attached files. Commercial messages or spammed messages are not allowed on the list. The use of auto-responder "out-of-office" messages may also lead to your removal from the list. You can manage your subscription options, including joining or leaving the list here: http://aomlists.pace.edu/scripts/wa.exe?SUBED1=entrep&A=1 If you have questions or need help, please contact Dr. John Bunch jbunch@benedictine.edu. Ventures HO!
    ************************************** This message is from ENTREP which is sponsored by the Entrepreneurship Division of the Academy of Management. Please do not post messages with attached files. Commercial messages or spammed messages are not allowed on the list. The use of auto-responder "out-of-office" messages may also lead to your removal from the list. You can manage your subscription options, including joining or leaving the list here: http://aomlists.pace.edu/scripts/wa.exe?SUBED1=entrep&A=1 If you have questions or need help, please contact Dr. John Bunch jbunch@benedictine.edu. Ventures HO!


  • 4.  Entrepreneurial Success

    Posted 03-13-2008 00:27
    Doan,

    To decide what success measure is appropriate, you need to decide what stakeholder, population and questions you are studying. Let me offer a few examples.

    For what is disparaging referred to as a "lifestyle" business, the entrepreneur may want the greatest chance of a salary-replacement job with more autonomy. For a Silicon Valley serial entrepreneur, they buy 3 or 4 lottery tickets in their careers and hope that one leads to a $10+ million exit that means they don't work again (see also Amit et al, 2001). But frankly entrepreneurial motivations vary considerably (cf. Carter et al 2003)

    For a VC (or other investor), success is a quick high return on invested capital as part of a portfolio of a few big winners and lots of losers. For an economic development agency, it's employment growth (jobs created), and perhaps the salary levels of those jobs.

    So if you are studying factors that lead to the creation of high growth businesses, you would use one measure of "success"; most of this literature focuses on the exit event -- sale or IPO. If you are studying entrepreneurs achieving the goals they set out to achieve, then you would need to ask entrepreneurs to articulate those goals as one of the questions.

    Finally, it is very hard to get measures of success for nonpublic companies, so survival is often used as a proxy (your N years in a business). But that's more a data sufficiency argument than a theoretical claim that this is what founder or investors define as "success".

    Joel

    PS: I would not recommend that you read Shane's latest book unless you want to know what a contrarian view looks like -- which is really only useful after you understand the broader brush of decades of research.


    R Amit, KR MacCrimmon, C Zietsma, JM Oesch - Does money matter? Wealth attainment as the motive for initiating growth-oriented technology ventures, Journal of Business Venturing, 2001

    Nancy M. Carter, William B. Gartner, Kelly G. Shaver, Elizabeth J. Gatewood, The career reasons of nascent entrepreneurs, Journal of Business Venturing 18 (2003) 13 - 39


    On 12:00 AM -0500 3/10/08, ENTREP automatic digest system hath said:
    >Date: Sat, 8 Mar 2008 16:59:38 -0600
    >From: David Touve <david.touve@VANDERBILT.EDU>
    >Subject: Re: Entrepreneurial Success
    >
    >I might suggest you take a peek through Shane's recent book - =20
    >Illusions of Entrpreneurship.
    >
    >The point being, why entrepreneurs start busineses would perhaps point =20=
    >
    >to different measures than sales, size and even profit when the =20
    >measure of interest is something as multi-faceted as success.
    >
    >david touve
    >
    >On Mar 8, 2008, at 10:44, DOAN WINKEL <doanemil@MSN.COM> wrote:
    > > I am an early doctoral student and have been asked to come up with a =20=
    > > couple items to include on a survey to get at the success of an =20
    > > entrepreneur. Is there a standard metric (one or two questions) =20
    > > used in the field to get at the level of success? Sales? Assets? =20=
    > > # employees? E years in business? Any related citations would be =20
    > > appreciated, and I can post a summary of replies.


    --
    Joel West http://www.JoelWest.org/
    Associate Professor, Innovation & Entrepreneurship
    College of Business, San Jose State University
    BT 555, One Washington Square, San Jose, CA 95192-0070

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    Ventures HO!


  • 5.  Entrepreneurial Success

    Posted 03-13-2008 11:53
    Using the proxy of number of years in business has a problem. When I looked at new (early stage) start-ups and escalation of commitment (this was true in two separate studies), many of the living dead managed to hang on years longer than it took any of the firms in the sample (close to 400) to go public, be bought, etc. While ditching a dog will be captured by that, 10 years out there were still a number of living dead hanging on by a thread. A few of the group were still private and thriving, but most that were still private were not. By hunting (on the internet, in various databases, Lexus-Nexus, etc.) for each firm left X number of years out that hasn't gone public or been bought I found you can identify what has happened to most of the rest.
     
    Do NOT trust what Thompson's VentureXpert says about new start-up outcomes. It is far from reliable. I have used that database twice 5 years apart. While that database captures almost all IPO's and many mergers/aquisitions I found that they generally identified a number of living dead that I knew had finally died (verfied bankrupt via public announcement) and other companies that no longer existed (that had absolutely no current presence on the web, in phone directories or in any other database I could search including news releases, etc.) as "active investment"  even if the last round of funding had been 8+ years earlier and any evidence of a currently living company had vanished from the face of the earth. When you think about it, the VC's may not want that failure listed as a failure - better to leave it as active - in their records in that database considering who uses that database to get funding and the reputation effect of listing failures.
     
    I also found that database had completely scrubbed from their records a number of failures (including verifiable failure outcomes or "can't find evidence of their exsitence anywhere" type failures) that had been previous listed (5 years previously) as active investments. Several years ago I found that about 60% of all high tech early stage new startups in that database were ones that had successful outcomes. I found (in 2001) around 50 high tech early stage new startups (with an eventual verifiable non-successful outcome) that had had multiple rounds of funding  in the first half of the 1990's had vanished completely from that database when I was back in there 5 years later. Poof, like they had never happened. No trace in that database anywhere. Didn't happen to any of the successes.
     
    Carolyn Birmingham
    Assistant Professor, Management
    University of Idaho
    ************************************** This message is from ENTREP which is sponsored by the Entrepreneurship Division of the Academy of Management. Please do not post messages with attached files. Commercial messages or spammed messages are not allowed on the list. The use of auto-responder "out-of-office" messages may also lead to your removal from the list. You can manage your subscription options, including joining or leaving the list here: http://aomlists.pace.edu/scripts/wa.exe?SUBED1=entrep&A=1 If you have questions or need help, please contact Dr. John Bunch jbunch@benedictine.edu. Ventures HO!


  • 6.  Entrepreneurial Success

    Posted 03-13-2008 16:03

    Carolyn,

     

    I quite agree with Joel West – success is perceived from where you are standing. Our national technology clusters are heavily populated with "living dead" – no more investable for the large returns, not a "loser" gone, but surviving to keep the loyal employee band satisfied, and provide a good income to the entrepreneur or most recent passionate CEO. This phoneme is worldwide. The standard success measure of 10X – 15X returns in Y year (VC perspective) most often ebbs to managing something where all decisions are central to the beneficent dictator, the company pays for the car, home fires are burning well, a reputation for NOT being loser is intact, and maybe – just maybe – the big winner will spring from their original tech base or market niche.

     

    Jack Savidge

    The von Liebig Center, UCSD

    jsavidge@ucsd.edu

      

    From: Entrepreneurship Division Listserv [mailto:ENTREP@AOMLISTS.pace.edu] On Behalf Of Birmingham, Carolyn
    Sent: Thursday, March 13, 2008 8:53 AM
    To: ENTREP@AOMLISTS.pace.edu
    Subject: Re: [ENTREP] Entrepreneurial Success

     

    Using the proxy of number of years in business has a problem. When I looked at new (early stage) start-ups and escalation of commitment (this was true in two separate studies), many of the living dead managed to hang on years longer than it took any of the firms in the sample (close to 400) to go public, be bought, etc. While ditching a dog will be captured by that, 10 years out there were still a number of living dead hanging on by a thread. A few of the group were still private and thriving, but most that were still private were not. By hunting (on the internet, in various databases, Lexus-Nexus, etc.) for each firm left X number of years out that hasn't gone public or been bought I found you can identify what has happened to most of the rest.

     

    Do NOT trust what Thompson's VentureXpert says about new start-up outcomes. It is far from reliable. I have used that database twice 5 years apart. While that database captures almost all IPO's and many mergers/aquisitions I found that they generally identified a number of living dead that I knew had finally died (verfied bankrupt via public announcement) and other companies that no longer existed (that had absolutely no current presence on the web, in phone directories or in any other database I could search including news releases, etc.) as "active investment"  even if the last round of funding had been 8+ years earlier and any evidence of a currently living company had vanished from the face of the earth. When you think about it, the VC's may not want that failure listed as a failure - better to leave it as active - in their records in that database considering who uses that database to get funding and the reputation effect of listing failures.

     

    I also found that database had completely scrubbed from their records a number of failures (including verifiable failure outcomes or "can't find evidence of their exsitence anywhere" type failures) that had been previous listed (5 years previously) as active investments. Several years ago I found that about 60% of all high tech early stage new startups in that database were ones that had successful outcomes. I found (in 2001) around 50 high tech early stage new startups (with an eventual verifiable non-successful outcome) that had had multiple rounds of funding  in the first half of the 1990's had vanished completely from that database when I was back in there 5 years later. Poof, like they had never happened. No trace in that database anywhere. Didn't happen to any of the successes.

     

    Carolyn Birmingham

    Assistant Professor, Management

    University of Idaho

    ************************************** This message is from ENTREP which is sponsored by the Entrepreneurship Division of the Academy of Management. Please do not post messages with attached files. Commercial messages or spammed messages are not allowed on the list. The use of auto-responder "out-of-office" messages may also lead to your removal from the list. You can manage your subscription options, including joining or leaving the list here: http://aomlists.pace.edu/scripts/wa.exe?SUBED1=entrep&A=1 If you have questions or need help, please contact Dr. John Bunch jbunch@benedictine.edu. Ventures HO!

    ************************************** This message is from ENTREP which is sponsored by the Entrepreneurship Division of the Academy of Management. Please do not post messages with attached files. Commercial messages or spammed messages are not allowed on the list. The use of auto-responder "out-of-office" messages may also lead to your removal from the list. You can manage your subscription options, including joining or leaving the list here: http://aomlists.pace.edu/scripts/wa.exe?SUBED1=entrep&A=1 If you have questions or need help, please contact Dr. John Bunch jbunch@benedictine.edu. Ventures HO!