Tag: startups

Validating your market

Sometimes your competitors are your greatest marketing assets.

Last week I interviewed Anthony Foy, CEO of Workshare about his business and the growth in the online sharing and collaboration markets.

When researching Workshare the obvious message is the business can be best described as a Dropbox for enterprises.

It always pays to be cautious when comparing a business to a competitor as often the managers or founders don’t like mentioning marketplace rivals.

Frequently, it turns out the rival in the market helps you define what your service delivers.

A good example of this was a gay and lesbian dating service run by a pair of acquaintances.

Naturally the obvious comparison was with the Grindr app but the two founders – who we’ll call George and John – had completely different views about this.

George’s view was “don’t mention the G word” as Grindr was the feared rival while John’s view was that their opposition validated their market and actually made it easier for them to explain their business.

John’s view turns out to be that of Anthony Foy’s – that Dropbox actually makes it easier for Workshare to articulate its business.

Investors, customers and staff understand what Dropbox does so there’s no need to for Workshare to convince people there’s a demand for what they do or to explain exactly what their service does.

This has proved true for many successful businesses. Facebook needed Friendster and Myspace to prove the market for social media existed while Google had Yahoo! and Altavista to show there was a need for an online search engine.

Just because you aren’t first to the market doesn’t mean you won’t be successful. Sometimes your competitors are your greatest asset in helping the rest of the industry understand exactly what you do.

Lessons in crowdfunding from an unsuccessful Kickstarter campaign

Crowdfunding is in its early days and Moore’s Cloud founder Mark Pesce explains some of the lessons we have to learn about this new way of raising capital.

“I’d rather eat a bullet than do a Kickstarter campaign again,” says Moore’s Cloud founder Mark Pesce in the latest Decoding The New Economy video when asked about crowdfunding his project.

Moore’s cloud is an internet of things company that focuses on lighting, “we think it’s interesting and something that expresses emotion” Mark says.

With their first project, Moore’s Cloud looked to raise $700,000 to build their first project but fell well short of their target.

Falling short lead to Mark and his team executing a classic business pivot from a static lights to Holiday, a system of intelligent fairy lights.

“We took exactly the same technology and put it into a different form factor,” said Mark. “It’s as if we took the light and unwound it.”

The failure of the Kickstarter campaign gave the Moore’s Cloud founders an education on how crowdfunding works.

Customer focused from day one

An important aspect of crowdfunding is it’s very customer focused. From day one of the campaign, the venture has to devote resources on relations with those who’ve pledged a contribution.

Most startups don’t have those resources, or the time and skills, to deal with those relations.

“People say it’s a better way of getting investors. I would have to say ‘it’s not better, it’s different.'” Mark says about crowdfunding.

The psychology of investors

One of the differences is the psychology of investors. Mark was urged by the CEO of Indiegogo, Slava Rubin, to set a low target as participants like to back successful campaigns.

“There’s a whole bunch of psychology I didn’t understand going in,” says Mark. “If we’d had a goal of $200,000 we probably would have filled it in the first two weeks.”

“Once a campaign is fully funded, it tends to get overfunded.”

A truism of business is that banks will only lend to you when you don’t need the money and it strangely appears the same thing applies to crowdfunding.

We’re in the early days of crowdfunding and there’s more to be learned about the way it works and for which ventures the fund raising technique works best.

The experience of campaigns like Moore’s Cloud are part of how we’ll discover the nuances of crowdfunding and the psychology of the crowds that contribute.

Finding the smart money

Can events like Sydney’s AngelEd and London’s City Meets Tech help those cities become global startup centres?

Around the world startup communities are working to connect with local investors, in Sydney and London two groups are showing how it is done.

“We’re looking at turning idle money into start money,” is the aim of Sydney AngelEd says one of its founders, Ian Gardner.

Fitting startup companies’ capital needs into the established criteria of investment managers is an ongoing problem that AngelEd’s founders want to resolve. “We see startups becoming an asset class,” says Gardiner.

AngelEd, to be held on November 7, aims to educate high wealth investors and asset managers on understand the risk, benefits and hype around angel investment, particularly in tech companies.

The global search for funds

Startups around the world are struggling to engage with investors – in London, the local tech community has set up City Meets Tech to introduce British investors to high growth companies.

London should have an advantage in this field given its leading role in the global finance industry, however the challenge for the tech community is to find financiers who are prepared to accept higher levels of risk than mainstream investments.

“The City is generally risk adverse and doesn’t understand tech and tech start-ups,” says the City Meets Tech website, “though really it’s about understanding the business and managing risk though unfortunately innovation requires at least some risk.”

Australia’s trillion dollar superannuation system should similarly give Sydney an opportunity that to become a global centre however it suffers from a similar, if not worse, conservative investment culture to London’s.

Turning Sydney into a global finance centre has been an objective successive state and Federal governments for twenty years but the sleepy, comfortable and risk averse culture of Australian fund managers offers little to attract foreign investors or companies.

Much of Australia’s is problem is the insular nature of local fund managers with all but a tiny part of the nation’s retirement savings being put into the top local stocks, listed property funds or domestic infrastructure projects that are notable for their lousy returns and extortionate management fees.

Breaking that mentality is going to be the key to both AngelEd and the Sydney’s success as a financial centre.’

Competing with the world

While London and Sydney are struggling with the challenges of encouraging investors into the high growth sectors, cities like Singapore and New York are developing investor communities that are attracting entrepreneurs to their cities.

Many governments dream of being the next Silicon Valley and while it isn’t likely anyone can recreate the circumstances that led to Northern California becoming the computer industry’s world centre , a vibrant and accessible capital market will be necessary for any place hoping to be a global cnetre.

For Sydney and London, the success of initiatives like AngelEd and City Meets Tech may be critical for both centres’ future in the global digital economy.

Venture capital investors as mentors

Early investors bring more than money to a young business

LinkedIn founder Reid Hoffman has a wonderful post on his blog detailing what he wished he knew when he first pitched his business to investors.

His seven myths of pitching are well worth reading whether you’re seeking capital from Silicon Valley venture capital firms, a sceptical bank manager or your mum and dad.

The first point is the most pertinent — a successful financing process results in a partnership that delivers benefits beyond just money.

Raising investor funds is only a step in the journey of creating a successful business, it is by no means the end point.

Hoffman’s point is something every business founder needs to keep in mind, those early investors are important mentors and their advice could prove to be more valuable than the money they bring to a venture.

Do business awards help companies?

Winning business awards are great for helping a company focus on its operations, but they aren’t necessarily great for growing an organisation.

The latest clip on The Decoding the New Economy YouTube channel is an interview of Cameron Wall of Melbourne’s C3 Business Solutions about business intelligence, data analytics and whether winning awards helps a company.

Cameron’s business has been a successful enterprise having grown to over a hundred employees since being founded seven years ago.

As a high growth business, the company was listed in the 2010 BRW Fast Starters list, interestingly though Cameron didn’t see a great deal of benefit from winning the accolade.

“I look at it as being a credential, just because you get the credentials it doesn’t necessarily mean you can charge a premium in the marketplace,” Cameron says. “It all helps in terms of recognition, but we haven’t been thrown anything as a result of the award.”

On the other hand the company has won the BRW Best Australian workplace three years in a row and Cameron has found this improved the business’ recruitment.

“Being in a service company you often hear ‘people are our greatest asset’, basically they are our only asset.” Cameron says, “Having a great place to work is really important for us.”

Cameron found that after winning the great place to work that the flow of resumes increased. “Some of the benefits of that were a lot of people applied to join C3 and it makes the recruitment process a lot easier.”

How business awards do help companies is in reviewing their operations and practices as Cameron explained, “using the great place to work process is a great way to understand if we’re trending upward, downward and where we’re going.”

“It was a difficult award to win, as you get probed by every angle.”

With the growth in data science, business analytics and Big Data companies like C3 are going to need good employees in the global race for talent. Having a reputation as fine place to work is a good way of winning the global race for talent.

Trophy image by RoyM through sxc.hu

The truth is in the data

One of the big challenges facing all organisation is using Big Data to understand their customers better, Emma LoRusso and Digivizer are part of the new wage of businesses and entrepreneurs providing the tools to help managers make better decisions.

Emma LoRusso founder of Sydney based social analytics service Digivizer believes the truth in a company’s data will challenge many managment and marketing beliefs.

In a somewhat poorly recorded interview as part of the Decoding the New Economy YouTube channel, Emma described how analysing social media trends and tying them into an organisation’s Customer Relationship Management (CRM) platform can help improve a business’ marketing and customer satisfaction.

The Truth is in the data

“A lot of marketing in the past has not been data driven,” says Emma. “There’s still this gap between people saying ‘this is what we think’, ‘this is what we’ve always done’ and ‘this is what they’ve found’ – we’ll come behind that and say ‘let’s let the data tell the truth.'”

That data is powerful due to the context Emma believes Digivizer adds, “because we can map people to the social web based on their profiles – who are they, what they talk about, who they are engaged with and what’s important to them.”

“We let data become the truth and we push back on the hypothesis that might have been unsubstantiated previously in the organisation,” Emma says.

Fighting the average

For some organisations, this truth can be challenging. “The ones who resist it are those with a fixed position who have built a career of playing to the averages,” states Emma. “We get massive returns, say 39 to one, whereas they were getting maybe seven to one or twelve to one.”

“Again, data can be the truth in this story.”

One advantage of real time social media monitoring is marketers can now track how consumers changing lives unfold are affecting their buying habits and desires as people get married, become single, have children, move houses or just simply change tastes.

Hearing the consumer

A key part of modern marketing is letting customers know their voices have been heard, as modern consumers know they have a voice and expect companies to acknowledge what they’re saying.

Emma sees a lot of lip service has been paid in companies to the ‘single customer view’ where businesses need to know their customers better.

“I actually think it’s customers that are driving that,” says Emma. “Their expectation is ‘I’ve interacted with you a lot of times, you’re asking me to engage with you digitally and now I expect you to serve me better.'”

“Now if you plug that data into organisations you can start to offer more meaningful – the right message at the right time.”

Emma believes that makes customers happier as they now feel they’ve been heard and understood. “That’s the beauty in the data,” she says.

One of the big challenges facing all organisation is using Big Data to understand their customers better, Emma LoRusso and Digivizer are part of the new wage of businesses and entrepreneurs providing the tools to help managers make better decisions.

While there’s some risks with paying close attention to customers’ online behaviour – as we saw with the famous Target pregnant girl mailout – the benefits for businesses listening to their clients is obvious. It’s another example of how the slow to adapt businesses will be crushed in the changing economy.

Bringing social networking to life

One startup project shows how different technologies are coming together to change our business world.

One of the highlights of the 2013 Australian Microsoft TechEd was a startup panel featuring local startups CoOpRating, Project Tripod and Nubis.

All three startups are interesting projects and Nubis in particular illustrated how various internet and smartphone technologies which are coming together.

Nubis is an Augmented Reality platform that projects social media onto the viewer of a smartphone’s camera. By pointing the camera at someone, the idea is a user can bring up details about a person.

“We’re bringing social networking to life,” says founder Uzi Bar-On.

As part of their Alphega project, Nubis has teamed with Glass Up, an Italian startup attempting to create a Google Glass competitor, the aim is to create a wearable computer that feeds social media information to the wearer.

While it’s not clear what the benefits will be of that – or whether Glass Up, Nubis or Alphega will be successful – the project is interesting as it brings together Augmented Reality, geolocation, wearable technologies and social media.

Over the next few years we’ll be seeing more products like Alphega tying together different technologies and using the Internet of Everything to talk to each other.

It’s these sort of projects that will show us how our businesses and lives are going to change over the next decade as smart people figure out the ways to mash together these technologies.

Paul travelled to Microsoft TechEd 2013 courtesy of Microsoft Australia

Why do executives see romance in the startup culture?

Many managers think startups are romantic – could it be because of the corporate lives they lead?

One of the fascinating phenomenons of the modern era is how corporate managers have appropriated the startup culture.

At the announcement of the Australian Centre for Broadband Innovation’s Apps For Broadband prizes, Foxtel’s CIO Robyn Elliot described her experience of working in a startup.

“Foxtel was once in the category of startup itself,” said Elliot at the start of her speech.

Apples and Oranges

Comparing Foxtel to a scrabbling startup in the modern sense is bizarre given the company was a well funded joint venture between News Limited and Telstra – the company being a good example of modern Australian crony corporatism rather than a risky undertaking by daring entrepreneurs.

This conceit about startups isn’t unusual among corporate executives, in the early days of Australia’s National Broadband Network it was quite common to hear NBNCo managers talk about their startup ethos – this from a company backed by around 30 billion dollars of government funding.

At one stage I interviewed for a job at NBNCo and I struggled not to start giggling when the “startup ethos of the organisation” was earnestly emphasised to me several times during the meeting.

Not surprisingly the job went to an ex-telco staffer, as did most of the team’s roles. No doubt their corporate experience was far more suited to the company’s ‘startup ethos’  than that of actually having worked in four startups. Giggling in the interview probably didn’t help either.

The romantic dreams of executives

Given most corporate staffers would curl into the fetal position and weep after two weeks of working in a real startup, why do executives indulge in the conceit that their business is ‘just like a startup’?

The answer could lie in “The Consequences to the Banks of the Collapse in Money Values” written by John Maynard Keynes in 1931.

A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him. It is necessarily part of the business of a banker to maintain appearances, and to confess a conventional respectability, which is more than human. Life-long practices of this kind make them the most romantic and the least realistic of men.

So it is for the modern corporate executive who has spent their working lives fighting for the corner office having met their KPIs and spending years cultivating their network of like minded managers.

After two decades spent writing stern memos on the use of paper clips and climbing the corporate ladder, it must be tempting for a middle aged executive to look at those funky youngsters getting billion dollar payouts after a couple of years grabbing three hours sleep a night among the pizza boxes under the desk and get pangs of what might have been…..

A harmless startup fantasy

In some many ways the executive startup fantasy is touching and largely harmless, even if it does attract sniggers and giggles from the unwashed and underpaid who’ve actually been there.

The real risk is when a senior executive tries to shoehorn a Silicon Valley startup culture into an organisation.

While most large companies could do with some of the hunger and flexibility found in smaller businesses, there’s many ways that could go terribly wrong – particularly when driven by a starry eyed romantic manager.

For most executives though, the dreams of being in a startup will remain a fantasy – and that’s probably best for everybody.

A startup’s journey – what businesses can and can’t learn from Silicon Valley

There’s a lot small business can learn from the tales of Silicon Valley startups, but not every lesson applies.

Tech Crunch has a fascinating story on the journey of failed startup, Los Angeles based Flowtab that hoped to create an bar tab smartphone app.

In many ways Flowtab is a story of our bubble economy times – a cheap, easily built service that addresses what is, at best, a minor first world problem.

Flowtab failed when it turned out solving that problem was a lot harder than just writing an app, which is something often overlooked in the current startup hype.

However had the timing of Flowtab’s founders been a bit luckier they could have hit the jackpot.

Dave Winer describes the herd mentality of venture capital investors and had the hot trend of the time been bar ordering apps then the Flowtab team could have been one of the beneficiaries of the Silicon Valley business model.

Along with being a historical insight into today’s investment mania, Flowtab’s story is an illustration of how a new business needs to pivot when the original idea turns out not to be as compelling as the founders first thought.

Even when a business does a pivot, it’s not guaranteed the company will survive, but that’s part of the risks in starting a new enterprise, particularly when it’s undercapitalised as Flowtab was.

There’s many lessons from Flowtab’s failure, but not all of them apply to every business.

Keeping sane in business

How can business owners and startup founders reduce stress and depression?

Last night some of Australia’s best small and medium businesses were celebrated at the 2013 Telstra Business Awards. There were lots of happy winners, particularly Tasmania’s Bruny Island Cheese Company who won the overall prize.

Speaking at the business awards, previous winner Jason Wyatt of Sydney’s Bike Exchange mentioned some the “stumbles on the way” and keynote speaker Mark Bouris described some of those ups and downs.

“Accept the downside and dream of the rewards on the upside” advised Bouris.

Sometimes though those upsides are hard to find, behind the glamour and glitz of having a successful enterprise the toll on proprietors’ mental health can be tough and this month’s Inc magazine looked at the psychological downside of running your own business.

Running your own business – whether it’s a plumbing service, cheese company or a tech start up – is hard work and risky with not everybody suited to the often demanding lifestyle.

If you aren’t suited to running a business, or you’re unprepared, then those mental health costs can be high.

My own experience is instructive, in fact it’s a case study of what not do as a business founder covering everything from being undercapitalised to choosing bad business partners.

 

Find good business partners

Running a business alone is a mistake, partly because few have the full range of skills required to successful run an enterprise and mainly for the fact being a sole trader or boss is a lonely, isolated experience.

A business partnership though is like a marriage and it’s just as important to choose those co-founders as carefully as you would a spouse.

Good business partners have the skills that complement yours – if you’re good at sales or the technical side of the business then you’ll probably need someone good at the administrative or accounts side. Business is a team effort.

What’s very important is that all the partners in the business respect each others’ strengths and understand their own weaknesses. This makes a powerful team.

Probably the most therapeutic thing about having trusted business partners is that you have a sympathetic sounding board. At the very least you kick back on a Friday afternoon and have a bitch about your customers, staff and the government. That in itself is very important in keeping sane.

Watch the money

One of the biggest problems in business, and one I’ve encountered many times, is that many people don’t understand the difference between cash flow and profit. They see the money in the bank and they spend it.

If your business partner has blown the company’s working capital on a flash car and an overseas ski trip for the family, you can bet the clients, staff and creditors won’t be expecting them to clean up the financial mess.

Should you find yourself in that situation with your partners, get out of the business early before it wrecks your relationships and sanity.

Have sufficient capital

Stories abound of the successful business that was founded in a garage by a couple of penniless college grads and bootstrapped from nothing but they are the exception, not the rule.

While it is possible to bootstrap a successful business – I did it with PC Rescue – it’s a tough, hard road and having insufficient capital exponentially increases the chance of failure. Get some money from family, friends or fools.

Don’t hold out though for the million dollar capital raising though, the Silicon Valley investment model is only suitable for a tiny subset of business and it is possible to be over capitalised as we saw in the dot com boom of the early 2000s.

Stressing about money is one of the greatest problems for business owners and founders, having a little bit of capital makes commercial life a lot more enjoyable.

Watch your business plan

It’s fashionable to say business plans are useless – that is bunk. A business plan gives you some idea of how you expect to spend your money and where the revenue will come from. It’s a good reality check.

However, the 19th Century German general Helmuth von Moltke said “no battle plan survives first contact with the enemy” and it’s true that even the best business plan won’t survive first contact with the customer.

That’s fine because tweaking your business plan in the early days will give you more understanding and control over your business. More control means less stress.

Pivot when necessary

Some of the world’s most successful businesses were started as something completely different, Microsoft being one of the best examples. When it turns out the market doesn’t like your original idea but there’s a similar but different opportunity, grab it.

Executing a business pivot can be time consuming and stressful, but it’s far better for your finances and mental health than riding a failed business plan into oblivion. If you’re the type that enjoys building businesses, then you’ll probably find a business pivot is fun.

Take a holiday

I cannot emphasise this enough. In PC Rescue I went ten years without a holiday. It was a stupid mistake and both my family and my own health suffered for this.

Create limits

Micheal McQueen points out that Baby Boomers are poor at creating limits to their worklives, for many it’s a matter of pride in working punishing long hours.  In small or startup businesses there’s no shortage of opportunities to work twenty-two hour days.

The difference with working 90 hour weeks for the law firm or bank is that managers have a nice salary, sick leave and workers compensation. As a proprietor you don’t and in doing so you’re putting undue on yourself, your business partners and your family by working too hard.

Delegate

One key to success is finding good employees – this is something I totally suck at. While I’ve had the privilege of hiring a few good people, I’m spectacular at finding duds.

Being able to delegate is one of the key skills to business survival, it allows you leave work at a decent hour, take that holiday and – most importantly – get time to think strategically. If the owners, founders or managers can’t delegate then the business potential is limited and the risk of burn out is far higher.

Sack the troublemakers

Something that always bemuses me is how small business owners constantly moan about staff. While it’s true one dud staff member can cause untold damage to a business, bad customers are far, far worse.

Pareto’s law – otherwise known as the 80/20 rule – comes into play here. 80% of your troubles will come from 20% of your customers and rarely will the slow playing, demanding troublemakers be your most profitable clients.

If you’re in business long enough you’ll eventually encounter the psychopaths who actually enjoy stringing out invoices or creating commercial disputes. It’s your duty to your own sanity to get these people out of your life as quickly as possible.

So sack them, write off their debts and get them out of your business. Your time on this earth is too short to be dealing with bad payers, the crazies or the one percenters who get their kicks from screwing other people around.

Watch the warning signs

“Five years in tech support will turn you into an axe murdered, I did twelve” is a joke I often make.

There’s a strong element of truth in that line though as IT support in particular is a stressful, thankless trade and running a business in that sector exposes you to a lot of negativity.

While I genuinely enjoy customer service, tech support and running a business I hadn’t realised just how that negativity and stress was affecting me.

It was only when I noticed the signs of stress in a couple of my good contractors that I started researching depression in the IT industry and did the Beyond Blue K-10 anxiety and depression checklist. The results weren’t pretty.

The exit from PC Rescue and IT support in general started shortly afterwards.

In retrospect I’d stopped enjoying the business and dealing with customers about five years earlier and that should have been the warning sign to get out.

“Love what you’re doing” was Jason Wyatt’s advice at the Telstra Business Awards and he’s absolutely right – the moment you stop loving your business is when it’s time to start looking for something else.

Surviving in business by executing a pivot

One of the key skills in running a business is knowing when to change direction.

One of the key skills in running a business is knowing when to change direction, to ‘pivot’ in the language of Silicon Valley.

Yesterday I had the privilege of interviewing Jonathan Barouch, founder of social analysis company Local Measure about the service’s pivot from Roamz.

I’ll be writing that interview up in more detail in a few days, but Jonathon’s observations about pivoting businesses reflected my own business experiences.

PC Rescue was born out of a pivot and its ultimate demise was due to the failure of the company’s management, and my own, to move decisively when it was clear the business wasn’t working as planned.

The founding of PC Rescue happened out of a virtual assistant service my wife an I set up in 1995. We’d been victims of the curiously insular attitude of Australian managers towards employing expats and starting our own business seemed to be the right option.

So Office Magic was born.

Office Magic was a good business, but in talking to clients it became quickly apparent there was a bigger need for computer training and repairs. Most small businesses were struggling to find reliable techs to help them out with their IT services.

So Office Magic pivoted into PC Rescue.

For  the next ten years PC Rescue was a profitable business, the problem I had was the classic small business proprietor’s dilemma – I couldn’t get the right people.

The staff and contractors I had were good computer techs but I couldn’t find one with the skills or motivation to take over the day to day supervisor role so I could work on growing the business. I was stuck in the trap described by Michael Gerber in his book the e-myth.

Originally, PC Rescue’s business plan had been a five year strategy — two years validating, two years executing and one year exiting. The exit I particularly liked was creating a computer support franchise operation.

This didn’t happen because the company lacked the human capital required;  my wife and I lacked the management resources to move PC Rescue to the next stage.

When this became apparent we should have pivoted the business. We didn’t because I was too busy with the day to day stresses of keeping customers and staff happy.

Eventually we achieved an exit of sorts, ten years later than intended and not in a satisfactory way. The business remained under capitalised and the new partners turned out not to have the expertise or drive required to grow the operation.

Which make Jonathan’s pivot of Roamz so much more interesting. He listened to customers, looked at the direction of the industry and realised where the company’s strengths lay.

Rather that doubling down on a model which was struggling, he took the business in a new direction.

Having that flexibility is probably one of the greatest assets for small and startup businesses as larger corporations struggle with executing massive changes.

As markets evolve and the rate of economic change accelerates, having the skills and mindset to execute successful pivots could be the difference between survival and failure for many big and small businesses.

When Venture Capital meets its own disruption

Falling barriers to entry are disrupting Venture Capital investors as much as incumbent managers.

Tech industry veteran Paul Graham always offers challenging thoughts about the Silicon Valley business environment on his Y Combinator blog.

Last month’s post looks at investment trends and how the venture capital industry itself is being disrupted as startups become cheaper to fund. He also touches on a profound change in the modern business environment.

Graham’s point is Venture Capital firms are finding their equity stakes eroding as it becomes easier and cheaper for founders to fund their business, as a result VC terms are steadily becoming less demanding.

An interesting observation from Graham is how the attitude of graduates towards starting up businesses has changed.

When I graduated from college in 1986, there were essentially two options: get a job or go to grad school. Now there’s a third: start your own company. That’s a big change. In principle it was possible to start your own company in 1986 too, but it didn’t seem like a real possibility. It seemed possible to start a consulting company, or a niche product company, but it didn’t seem possible to start a company that would become big.

That isn’t true – people like Michael Dell, Bill Gates and Steve Jobs were creating companies that were already successes by 1986 – the difference was that startup companies in the 1980s were founded by college dropouts, not graduates of Cornell or Harvard.

In the current dot com mania, it’s now acceptable for graduates of mainstream universities to look at starting up business. For this we can probably thank Sergey Brin and Larry Page for showing how graduates can create a massive success with Google.

One wonders though how long this will last, for many of the twenty and early thirty somethings taking a punt on some start ups the option of going back to work for a consulting firm is always there. Get in your late 30s or early 40s and suddenly options start running out if you haven’t hit that big home run and found a greater fool.

There’s also the risk that the current startup mania will run out of steam, right now it’s sexy but stories like 25 million dollar investments in businesses that are barely past their concept phase do indicate the current dot com boom is approaching its peak, if it isn’t there already.

Where Graham is spot on though is that the 19th and 20th Century methods of industrial organisation are evolving into something else as technology breaks down silos and conglomerates. This is something that current executives, and those at university hoping to be the next generation of managers, should keep in mind.