Innovate. Effectuate. Overcoming the Challenges of Launching a Business

Hi All!  Please see below for a GUEST BLOGGER from the Entrepreneurial Ventures Club (EVC).  Written by Darden FY Scott Caras on the recent Darden Entrepreneurship Conference that took place last week.

Darden’s annual Entrepreneurship Conference wrapped up Friday evening after two days dedicated to exploring the topics of innovation and effectuation in entrepreneurship.

The conference kicked off Thursday afternoon with the Darden Concept Competition.  Students presented a variety of business ideas ranging from original technology platforms to innovative consumer products.  The competition provided an opportunity for MBA students to share ideas and seek feedback from experienced entrepreneurs.  The discussions continued into the evening at the event’s kick-off reception and dinner.  Among other highlights from the evening, participants had the opportunity to hear Greg Fairchild, the Executive Director of the Tayloe Murphy Center, share the inspiring story of Solid Stone Fabrics, recipient of the Tayloe Murphy Resilience Award which recognizes businesses that succeed in communities facing tough economic conditions.

Friday’s schedule was packed full of opportunities to listen to successful entrepreneurs share their stories and attend workshops led by world-renown academics on the concepts of innovation and effectuation.  The event’s speakers included experienced entrepreneurs, investors and academics, each of whom provided a unique perspective on entrepreneurship.  Although a wide variety of topics were presented, three primary themes emerged.

First, it doesn’t require a blockbuster idea to start a business—think about everyday challenges and consider solutions to address them.  Seek opportunities to improve products and services that already exist.  Professor Saras Sarasvathy compared developing a concept to playing scrabble—if you add a letter to the end of a word that has already been played, you still get credit for the whole word.

Sean Eidson, CEO and founder of TRUE linkswear, shared the story of launching his golf footwear business.  During a round of golf, Eidson saw a golfer wearing the “five finger” shoes that have recently become popular among runners.  He realized that most golf shoes aren’t particularly comfortable and began sharing his hypothesis with other golfers.  Before he knew it, he had developed a concept for a new golf shoe that was built on a “barefoot” premise.  Less than a year after launching the product, the company has already sold tens of thousands of pairs worldwide.

The second theme that emerged from the conference addressed a common barrier faced by many would-be entrepreneurs—one of the primary reasons individuals don’t pursue an idea is that they lack the capital required to launch a business.  Many of the conference’s speakers reiterated that limited capital is rarely a challenge that cannot be overcome.   Adam Healey and Charles Seilheimer spoke about raising the money to start their business, hotelicopter.  The two partners pooled their savings and scrapped together enough cash to develop a prototype of their innovative hotel search platform.  The functioning prototype enabled them to share the idea with individuals in the travel industry and raise the capital required to fully develop and launch the product.  Healey and Seilheimer didn’t allow limited financial resources to be a barrier to developing their idea, and today hotelicopter has become one of the premier hotel search platforms on the internet.

Professor Frank Genovese discussed the opportunity to buy an existing business and how to overcome the challenges of financing the transaction.  While acquiring a business certainly requires a personal investment, he advised that when the right type of business is identified (in particular, one with a lot of assets) and a good deal is negotiated, financing is often readily available.  Although very different from starting a business from scratch, buying an existing business offers another opportunity to pursue an entrepreneurial career.

The final theme emerging from the conference’s many stories was the importance of sharing early stage business concepts with others.  In her workshop on effectuation, Saras Sarasvathy illustrated this concept using examples from her research.  She explained that most successful entrepreneurs use feedback from others to strengthen their ideas.  She encouraged aspiring entrepreneurs to build a network of stakeholders who are willing to provide feedback that will make their idea stronger, and ask them to make a true commitment to the business by investing in it financially—very quickly you will be able to tell if others actually believe the concept will be successful.

The founders of hotelicopter reiterated the idea that even after a concept has been transformed into a successful business, one shouldn’t be afraid to mend or even recreate it.  Healey discussed hiring the first CTO of hotelicopter, Colin Steele, who was hired to manage the development of the company’s product.   However, instead of improving company’s established hotel search platform, Steele’s first initiative was to rebuild the product from scratch.  Although the founders were doubtful at the time, they acknowledge that hotelicopter would not have the successful product it does today if they hadn’t allowed Steele to recreate the initial platform.

Darden’s Entrepreneurship Conference provided opportunities to develop one’s knowledge of entrepreneurship and learn the tactical steps required to launch a business.  More importantly, however, the event was both educational and inspirational, bringing together experienced and aspiring entrepreneurs, academics and investors to collaborate and share ideas about innovation and effectuation.