On Thursday, September 4th, 2008 the Hamilton County Alliance will host the Extreme Entrepreneurship Tour, an event directed at high school students, college students, and local community members.

The goal of the tour is to inspire young entrepreneurs to dream big goals and to build a plan to achieve them, and when you start reading the bios of the speakers, it's hard not to be inspired. So many of them have started successful businesses before they could legally vote, that any kid who ever thought he needed to be an adult before he could achieve something, would think twice about "waiting."

Why didn't I write at least one business plan in college?

I'm amazed at how many business plan competitions are occurring around the state, and even more amazed at how many are directed specifically at college entrepreneurs...and yet even more amazed at the prizes being given out.

Here's another competition I just learned about. The deadline for submission is February 8th and I'm being told that the number of entries is low. I'm even being told there's still time to write a potentially winning business plan.

Evansville New Venture Creation Competition

Friday, Feb. 8-Online registration due
Friday, Feb 22-Electronic Business Plan Due
Friday, March 7-Announcement of Teams
Friday, March 14-Business Plans Due (hard copy)
Friday, April 4-Competition (U of E in the Brand new Smyth Lecture Hall)

Prizes
1st place $10,000
2nd place $5,000
3rd place $2,500

Clearly all kinds of Indiana communities from towns to regional cooperatives to universities are turning to business plan competitions to spur economic development and to emphasize a culture of entrepreneurialism.

In general, it seems the demand for business plans to fill out the competitions is high, while the supply remains relatively low - great news for anyone holding even the most underdeveloped business plan. I wouldn't say it's easy to win, but the odds are high for serious entrepreneurs. (better than winning institutional money for sure, cheaper too)

Indiana is getting ready to host it's second startup weekend, which will be held February 8th through the 10th in Bloomington. West Lafayette hosted a Startup Weekend this past October 12th - 14th. (It's interesting to note that Indiana is the only state besides California to host two startup weekends so far)

What is Startup Weekend?

"Startup Weekend recruits a highly motivated group of small business entrepreneurs to build a community and company in a weekend.

The founders decide what to make as a team, and earn an equal share of stock in the developed business. Attendees are responsible for bringing the desire and passion to the project and walk out of the room with a brand new business, in a short 54 hours. Sound intense? It is."

Arguably not the best way to launch a new business, Startup Weekend does an amazing job of energizing a community of entrepreneurs.  Live blogging has become a staple at the event, and a networking community has even emerged around the Bloomington Startup Weekend. If you're interested in being a part of the startup team, it's not too late, you can sign up here.

If you're interested in the result of the West Lafayette weekend you can check out their blog here.

It looks like there are also plans to bring Startup Weekend to Indianapolis, so stay tuned.

Check out this recent article in Indiana Business Magazine where Mark Hill discusses how investing in entrepreneurship is the best way to spur economic development. I've included the full article below.

COPYRIGHT 2007 Curtis Magazine Group, Inc.

EVERY EXPERIENCED investor knows the value of a balanced portfolio. "Safe" options like bonds and money market funds provide slow, steady returns. But it's the more aggressive investments that carry a higher risk, and also the greatest potential rewards.

The same principles apply to economic development. Larger, more mature companies can help anchor a regional economy, even account for a significant share of its jobs and tax base. But it's entrepreneurial success that's the real catalyst for dynamic growth.

Now more than ever, entrepreneurship is the critical ingredient for a diverse, thriving economy. Let's look at how entrepreneurial activity can drive Indiana towards our stated economic vision, defined by the Daniels administration in its "Accelerating Growth" strategic plan: Reversing our decades-long decline in per capita income to meet the national average by 2020.

Economists from the Federal Reserve Bank of Cleveland studied the factors that contribute to rising wages in a recent report, "State Growth Empirics: The Long-Run Determinants of State Income Growth." Their conclusions confirm what most policymakers already realize: Human capital, measured primarily by percentage of college graduates in the workforce, and innovation, measured here by patents-per-capita, are the best predictors of income growth. Entrepreneurial companies contribute significantly to both.

First, human capital--entrepreneurial firms employ a greater percentage of scientists and engineers than the labor market as a whole. Exciting, plentiful careers with fast-growing companies also help attract and retain more college-educated workers. To quote a Small Business Administration research summary: "The most entrepreneurial regions possess the highest proportion of the population with a college degree ... the average for the most entrepreneurial regions is more than 42 percent higher than the average for the least entrepreneurial regions."

By their very nature, startups are major contributors of innovation. A churn of ideas allows new companies to grow, but also helps the better-established firms in a region succeed. According to the Council on Competitiveness ("Where America Stands: Entrepreneurship"), "Large firms often depend on small firms for new ideas and technologies ... Procter & Gamble now gets about 35 percent of its ideas from outside the company, and its goal is to reach 50 percent ... as the pace of innovation increases, tapping into the creativity of entrepreneurs is the only way to keep up."

With Indiana ranking among the bottom third of states in per capita income, educational attainment and patents-per-capita, it's clear that boosting our entrepreneurial ambitions should be an economic-development priority. The state is making some progress-from 2002 to 2006, TechPoint's Indiana Technology Index reports that Indiana experienced 50 percent growth in venture capital investment and more than a 200 percent increase in federal SBIR/STTR grants (two key sources of seed funding).

We're boasting more and more entrepreneurial success stories. Just in software technology, companies like Interactive Intelligence, Aprimo, Exact Target, Baker Hill and Pan Testing stand out.

We all know that entrepreneurship is important. But more and more evidence suggests that building an entrepreneurial economy should be the top priority. As "investors" in our state's economy, it's time to skew our portfolio towards entrepreneurial ventures, and make every effort to encourage these economic pioneers.

Mark Hill is managing partner of Collina Ventures LLC, a private investment company focusing on technology companies: Hill also serves on the board of directors for the Central Indiana Corporate Partnership.

You may remember MatrixBio, LLC from our video story about Purdue University’s 2nd Annual Company  Fundraising Bootcamp. Daniel Raftery, a Purdue University professor and founder of MatrixBio, spoke to us from the “veteran’s” perspective of having taken his company through the first bootcamp and then to potential investors. He mentioned when we interviewed him that his company was expecting to receive a seed round in October, and by the looks of this report on Inside Indiana Business, they’ve received the funds and have finally gotten around to a press release.

I’d be surprised if this was the first company out of Purdue’s Discovery Park to receive financing, but MatrixBio is still nonetheless a poster child for what Purdue is trying to accomplish in turning its research into commercial successes. The Fundraising Bootcamp is merely one of a number of programs put into place to try and systemize entrepreneurship and new company creation. Would MatrixBio still have received funding even if it hadn’t gone through the bootcamp? I’m guessing yes, since the research and the innovation seem strong, and the market for early cancer diagnostics is unquestionably large enough to qualify MatrixBio as a high-potential venture (they plan to focus first on breast cancer but the technology has other applications).

So great ideas will always get funded, but to my last post, it’s the companies with a good idea but a murky business plan that will benefit most from programs like Purdue is sponsoring, and it’s the success of these companies that will ultimately move the needle for entrepreneurship in Indiana.

I don’t know how many of you are familiar with TechCrunch, but for those of you who aren’t, it’s a wildly popular blog that reads more like an informal magazine that covers the latest internet companies. I read it fairly regularly since it is truly cutting edge in its space, and it presents a different perspective on entrepreneurship than we typically receive in the Midwest. (I don’t necessarily always agree with it, but that’s another post)

TechCrunch recently had a post about Fred Wilson of Union Square Ventures blogging about his VC’s failure rate, a statistic closely guarded by many VC firms. (Note: I realize I’m blogging about a blog blogging about a blog, and while I think that’s a bit much, I thought it necessary to credit TechCrunch for originally presenting me with the information) The interesting thing wasn’t so much the details of his investments (20% return over 17 years over 32 investments), but what he learned from his failures. One thought in particular, and again I credit TechCrunch for pulling this out:

“. . . Of the 26 companies that I consider realized or effectively realized in my personal track record, 17 of them made complete transformations or partial transformations of their businesses between the time we invested and the time we sold. That means there a 2/3 chance you’ll have to significantly reinvent your business between the time you take a venture capital investment and when you exit your business…

…Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.”

I’m sure anyone attune to the entrepreneurship scene has witnessed a startup transform its business plan, but to see that 2/3 of the successful investments of a very successful VC transform their business plans is truly powerful. And for Wilson to go on to say that a large number of failures stem from trying to scale the business too quickly before the correct business plan is discovered, speaks strongly to the mindset of most Indiana entrepreneurs and Indiana investors.

Even though some of our Midwestern approaches are corraborated by Wilson's lessons learned, are we still too conservative? The only way to know is to see the statistics of our own VC's investments. I'll admit, I haven't tried to find them, does anyone know if they're there?

I went on a sales call today (which I do from time to time as my role at Cantaloupe.TV generally involves all things marketing, including sales) and this particular prospect is an established research foundation exploring new ways to attract donations. Except for a generally static website, their current marketing plan is 100% traditional, involving such things as paper newsletters, direct mail campaigns, and of course face to face networking.

At a high enough level all businesses experience the same challenges, but when I heard this potential client’s story, I thought about marketing a startup. What if an ambitious startup company tried to market without using the internet? “Democratization” is a word we often hear used to describe the effect the internet has had and (despite its triteness) it’s true. It may be easier to buy a list of home addresses, but who can argue that direct mail is more effective and produces better returns than an email campaign sent to a permission database?

I assume the only reason most people don’t leverage the internet more to market is because they’re still learning about it. That’s why some Indiana companies (a few of them startups from Indiana, including Cantaloupe) have come together and created a conference where you can earn your Masters of Business Online. It promises to be an interesting and informational day, even for those who think they know all the latest of internet marketing. At the very least, I would recommend checking out the website, and see how the experts in online marketing, market themselves.

There is an article in Business Week about a new book that confronts the age-old "academics only" debate of whether entrepreneurialism can be learned. The book is called Entrepreneurial Excellence: Profit From the Best Ideas of the Experts (Career Press; 2007) and it is written by a man named Richard Goossen. It seems Goossen unsurprisingly arrives at the conclusion that a fair bit of entrepreneurialism can be taught, and an equally fair bit can't. Among the attributes of successful entrepreneurs that can be taught he identifies:

1. General business knowledge
2. General entrepreneurial principles 
3. General opportunity awareness

As far as what can't be taught, the article specifically mentions "venture specific opportunity principles."

Perhaps the article doesn't do the book justice, but I have a hard time gleaning any applicable wisdom from the learnable and innate qualities Goosen has identified. Not only are the points are too general and full of empty talk (what's the meaningful difference between general opportunity awareness and venture specific opportunity principles?), but I have to ask one of my favorite questions, so what? Who cares?

Rather than the article failing, I think it's more likely that finally understanding what entrepreneurial qualities are in-born and which are learned doesn't really promise us anything interesting that we can use. Entrepreneurship is one of the few careers where you have the ability to build around your strengths, whatever they may be. I called this an "academics only" debate because I doubt people actually starting a company or building a startup are worrying whether they will fail because they weren't born with the right set up skills. If they are, I doubt they possess the most important quality important to any success, entrepreneurial or otherwise, which is confidence.

In my previous life, the one where I didn't work for a growing startup, "good enough" was a statement of submission, a phrase used by the quitter and the unaspiring. It certainly wasn't the mantra of the winner or the battle cry of success. I was always ashamed to dismiss an effort as "good enough" even if I truly believed it was good enough.

And then, welcome to the life of the practical! An existence where "good enough" is not only accepted, but enocouraged. It seems no one understands the philosophy of "good enough" quite as well as the entrepreneur (except maybe the U.S. Marine Corp, but more on that later), because without it a startup never gets off the ground. If the "perfect" startup does get off the ground, like the infamous online grocer WebVan, which raised $375 million making it the second most funded e-tailer of all time, it loses all agility and can't change its strategy in response to market realities. It may not have been as obvious to Louis Borders as it was to the rest of the world that guaranteeing a 30 minute delivery window and trying to efficiently stock fresh produce was unprofitable, but he could have at least tested a "good enough" strategy before ordering a billion dollars worth of infrastructure. 

Just ask Frank Cheng, Indiana entrepreneur and CEO of OBS Medical, how he expects his emerging business to compete with the big guys. (of if he's unavailable, just watch his video)

I still find it hard to disassociate "good enough" from its negative connotation, even if I do believe in its philosophy, so I offer you another phrase from the U.S. Marine Corp: the 70% solution. Take this bit of advice from a fantastic Forbes article on the management wisdom of the Marines:

"In environments where conditions can quickly flip, and where the opposition can regroup and take the advantage in a heartbeat, the Marines consider indecisiveness a fatal flaw--worse than making a mediocre decision, because a mediocre decision, if swiftly rendered and executed, at least stands a chance."

How often do we admire an entrepreneur's ability to just pick a direction and run with it? I believe it's their most distinctive quality. 

Although IndianaEntrepreneur.tv is still in its infancy, it has already spurred some lively debates among the IEtv staff and others at Cantaloupe.tv. In particular, opposing factions have formed in support of two different types of entrepreneurship, what I have best heard referred to as high-potential ventures and lifestyle companies. Before I even give my general definitions of what these two phrases mean, I want to note that they are not mutually exclusive categories (and perhaps that is why the debates have been so lively). Like most things in reality, companies can’t always easily be identified as a high-potential venture or a lifestyle company; however, in general, an organization’s direction at any one time can usually be labeled as one or the other.

The extreme examples of high-potential ventures are the Google’s, the Amazon.com’s, and the Home Depots of the world. The market opportunities of these firms represented by revenues and profits are huge – enough to justify millions of dollars worth of investment from institutional investors like venture capital and private equity firms who expect every investment to be a home-run and generate returns of 10x’s the investment.

Lifestyle companies on the other hand, don’t operate in such large markets. They are the two person consulting firms, the three location restaurants, and the local boutiques. These types of organizations never plan to take things big – and not necessarily because they can’t. Sometimes the business model just may not have a huge market potential, but sometimes entrepreneurs simply keep things small so they can maintain a certain lifestyle. Constantly trying to grow a company means accepting the high-level of stress and time commitment that one experiences when first getting started, and for some, a stable state provides the fulfillment and just the right amount of income they desire. Growing a high-potential venture doesn’t always produce more money and happiness for an entrepreneur than a lifestyle company.

The debate at IEtv has been over which type of entrepreneurship we should direct our video stories to. Is our audience more interested in watching the profile of an Indiana bio-tech company that just received $15 million in venture funding, or would our audience rather watch a story about an innovative restaurant that is promising to take over Indianapolis? Even more critical is answering whether our audience has more to gain by learning about how to structure a company so it’s best suited for a buyout or an IPO, or whether its more practical for them to learn how to grow from one location to three.

Not surprisingly, when these questions were posed to the team someone asked, “Why can’t we serve both?” – which I’m sure she intended to be a statement more than a question. And in a way she’s right, we can serve both. Both types of entrepreneurship face common challenges such as finding the money and the people to take an organization to its next level, however large that may be. But the truth is, we could undoubtedly better serve one or the other if we just chose a favorite child. Both types of entrepreneurship are extremely important to Indiana, and both probably could use a dedicated Video Magazine (am I really already talking about expansion plans?), but operating within the constraints facing IEtv with regards to our own available human and money capital, we could tell deeper stories and provide more valuable, comprehensive knowledge if we picked a more narrow audience.

If you’re reading this then you are IEtv’s audience, so tell us what you think. What types of stories and information would you rather see?

Welcome to the staff blog for IndianaEntrepreneur.tv, an online video magazine dedicated to Indiana’s business innovators. We would like you to think of this blog as a print magazine’s “letter from the editor”– a place where we can provide commentary on the stories you are viewing and give you an insightful glimpse at what is going on behind the scenes.

For instance, I’d like to highlight one of our first video stories which explores the state of entrepreneurship in Indiana and how it compares to other locales around the country (see Back Home to Indiana). The current video features footage from the August Venture Club meeting where a panel of Indiana entrepreneurs shared their experiences of returning home after pursuing ventures on the more entrepreneurially disposed west and east coasts. It’s interesting that although none of the panelists cited Indiana’s state of entrepreneurship as their primary reason for returning (all of them cited a “family” reason such as being closer to relatives or wanting to raise their children in the Midwest), each of them noted that the economic culture is drastically different than when they left, which has allowed them to return to Indiana.

By featuring startup companies and highlighting recent new business initiatives, IEtv hopes to do its part to raise awareness for entrepreneurship in Indiana and to change the perception that Indiana can't be home to high-potential startups - and we would like our viewers to be highly involved in the process. Our inboxes are always open to receiving your comments and story ideas and to fielding your questions about starting and running a business (see Ask an Entrepreneur).

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