So What will be the Next “Big Thing?”

It seems that biotechnology has gone from the hottest growth sector to yesterday’s news in a blink of an eye. Offshoring seems to be the culprit. From SignOnSanDiego.com:

Increasingly, the venture capitalists who fund new life-science companies are shopping for existing drugs to refine instead of backing scientists to make discoveries. When startups are created, they’re often minimally staffed. More drug companies are farming out research work to scientists in China, India and Eastern Europe, where tasks are done more cheaply.
For California, the birthplace of biotechnology, the stakes are high. Of the estimated 260,000 Californians who work in the life-science industry, about 70 percent are employed in high-paying jobs in drug, medical-device or diagnostic-tool companies. In San Diego, an estimated 36,600 employees work at about 500 companies, according to BIOCOM, the local biotech trade association.

Many of the highly touted biotech start-ups of a few years ago just did not pan out. And many of these, just like the dot.com’s before them, had over-hyped their potential. I remember more than one investor talking about this biotech or that biotech being the next “Microsoft” investment. So as investors began to experience the reality of the risks in this industry, venture capitalists tied to that industry shifted their strategies.

In an effort to revive Wall Street interest, venture capitalists shifted to creating companies that develop late-stage products or existing drugs that can be revamped to treat other diseases.
Such companies don’t require the big staffs or laboratories lavished on San Diego’s pioneer biotechs, which often took a decade or more and spent hundreds of millions of dollars to get a novel drug to market. Instead, drug companies are stretching dollars by farming out tasks to U.S. contract research organizations or cheaper offshore companies.

America seems to be re-living the story of the hare and the tortoise over and over, never seeming to learn its lesson. Most of our economic growth is not coming from venture capital backed high potential firms. Although those deals get the headlines, their true impact on the economy is marginal. Even in the best of times, venture capitalists only pick about one real winner out of ten investments, and most only make about three investments a year. High potential deals do have their place in our economy. They can bring us breakthroughs that can shape markets of even create new industries. But they are not at the heart of this entrepreneurial economy.
Our economic growth is coming from small businesses that are prudently growing their businesses one job at a time, toward the goal of creating a sustainable venture that will build wealth over the long-term.
(Thanks to Jim Stefansic for passing this along).

Balance Seasonal Businesses

When I first got back into teaching at the University of St Thomas I met a young man named Dan, one of our students, who had mastered the art of balancing seasonal businesses. While still in college, he had set up two businesses that took advantage of Minnesota’s two seasons — winter and summer (spring and fall don’t last long enough to really call them true seasons). Summer is short, but beautiful, and with its long summer days (remember it is really far north up there) people make the most of the outdoors. On the St. Croix River, the wealthy residents had beautiful boats and yachts that they would take out every weekend. Dan had a business providing cleaning, basic servicing, and general maintenance on these boats. The owners loved Dan’s services because he took care of all of the hassles that go along with boat ownership. They could just show up and take off in their boats for a day of fun in the sun. Business was so successful that Dan had hired several part-time employees.
In the winter, which some years lasts about eight months, Dan took advantage of the inevitable snow and built a very successful commercial snow plowing business, using some of the same workers and working with some of the same people who owned the yachts he took care of in the summer.
There are countless examples of entrepreneurs who balance one seasonal business with another. For example, the summer camp owner who turns her facilities into a retreat center the rest of the year, or the home builder who becomes a home re-modeler in the winter months.
I heard a report on Wall Street Journal radio this morning about another example. It seems that many entrepreneurs with lawn service businesses are also getting into the professional Christmas decorating business. Those of you who live in America’s suburbs have seen the proliferation of ever expanding outdoor Christmas lights and decorations displays. Many suburbanites want the decor, but do not have the time or inclination to climb up on the roof to install the annual extravaganza of lights. Thus is born a new industry: professional outdoor holiday decorators. There is even a franchise available for those who want help in setting up this type of business called Christmas Decor.
The best way to approach off-setting seasonal businesses is to set up a second business that takes advantage of the skills and/or resources you already have on hand. In some cases, you can even serve the same customer base with both businesses.

There is No Place Like Home

Self-employment is now a major part of our entrepreneurial economy, now approaching almost 20 million Americans. Many of the self-employed are choosing to work from home due to family considerations. For example, self-employment allows more flexibility for parents with young children.
Homestead Technologies commissioned a study on home-based businesses and found the following as their list of “hot” opportunities that can be run from home:

E-Learning: With advances in new web application tools such as podcasts and video blogs, development costs will decrease.
E-Bay Aftermarket: Helping companies conduct market research, pricing strategies, shipping, and competitive analysis is a great niche business.
Children Arts Education: There is a major market for teachers of right-brained education who are thought to help foster the development of future innovators.
Garage Organizers: Just as organizing closets was the next big thing in the 80’s, the messy garage is the final space to clean up.
Background Checks: Small businesses with limited resources are turning to background check companies to handle investigation and due diligence.
Pet Sitting: An ideal home-based business where you get paid to walk and enjoy the companionship of pets.
Specialized Coaching: The coaching market has boomed in the recent years including specialized areas such as life, spiritual, corporate, relationship and business.
Home-based Debt Collection: Debt has become a way of life for many Americans. Operating a low overhead home-based collection service can serve the niche sections of this market.
Specialized Outsourcing: The small business market has limited resources and a focus on core competencies. Specialized outsourcing from home to small business will have a solid position market position for years to come.
Scrap Booking: In today’s easy to save and store digital age, opportunities abound for the home-based scrapbook artist, workshop teacher, or a direct sales rep.

Will you get rich with any of these ideas? Probably not. But, that is not the point for most who choose to run a home-based business. It is to earn income while enjoying the flexibility and freedom of running a small business from home.

Intellectual Property Waisting Away?

Universities are giant R&D departments dreaming up the “next big thing.” The problem is, they are not very good at making the transition from ideas to market applications.
Many academics have no experience in the business world. They do not understand the difference between an interesting new idea and a real market opportunity. But, don’t try to tell them that. Rather than truly partnering with the private sector to mine the wealth of new product applications, they set up rules and stipulations that keep many good opportunities locked away in their labs, and push many applications that are not ready or not truly viable into the market. They do this through their technology transfer policies and tight control by administrative and faculty committees.
Alfred Mann, inventor of the first insulin pump, wants to give hundreds of millions of dollars to universities with one simple condition. He wanted to the right to pick which ideas get funding based on the experience that he and his staff has had in launching new medical devices, rather than allow a committee of faculty and administrators to decide which should get funding with the money he donates to the university. So far, he has found no takers.
From Forbes.com:

Mann is puzzled by the rejections. As he sees it, universities should welcome his guidance since they typically do a bad job in commercializing their professors’ inventions. Professors, he says, don’t know how to turn their ideas into products. University patent offices have trouble finding industrial partners. He cites statistics showing that billion in government and industry sponsored university research each year leads to only billion in commercial licensing revenue, a paltry 2.7% return.
But universities say Mann wants too much control for too little money. Experts in technology transfer tend to agree. Robert Lowe, a professor of entrepreneurship at Carnegie Mellon University, who studies the topic, says that universities don’t want a single entity to have first-look rights to option its inventions because it can interfere with academic freedom and amount to a giveaway.

If technology transfer is to be part of the engine that drives our emerging entrepreneurial economy, universities need to stop being arrogant and understand that those with market experience can help the common good by accelerating new products coming out of their ivory towers.
(Thanks to Jim Stefansic for passing this along).

What Was Once Old…

Sometimes the best opportunities can come from old concepts that we take out of the proverbial attic and dust off. Here is an example of an idea posted at AOLnews from five decades ago that has gotten new life:

Before there was McDonald’s, there was the Automat….Three young entrepreneurs are hoping to revive the tradition – with a few modern twists – when they open Bamn! Automat in the East Village this week.

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In fact, their business concept is to take Automat and marry it with modern fast and convenience foods that today’s under 30 crowd love to eat.
I wonder if there is a market for my old love beads…..
(Thanks to Matt Sells for passing this along).

Accidental Entrepreneurs

Do you find yourself suddenly unemployed? Are you so tired of your cubicle that it is time to move on before you lose your mind? Did a once in a life-time opportunity to launch a start-up just get plopped in your lap? Not all entrepreneurs end up as entrepreneurs as part of some grand plan or life-long dream. It may just be the events of everyday life that put you in that position.
Information Week recently ran a profile of several “accidental” entrepreneurs who started their businesses after life dealt them a twist, as it often does. They looked to their personal interests, their techie hobbies, to find new paths for their careers.

Investment Banker Becomes Music Entrepreneur

The Tennessean has a profile of Alison Brown, who traded a career as an investment banker for one as a bluegrass music entrepreneur.

“I worked with the kind of people who just wake up in the morning thinking about structures for bond refundings,” said Brown, a Harvard University alumna and UCLA business school grad. “I’d wake up and think about when I was going to get to play the banjo again. And the two things were just mutually exclusive.”

Rather than take the traditional path of trying to make it with one of the big labels in town, she decided to make her own path.

“If you have the money and the clout of a major label, you’re in a better position to shove things down people’s throats,” she said, speaking as someone who had worked briefly at a major pop label. “Our approach is to find art that we think is great and then try to draw people to it.”

This niche approach to the industry is gaining traction. She is one of many who are quietly changing the music industry right under the feet of the big three companies that now dominate.

Time is….Opportunity

Find something that irritates a lot of people, and you have found a source of opportunity. From dailynews.com:

An Associated Press poll has found an impatient nation. To get to the point without further ado, it’s a nation that gets antsy after five minutes on hold on the phone and 15 minutes max in a line. So say people in the survey….”If you ask the typical person, do you feel more time-poor or money-poor, the answer almost always is time-poor,” says Paco Underhill, an authority on what draws and drives away shoppers.

Find a way to reduce people’s wait time, for example by a new process or a new technology, and you may be on to a booming new business.
(Source: newsalert).

Mom and Pop Record Stores Enter Digital Revolution

In times of rapid change it is often small businesses that find ways to adapt. My partner used to say we were little mammals dancing under the feet of dinosaurs when we were doing this in health care.
This time it is small Mom and Pop record stores. Red Herring reports that they may be part of a major development in the digital revolution in music.

The music industry on Monday signaled its intention to move past its pricing impasse with Apple’s iTunes as Warner Music Group announced that it has made a deal with three retail groups to challenge the computer company’s position as the digital music retail market leader.
Warner Music, the bellwether of the music industry, said its retail marketing company WEA is working with the Coalition of Independent Music Stores (CIMS), the Association of Independent Media Stores (AIMS), and the Music Monitor Network (MMN) to bring independent, brick-and-mortar retailers into the digital age.

These stores were already considered road kill on the information super highway by many in the industry. But they will now have the chance to play a role in the new age of music distribution.

WEA will offer the retail stores digital bundles, which will include additional content such as videos, bonus tracks, and interactive digital booklets. The company will also offer downloads of in-store performances, downloads from local artists, and coupon-based download promotions.

Go Patriots!

As a Professor at a small Division I school I can’t help but cheer for George Mason this weekend. As proud as we all are at Belmont just making the tournament this year, I can only imagine what the students, alumni, faculty and staff of George Mason must be feeling right now.
But, my colleague Dr. Larry Hall, Dean of our College of Arts and Science, passed along an article from Slate.com that will make me cheer even louder on Saturday as GMU plays Florida. It seems that both in their basketball and academic programs they are behaving in many ways like a smart entrepreneur.
Opportunity Recognition

GMU has excelled on the court and in the classroom by daring to be different. Its basketball team and academic programs began with the (correct) assumption that they couldn’t hope to compete against the top schools in their fields–say, Harvard Law School or the Duke Blue Devils–by directly imitating their methods. GMU lacks the resources and reputation to recruit McDonald’s All-Americans or Alan Dershowitzes. So instead, GMU has hunted for inefficiencies in its markets.

Bootstrapping

Coach Jim Larranaga follows the Moneyball model of recruitment: hunting for the undervalued players–the ones who everyone else thought were too short, too thin, or too fat–and then building them into a team. In its astonishing defeat of UConn, GMU’s players were giving away 4 inches at nearly every position.

Exploiting Under-served Market Niches

From the 1960s into the 1980s, a small university such as GMU could hire conservative and free-market thinkers of true genius for the same kinds of reasons that, in the mid-1960s, a middling school like Texas Western University could recruit some of the best basketball players in the nation, so long as they were black, and win the 1966 NCAA championship. Conservative and free-market economists were so undervalued that GMU could afford the best of them.

So this free-market, entrepreneurial-minded professor from a small Division I school will be cheering like a mad fool for George Mason. Go Patriots!!!
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