CEOs Can’t Find Entrepreneurs. VCs Can’t Shake Them.

Posted by: Jeff Bussgang on June 18

Entrepreneurship is a magical thing. Creating a valuable company from whole cloth. A new product, brand, institution, culture – all can be invented in the classic tradition of Thomas Edison.

Yet like most magic, it isn’t as easy as it looks. In a recent survey of top CEO Challenges, CEOs cite “stimulating innovation and creativity and enabling entrepreneurship” as one of the top 10 challenges they face, and 24% said it was “of greatest concern.”

Yet on the other side of the economy, in the start-up hemisphere, entrepreneurship is flourishing. My fellow Venture Capitalists report that the flow of business ideas, plans and innovations has never been at a higher level.

So why is it that inside the big corporation, stimulating innovation is so hard, while at the same time VCs are awash in innovative business plans and people?

Reader Comments

Damian Palmares

July 6, 2008 10:26 PM

Well said Dave.

Alamo

July 5, 2008 12:56 AM

CEOs Can’t Find Entrepreneurs. VCs Can’t Shake Them.

Imagine that. You work your whole life and create something all for someone else's bottom line.

In the end you get treated like trash. You get paid 5% of what you otherwise could get paid should you go out on your own.

You have a boss breathing down your neck all day and then after you 'make your mark' you are cast off like garbage.

Its not rocket science folks. Corporate America is a very good exploiter and the lifestyle sucks.

Entrepreurnship on the otherhand is fun and unconventional. Office politics will get you promoted in corporate America, but they will get you fired in 2 seconds flat from entreprenuership.

Its a dog eat dog world. Its best if the one dog eats the other before the one has a chance to eat him first.

The only corporation that is your friend is one where you have majority ownership.

Mr. Ming

June 26, 2008 11:46 AM

That RACISM card is really getting old!

If you have a great idea then you should put it into action and hire only people of color if you like. Nobody stops you.

It's much easier to sit by the sidelines and complain than take action yourself.

Oluyemi

June 26, 2008 10:25 AM

I have a simpler explanation for both problems: White Racism. Both CEOs and VCs tend to look for people in their likeness, which includes similar cultural and social backgrounds.

The end result is inadvertent and subconscious racism even though they will never admit to it. But this is what happens all the time.

Look at all the industries, and see how many people of color practically run companies behind the scenes but they are never given the chance.

Every now and then some of these people get a lucky chance due to White Guilt and then they win. Obama's candidacy is a perfect example of this phenomenon. Here is a half-black candidate who is very white in his outlook, with a personality much like his corporate American peers.

tchen

June 20, 2008 05:58 AM

One of the reasons might be that for startups, some kind of innovation is the sole reason they will ever succeed, while for big corporations, they have to balance existing projects with new projects, which requires a different structure to operate best.

Another reason might be that while VCs are awash in innovative ideas and people, only 20% of their investments will be rewarded. I wonder if big corporations are willing to bear that risk.

Dave Ziffer

June 19, 2008 10:24 PM

Well this one is a no-brainer. Large corporations provide no incentives for entrepreneurs, and if anything they throw up roadblocks. If you develop a $100 million idea at a large corporation, odds are you won't find anyone to back you, and the reason for that is that backing you would involve risk and people at large corporations are generally the types who shoot for sure-fire pensions, not big-time payouts for great ideas. And then even if the corporation adopts your idea, your reward will be a gold pin or a certificate or some such thing, while the corporation takes all the profits. The people in the corner offices of corporations don't get rich by splitting the spoils of war with their employees.

Core 2 Dude

June 19, 2008 04:59 PM

Risk vs reward, it's that simple. If I take the risk of innovation for my own company, I may get billions of dollars. On the downside, I have wasted few years of my career. However, the same type of risk in the corporation gives me at most 10% raise, and I still risk wasting few years of my career. Why would I bother?

Corey

June 19, 2008 04:55 PM

Easy - because by definition, an entrepreneur doesn't work for a corporation. She works for herself. Why would any entrepreneur want some CEO who is concerned with "stimulating innovation and creativity" to get rich off the actual innovation and creativity that she outputs?

Sharon Gillenwater

June 19, 2008 02:49 PM

There are two main obstacles to innovation within the enterprise. The first is fear: if I try something new and fail, will I lose my job? Companies need to send a clear message that it is far better to try and fail, than fail to try.

The second obstacle is typically the company's own internal structure or processes. The typical middle manager will always give you 10 reasons why they can't take advantage of a great idea. In 9 cases out of 10, the issues are internal and not at all relevant to the business problem they are trying to solve. All they can see is that implementing the idea will make their job harder.

In these cases where change management is required, a pilot project is typically the best approach. Assemble a small, engaged team, design and execute a manageable pilot project and then demonstrate and socialize your success. Once other managers within the company see what you have been able to accomplish, they will also want to jump on the success bandwagon. Another benefit: when change happens organically, people will be more committed than if it were imposed from above.

Thank you for your interest. This blog is no longer active.

 

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Staying Entrepreneurial contributors

Renowned executive coach Marshall Goldsmith, serial entrepreneur Jeff Bussgang, a partner at Flybridge Capital in Boston, and Dr. Steven Berglas, executive coach, management consultant, and expert on "the stress of success," share their tips for staying entrepreneurial in trying times.

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