Author Archives: Hakan Ener

About Hakan Ener

Hakan Ener is assistant professor in the Department of Entrepreneurship. He does research on top management teams in entrepreneurial firms. One of his main interests is the "management experience pitfall," a theme emerging from his dissertation, which showed that entrepreneurial firms led by the most experienced top executives in their industry do not typically achieve the highest performance. This work has won a worldwide doctoral research award from the Center for Creative Leadership in the US, and was nominated for the Strategic Management Society's Best Implications for Practice award. He holds a Ph.D. in management (with a specialization in strategy), which he completed at INSEAD's two campuses in France and Singapore.

My blog posts have moved…

Please click here to access my more recent blog posts, where I have continued to write following the launch of IESE’s Entrepreneurship Blog:

You can also see my posts on the Forbes website at these links:

Presenting Your Proposal: 5 Ways To Convince Investors To Back Your Idea:

Entrepreneurship: Five tips on garnering support for your new business:

Intrapreneur? How To Ensure Your Business Idea Doesn’t Get Killed:

Where should an entrepreneur look for new business opportunities?

I’m often asked by aspiring entrepreneurs about what are the most attractive
industries or markets to launch a business in. Often, they are interested in
finding out whether they should focus on a fast-growing market (or follow a hot new
trend) such as creating applications for smartphones, and they hope to validate
their ideas.

My answer is that there is no specific industry or market that is superior to
all others. Finding a fast-growing industry is good, but it is not sufficient
for an entrepreneur to conclude that it’s an ideal place to build a business.
Therefore, in order to help entrepreneurs to identify new business
opportunities, I recommend them to first ask themselves: “In which industries /
market will my efforts be most likely to make an impact?” The answer is usually
where the entrepreneur’s own knowledge, skills and contacts are the strongest.
Those are the most important “leading indicators ” of successfully launching a
new business. In other words, an entrepreneur looking to create a high-impact
business should look for new business opportunities in fields that he or she
understands better than anyone else (or at least can work with people that have
such expertise).

There are very few entrepreneurs who made an impact simply by chasing hot new
trends despite having little knowledge and few contacts to begin with. It takes
years to build those important resources. Just thinking (or doing research)
about fast-growing markets may lead to an exciting business idea, but the idea
itself is only one ingredient in building a venture that creates value.

Presenting Your Proposal: 5 Ways To Convince Investors To Back Your Idea

My blog post below was published at Forbes Magazine’s website recently.

I recently provided practical tips to help increase your chances of obtaining support for a new project at work or for a new business venture. Since then, I received questions on how to actually present a proposal to increase its chances of receiving support. Here are five specific tips on how you should make that important presentation.

1. During your presentation, make it clear that you know which results the evaluation committee or the board members expect to obtain if they support your proposal.

You should highlight your expected financial and operational results in terms of the metrics that matter most to your audience. For instance, a business angel may be interested in your start-up venture’s expected valuation after five years whereas a corporate investment committee may emphasize whether your new project will exceed the corporate investment hurdle rate (for example, more than 15% annual return on capital employed.)

2. Explain how you intend to use the resources you’re asking for.

If you’re asking for cash, provide some details on how you will spend it on recruitment, marketing, operations, etc. If you’re asking for human resources (such as engineers to work on your project) from a corporate investment committee, outline the work schedule and identify project milestones where you’ll evaluate the results. Remember that resource providers are evaluating your specific action plan, not a general business idea.

3. Think “lean” and only ask for resources to cover the next phase of your action plan, not more.

It’s tempting to tell investors or board members that you have a big vision for the future, and that you will create a new multi-million dollar business. However, they will not be keen on funding all of your future resource requirements right after the first presentation. You need to ask yourself “What is the minimum amount of resources that my project needs at this moment in order to reach the next level?” This is a good example of lean thinking, and it’s becoming increasingly popular when launching start-ups and corporate ventures (see the Lean Startup website and book for more ideas).  

4. Soon after your presentation, contact audience members individually, thank them for their time, and ask about areas for improvement.

Building a new business is not a sprint, it’s a marathon. You will need to present your proposal many times before you can obtain support. In this long process, the best sources of feedback are members of your audience who can give you tips for future presentations. Approach them with a positive attitude that shows your willingness to accept criticism and take some of their suggestions on board. Besides discussing the contents of your presentation, ask about how to develop your presentation style as well.

5. Don’t expect a quick “Yes” or “No.”

An investor may sound enthusiastic about supporting your project, but it will take a long time to obtain an agreement in writing, such as a term sheet. This is because investors prefer to see how well you are selling your ideas and products to others before they commit themselves to fund your project. Prepare yourself for a series of “Maybe” type responses from investors or board members at least for a few months. If you do not give up your proposal by then, they are likely to form a positive impression about your persistence as an entrepreneur.   


Who is the most searched for entrepreneur online?

A Google search on the keywords “Steve Jobs” brings quite a few people to my blog, so I wondered whether Steve Jobs is the most frequently searched entrepreneur on the internet. I was greatly surprised to find out that he isn’t. Who could it be?

I’ll give you a few clues before revealing the answer:

1)      It is not a person known for starting a technology-based company (this rules out Bill Gates, Mark Zuckerberg, Larry Ellison, Michael Dell and many others)

2)      Not a financial, industrial or real estate entrepreneur either (forget about Warren Buffett, Carlos Slim, Richard Branson, or Donald Trump)

Do these clues puzzle you? Then see this last one:

3)      The most searched for entrepreneur is a female.

Now, you must be curious! Here are two Google links where you’ll find the answers:

Link comparing worldwide search volume for several top entrepreneurs: Here

Link comparing United States search volume on a monthly basis: Here

Entrepreneurial failure

If I had to name one topic where it’s most difficult to find guest speakers in our programs, it would be entrepreneurial failure. It seems that no one wants to talk about it based on their own experiences!

Academic research is largely quiet on this topic as well, with rare exceptions such as Rita McGrath’s and Javier Gimeno’s work with colleagues. In this post, I’ll share with you three types of entrepreneurial failures, and emphasize that failure does not necessarily involve shutting down a business or bankruptcy.

The first type of failure, the most obvious one, is bankruptcy. No one would dispute an entrepreneur’s failure when he or she is unable to manage cash flows and pay off debt.

However, not all “technically bankrupt” businesses are shut down: thanks to either bankruptcy protection or sale of the business, an insolvent company can continue to operate, but the founder often has no choice except to leave. That brings us to the second type of entrepreneurial failure whereby the founder loses the rights to own or manage the company. On the bright side, the people employed by the company can keep their jobs, so this is considered a “smaller” failure than being forced to shut down the business.

The third type of failure is when the business is not in immediate danger of bankruptcy, but strategic conflicts between the founder and the rest of the board of directors reach a point where the founder is asked to leave the company. A famous example of this was Steve Jobs when had to leave Apple in 1985 because of major disagreements with CEO John Sculley and the rest of the board. At least, Jobs was able to keep his ownership stake in Apple (and years later, he made a great comeback!). Despite the legendary status of Steve Jobs as a successful entrepreneur, in 1985 he perceived this outcome to be a failure, as he famously described during a commencement speech at Stanford.

In summary, the three types of entrepreneurial failure I’ve described are:

1) Bankruptcy,

2) Near bankruptcy followed by founder’s forced departure, and

3) Founder’s forced departure due to board-level conflicts.

Clearly, entrepreneurial failure is a broader issue than the bankruptcy of a company. However, one bankruptcy or forced departure does not make an entrepreneur’s whole career a failure, which will be the topic of an upcoming post. 

Global Entrepreneurship Week: Do you know about it?

Maybe you’ve never heard of the week-long celebration of entrepreneurship that will take place from November 12 to 16 this year. Perhaps you didn’t know that it has become a global phenomenon, with thousands of activities planned in 104 countries. Now would be a good time to find out about it and make plans to participate.

In 2007 the British Prime Minister Gordon Brown and Carl Schramm, the CEO of Kauffman Foundation (which is the most important private initiative that supports entrepreneurship) launched the Global Entrepreneurship Week (GEW) in order to help entrepreneurs flourish. This involves not only activities for networking and developing new ideas but also making sure that entrepreneurs enjoy the spotlight for a brief time.

Putting the spotlight on entrepreneurs is, to me, the most important purpose of the GEW, because it helps company founders to realize that there is a large community of like-minded people out there. Especially for entrepreneurs who work “alone” (without co-founders) the GEW is a great time to meet others who have made the decision to launch a company, and notice how much they have in common regardless of which industry they have chosen to operate in. Sharing professional and personal tips – such as on how to deal with the ups and downs of building a business – is a core part of the activities. So, if you are interested in becoming an entrepreneur, but haven’t launched a business yet, the GEW is a wonderful opportunity to interact with company founders and understand what it’s like.

To further highlight why we need to celebrate entrepreneurship, just take a look at two astonishing numbers cited in the most recent World Development Report : the first is that there are currently 621 million young people around the world who are neither working nor studying. The second has to do with the number of new jobs that must be created worldwide if we are to maintain the world’s current employment rate (which is less than ideal to begin with): 600 million new jobs will be needed in the next 15 years! This is an enormous task, and can not be left to policymakers alone. So, it’s time to see how the Global Entrepreneurship Week can help.

Brazil’s outstanding entrepreneurs

IESE Business School’s Alumni Reunion will take place in Sao Paulo, Brazil for the first time (1-3 November). So, I thought it would be a good moment to reflect on the work of outstanding Brazilian entrepreneurs.

First, let’s be clear that any entrepreneur who creates a successful business in Brazil deserves praise. It’s remarkable that the country has grown so rapidly in the past decade despite having very challenging regulatory requirements for starting a business: in fact, the World Bank ranks Brazil 121st out of all countries when it comes to the ease of starting a business in 2012 (it’ even more surprising that the country’s overall ranking has not improved relative to 2006).

So, are there Brazilian entrepreneurs that truly stand out globally? Of course; let’s start with the most famous one: Eike Batista (founder of EBX Group). He is the owner of ports, mines, oil wells, and energy installations (did you know that his first job was selling insurance door-to-door?) What makes Batista unique is his ability to create not one but several multi-billion dollar businesses in different industries, all starting from scratch (rather than acquiring existing companies). When you think of successful entrepreneurs elsewhere, you often identify them with one or two companies at most, so Eike Batista’s track record is extraordinary not just for Brazil, but worldwide.

There are many less famous, but equally interesting, Brazilian entrepreneurs. I will just mention two more: thanks to the work of Endeavour and Fast Company in identifying high-potential entrepreneurs, I’ve learned about the fantastic work of Andre Dayan (founder, Vitrogen)  and Alexandre de Sene Pinto (co-founder, Bug Agentes Biologicos).

Andre Dayan’s start-up Vitrogen controls half of the world market for a very interesting product: in-vitro fertilization of livestock, which boosts the health and productivity of animals. Vitrogen was the first start-up in the world to fine-tune the test-tube technology for livestock and commercialize it, which many large companies had struggled to do before. Given the importance of beef exports for Brazil, you can imagine how important this company is for the country.

Away from the hustle and bustle of Sao Paulo and Rio de Janeiro, Alexandre de Sene Pinto’s Bug Agentes Biologicos also controls a large share of the world market for its products and services, which involve the optimal deployment of natural predators (e.g. wasps) to control harmful pests in agriculture. This solution is the only one granted permission for sale in Brazil, which is one of the largest agricultural markets in the world.

Brazil’s outstanding entrepreneurs are very good at tackling the country’s greatest opportunity, which is the effective use of its abundant natural resources. Perhaps the next Apple or Facebook will not come from Brazil, but you can be sure that many world-changing (I mean “real world”) innovations will emerge from this exceptional country.

What is the most difficult part of being an entrepreneur? Hint: Not the long work hours!

According to my blog’s analytics service, a reader in Silicon Valley recently visited these pages by searching for the following phrase: What to say to co-founder when the going gets tough? This got me thinking: what kind of difficult problem would get an entrepreneur to turn to the Internet for advice on a delicate relationship with a business partner? Although I will probably not find out the answer for this particular case, I was reminded that co-founder relationships can be the most difficult part of an entrepreneur’s professional life.

A recent book by Noam Wasserman (Associate Professor at Harvard Business School) cites an academic article by Gorman and Sahlman (1989) that reports on a survey of venture capitalists where two-thirds of all troubled ventures’ woes were traced to ineffective senior management, which often refers to a poor collaborative relationship between co-founders. That is a staggeringly high ratio and deserves attention.

Co-founders’ collaboration may begin to break down following problems ranging from differences in strategic vision for the venture to disagreements over each founder’s personal contribution to the company’s success, which “spill over” into disputes over compensation and equity ownership. In fact, many successful entrepreneurs who do an excellent job of creating and growing a business have done very poorly in dealing with such problems. The most striking examples in my view are the fractured relationships between the co-founders of Microsoft (Bill Gates and Paul Allen) and Apple (Steve Jobs and Steve Wozniak). In each case, co-founders that started out as good friends later fell apart. Paul Allen spent several years with Bill Gates at Microsoft before quitting due to health reasons, and Steve Wozniak essentially went back to being a pure engineer at Apple before leaving the company. In both cases, the co-founders had serious misgivings about how the company’s ownership was allocated at the start-up phase and beyond.

While these examples don’t prove that co-founder problems are the most difficult aspect of entrepreneurship for every founder, they do show that technical genius and a good business sense are not enough to make the greatest positive impact as an entrepreneur.