Technology Entrepreneurship: Creating, Capturing, and Protecting Value

Copyright Page......Page 2
Dedication......Page 3
Preface......Page 4
Acknowledgments......Page 9
About the Authors......Page 10
Fundamentals of Business and Economics......Page 13
It’s Hard to Be a CEO......Page 14
Introduction......Page 15
What Is a Business?......Page 17
Business as a Purposeful Activity......Page 18
Value......Page 19
Value Creation......Page 20
Value Proposition......Page 22
Business and Society......Page 23
Business and Social Responsibility......Page 25
Repeatable processes......Page 26
Scalability......Page 27
Change and Competition......Page 28
Engineering Creative Solutions......Page 29
The Grameen Bank Project......Page 31
The Future of Business......Page 32
Summary......Page 33
Key Terms......Page 34
Web Resources......Page 35
Endnotes......Page 36
Safety Belt Manufacturer Finds Success in Exporting......Page 39
Economic Resources......Page 40
Resource Allocation......Page 41
Supply, Demand, and Pricing......Page 43
Price and Market Equilibrium......Page 44
Price and Competition......Page 46
Price and Gross Margin......Page 47
Inflation......Page 48
Price in a Compromised Market......Page 49
Interest and the Price of Money......Page 50
Communism......Page 51
Mixed Market Economies......Page 52
The U.S. Economic System......Page 54
International Trade......Page 56
International Monetary System......Page 57
International Monetary Fund......Page 58
Elements of Global Trade......Page 59
The WTO......Page 60
Trade Blocs and Free Trade Areas......Page 61
Summary......Page 62
Study Questions......Page 63
Exercises......Page 64
Key Terms......Page 65
Web Resources......Page 67
ENDNOTES......Page 68
Modern Technology Transforms Old Lands to Meet Rising Food Demands......Page 69
Introduction......Page 70
Globalization and Technology Ventures......Page 71
Technology Venture Drivers......Page 72
Capital Intensity......Page 73
Knowledge Intensity......Page 76
Accelerated Pace of Change......Page 77
The Network Effect......Page 78
Early Adopter Becomes Case Study for Software Company......Page 81
Creating Market Value......Page 82
Creating Enterprise Value......Page 83
Value Protection in Technology Ventures......Page 85
Tips for Protecting Your Venture’s IP......Page 86
Protecting enterprise value......Page 87
Capturing Market Value......Page 88
McDonald’s Adapts to International Markets......Page 89
Capturing Enterprise Value......Page 90
Global Market entry strategies......Page 91
Licensing......Page 92
Strategic Alliances......Page 93
Direct Ownership......Page 94
Summary......Page 95
Exercises......Page 96
Key Terms......Page 97
Endnotes......Page 99
Legal Structure and Capital......Page 102
Choice of Wrong Legal Structure Endangers Financial Health......Page 103
Introduction......Page 104
Ownership and Liability Issues......Page 105
Limited versus Unlimited Liability......Page 106
The Extent of Limited Liability......Page 107
Choice of Legal Structure......Page 109
Sole Proprietorship......Page 110
General Partnership......Page 111
Limited Partnership......Page 113
Structure of a corporation......Page 116
Maintaining corporate status......Page 119
LLC characteristics......Page 124
Limited Liability Entities—A Comparison......Page 126
Profits and Losses......Page 127
Equity and Stocks......Page 128
Common Stock......Page 129
Preferred Stock Distributions......Page 130
Participating Preferred Stock......Page 131
Founder’s Stock......Page 132
Equity Distribution in the Nascent Venture......Page 133
Restrictive clauses......Page 135
Summary......Page 136
Study Questions......Page 137
Key Terms\r......Page 138
Web Resources\r......Page 141
Legal Structure Complexity Blocks Funding Opportunity for Dignified Living, LLC......Page 142
Questions for Discussion......Page 144
Endnotes\r......Page 145
Angel Capital Helps Launch Flypaper Studios......Page 147
Introduction......Page 148
Raising Capital is a Primary Function of the Technology Entrepreneur......Page 149
Capital Sources......Page 150
Angel Investors......Page 151
Venture Capital......Page 152
What do VC firms look for?......Page 153
Equity Financing......Page 154
Security and Exchange Commission rules......Page 156
Costs of Equity Financing......Page 158
Debt Financing......Page 159
Loan Rates, Payment Methods, and Lender Types......Page 160
Microloan Helps Struggling Firm......Page 162
Small Business Administration Loans......Page 163
Fund-raising Tools and Techniques......Page 164
Subscription Agreement......Page 166
SBIR Program......Page 167
Small Business Technology Transfer Program......Page 168
Bootstrap Financing......Page 169
Summary......Page 170
Exercises\r......Page 171
Key Terms\r......Page 172
Web Resources\r......Page 175
TimeBridge Secures Series B Financing Following Introduction of New Software Tools......Page 176
Questions for Discussion......Page 177
Endnotes\r......Page 178
StumbleUpon Acquired by eBay for $75 Million......Page 179
Introduction......Page 180
Acquisition......Page 181
Due Diligence......Page 182
Product/service line......Page 183
Warning Signs in Due Diligence......Page 184
The Acquisition Deal......Page 185
Mergers......Page 186
Venture Valuation......Page 188
Advantages of Going Public......Page 191
Disadvantages of Going Public......Page 192
Silicon Storage Technology Goes Public......Page 193
Underwriter Selection......Page 194
Selecting the Investment Bank......Page 195
The Prospectus......Page 196
The Red Herring......Page 197
Summary......Page 199
Exercises\r......Page 201
Key Terms\r......Page 202
Web Resources......Page 203
Omnisio, an Easy and Practical Acquisition for Google......Page 204
Questions for Discussion......Page 206
endnotes......Page 207
Intellectual Property and Contracts......Page 208
VisiCalc Pays for Decision Not to Patent First Spreadsheet Program......Page 209
Introduction......Page 210
Intellectual Property Protection......Page 211
Record Keeping......Page 213
License agreements......Page 214
Prior development defense......Page 215
Notebooks......Page 216
Trade Secrets......Page 217
Maintaining Trade Secrets......Page 218
Coke Employees Try to Sell Secrets to Pepsi......Page 219
Patents......Page 221
Requirements for Novelty and Nonobviousness......Page 222
Exclusive Right......Page 223
Written description......Page 224
Duty of disclosure......Page 226
The Patent Examination Process......Page 227
International Patent Protection......Page 228
A Classic Example of Copyright Law......Page 230
Considerations with Respect to Software......Page 231
Copyright Registration......Page 232
The Requirements of a Work-for-Hire Designation......Page 233
Trademarks......Page 234
Registering a Trademark......Page 235
Using the™ Symbol in Lieu of Registration......Page 236
Supplemental Register......Page 237
Generic marks......Page 238
Fanciful and arbitrary marks......Page 239
Choosing a Mark......Page 240
Maintaining Trademark Rights......Page 241
Summary......Page 242
Study Questions\r......Page 243
Key Terms\r......Page 244
Web Resources\r......Page 247
Microsoft Attempts New Approach to Intellectual Property Protection in China......Page 248
Endnotes......Page 249
Informal Agreements Can Lead to Intractable Arguments......Page 253
Introduction......Page 254
Sources of Contract Law......Page 255
The Offer......Page 256
The Counteroffer......Page 257
Acceptance......Page 258
Defenses against Contract Enforcement......Page 259
Performance and Breach......Page 260
Damages......Page 262
Specific Performance......Page 263
Writing an Effective Written Contract......Page 264
Performance......Page 265
Consideration......Page 267
Representations and Warranties......Page 268
Indemnity......Page 269
Miscellaneous Provisions......Page 270
Operating Agreements......Page 271
Confidentiality Agreements......Page 272
Consulting and Development Agreements......Page 274
Manufacturing Agreements......Page 275
License Agreements......Page 276
Trademark Licenses......Page 277
Distribution Agreements......Page 278
Summary......Page 279
Study Questions\r......Page 280
Exercises\r......Page 281
Key Terms\r......Page 282
INTEL and NVIDIA Battle over Licensure Rights......Page 285
Questions for Discussion......Page 287
Endnotes\r......Page 288
Skillful Negotiations Can Make or Break a Business......Page 290
Introduction......Page 291
Negotiation Fundamentals......Page 292
Mindset......Page 293
Position versus Interest......Page 295
Establishing Your BATNA......Page 296
Tips for Using Your BATNA in Negotiations\r......Page 297
Negotiation Approaches......Page 298
Integrative Bargaining......Page 299
Distributive Bargaining......Page 300
Lose-Lose Negotiating......Page 302
Rules for Developing Win-Win Outcomes......Page 303
Opening Gambits......Page 304
Bargaining Gambits......Page 305
Tips for Effective Negotiating......Page 306
Vendor Tactics......Page 307
Sales Contracts......Page 308
Summary......Page 310
Study Questions\r......Page 311
Exercises\r......Page 312
Key Terms\r......Page 313
Canon: A Master of Negotiating Contracts......Page 315
Endnotes......Page 317
Technology Venture Strategy and Operations......Page 319
Networking Opens up Opportunities......Page 320
Introduction......Page 321
The Business Plan......Page 322
Writing a Business Plan......Page 323
Company Information......Page 325
The FedEx Business Plan Got a “C” Grade in School......Page 326
Market Analysis......Page 327
Industry Analysis......Page 329
The Management Team......Page 331
The Marketing Plan......Page 332
Financial Projections......Page 333
Networking......Page 334
Effective Networking......Page 335
Using the Internet to Network......Page 336
Resource Aggregation......Page 337
Human Resources......Page 338
Organizational Resources......Page 339
New-Venture Operations......Page 340
Information and Measurement......Page 341
Quality Standards......Page 342
Belle Baby Carriers Has Relentless Focus on Quality......Page 344
People......Page 345
Summary......Page 346
Study Questions......Page 347
Exercises......Page 348
Key Terms......Page 349
Web Resources......Page 350
Questions for Discussion......Page 352
Endnotes......Page 353
Great Products Also Need Great Marketing to Be Successful......Page 354
Introduction......Page 355
Marketing......Page 356
Market Segmentation......Page 358
Product Planning and Development......Page 361
Tips for Generating New Product Ideas......Page 362
Product Life Cycle......Page 363
Cost......Page 364
Distribution......Page 366
Merck Switches Shipping from Free to Fee......Page 365
Modes of Transportation......Page 367
Managerial Practices in Physical Distribution......Page 369
Promotion......Page 370
Direct salespeople......Page 371
Television advertising......Page 372
Print advertising......Page 373
The Internet......Page 374
Location......Page 375
The Marketing Plan......Page 376
The Marketing Budget......Page 377
Determining a Marketing Budget......Page 378
The Marketing Message......Page 379
Summary......Page 381
Exercises......Page 382
Key Terms......Page 384
Web Resources......Page 385
Massive Goes to Market with In-Game Advertising Network......Page 386
Questions for Discussion......Page 388
Endnotes......Page 389
Balancing Growth with Profitability......Page 390
Introduction......Page 391
Accounting—Definition and Practices......Page 392
The Accounting Cycle......Page 393
Working with Accountants......Page 395
The Financial Manager......Page 396
The Financial Plan......Page 397
Financial Statements......Page 398
Sales Forecast......Page 399
Income Statement......Page 402
Balance Sheet......Page 405
Breakeven Analysis......Page 408
Ratio Analysis......Page 409
Types of Ratio Analyses......Page 410
Debt ratios......Page 411
Working Capital......Page 412
Accounts Receivable......Page 413
Suggestions for an Effective Credit Regime......Page 414
Payment of Debt......Page 417
Summary......Page 418
Study Questions......Page 419
The Assignment......Page 420
Key Terms......Page 421
Web Resources......Page 424
Questions for Discussion......Page 426
Endnotes......Page 427
New Ventures Often a Product of Experience and Initiative......Page 428
Introduction......Page 429
Entrepreneur Managers......Page 430
Analytical Skills......Page 431
Tips for Building “You, Inc.”......Page 432
Some Decision-Making Pitfalls to Avoid......Page 433
Communication Skills......Page 434
Conceptual Skills......Page 435
Team Building Skills......Page 436
Entrepreneurial Leadership......Page 437
Influence......Page 438
Michael Dell Brings in Executive Talent......Page 439
Effectuation and Entrepreneurial Expertise......Page 440
Entrepreneurial Ethics......Page 442
Entrepreneurial Strategy......Page 445
Real Options Approach......Page 446
Resource-Based Theory......Page 447
Differentiation......Page 448
Niche Strategy......Page 449
Summary......Page 451
Study Questions......Page 452
EXERCISES......Page 453
Scoring......Page 454
Key Terms......Page 455
Endnotes......Page 457
Managing Risk and Career Development......Page 460
“Puzzle Interviews” Help Screen Job Applicants, but Can Entail Unforeseen Risks......Page 461
Introduction......Page 462
Venture Risk Management......Page 463
Hazard Risks......Page 464
Liability Insurance......Page 465
Venture Governance......Page 466
Mission and vision......Page 467
Developing an Effective Board of Advisors......Page 469
Investor Relations......Page 470
Human Resources Management......Page 471
Legal Risk Management......Page 473
What Not to Do......Page 474
Administrative law......Page 475
Law of Sales......Page 476
Law of Negotiable Instruments......Page 477
Obtaining and Working With Legal Counsel......Page 478
Developing Resilience......Page 480
Overcoming Cognitive Biases......Page 481
Summary......Page 485
Study Questions......Page 486
Exercises......Page 487
Key Terms......Page 488
Endnotes......Page 490
The Entrepreneurial Career of Amazon’s Jeff Bezos......Page 492
Introduction......Page 493
The Individual Entrepreneur......Page 494
Conceptual Model of Entrepreneurial Careers......Page 495
The Entrepreneurial Personality......Page 497
High energy level......Page 498
Emotional Intelligence......Page 499
3M Programs Encourage Intrapreneurship......Page 500
Fostering an “Intrapreneurial” Culture......Page 501
Paul Baran......Page 502
Pierre Omidyar......Page 503
Craig Newmark......Page 504
Robert Metcalfe......Page 505
The Franchising Option......Page 506
Uniform Franchise Offering Circular......Page 507
Franchising Agreement......Page 508
Brand name......Page 510
Overdependence......Page 511
Franchisor Disclosure......Page 512
Launching Your Entrepreneurial Career......Page 513
Suggestions for Launching Your Entrepreneurial Career......Page 514
Summary......Page 515
Study Questions......Page 516
Exercises......Page 517
Key Terms......Page 518
Endnotes......Page 519
Model Business Plan......Page 521
A......Page 544
C......Page 545
D......Page 547
E......Page 548
G......Page 550
I......Page 551
L......Page 552
M......Page 553
N......Page 554
P......Page 555
R......Page 556
S......Page 557
T......Page 558
U......Page 559
W......Page 560
Z......Page 561