Nothing like the words "the big opportunity" get a group of entrepreneurs and venture capitalists salivating. Or debating.
The nature and dynamics of TBO were the subjects of a discussion at the Entrepreneurship Conference 2003, held at Harvard Business School on April 5.
For VC Ullas Naik, managing director in JAFCO Ventures' Boston office, the very term big opportunity is heading entrepreneurs down the wrong road.
"I don't think entrepreneurs should be looking around for the next big idea," said Naik. Instead, they should be looking for projects that are within their areas of expertise, that incite a passion backed by pragmatism, that have customers, and that have the right market timing.
Firdaus Bhathene, founder and CEO of Relicore, which offers IT support software, agreed there is no use going after a big opportunity unless you can deliver on it, he said. When considering any opportunity the entrepreneur should ask a series of questions including: What are my strengths? Who are my early adopters? What are the barriers to customers buying the product? Can we deliver before a bigger competitor arrives in the market?
Knowledge not needed
Do entrepreneurs necessarily need serious domain knowledge to pursue TBO? Although several panelists said expertise is a must, venture capitalist David Flaschen was of the contrary opinion. Flaschen, managing director of Flagship Ventures, said most Nobel Prize winners win the award for work not in their original field of study. He told the story of one of his entrepreneurs who, while sitting in rush-hour traffic, came up with the idea of a delivery service that delivers the goods at night. With less traffic at night, drivers can make more deliveries. That idea is on the path to raising some $50 million from investors.
|I'll be blunt; don't go to venture capitalists right now.|
— Firdaus Bhathene,|
Sundar Subramaniam, Chairman of Cell Exchange, said the big opportunity might come unexpectedly. Today, some 70 percent of his revenue in business consulting and mobile technology comes from the homeland security market, a business that hardly existed before September 11, 2001. The company changed its focus as the new possibilities became apparent. "Your architecture has to be flexible," Subramaniam said.
All the panelists agreed that student entrepreneurs should take advantage of this time in their life to throw caution to the wind. Taking risks becomes harder as you grow older, raise a family, and approach retirement, said Flaschen.
"Now is the time to take the big risks," he said, adding that he was disappointed hearing so many students talking about going to work for Microsoft.
But panelists also noted this is an extremely difficult time for young entrepreneurs to get funding for their big opportunity. Venture capitalists are very risk-averse now and are not very likely to take a chance on an entrepreneur without a track record.
"I'll be blunt; don't go to venture capitalists right now" for funding, said Bhathene. Instead, tap into relatives, friends, and other angel investors for the absolute minimum funds you need.
Networking for dollars
If you must go after VCs, find the top five investors who invest in your area and network your way into interviews, perhaps through the entrepreneurs that the VC has funded in the past.
An audience member asked what his communications company should do during the economic downturn, which is sapping away business and morale. Flaschen said the company should consider downsizing—"You always need less people than you think you do"—and consider retooling into a smaller company with a new focus.
No matter what size the opportunity, said moderator Shoba Purushothaman, founder and CEO of The NewsMarket, be prepared with a plan and filled with passion, which can overcome all kinds of obstacles.
"You have to be totally passionate, and surround yourself with people that share that passion," she said.