Sizing-up your Idea

Lifestyle or Enterprise?
One of the main design considerations in framing up your next startup opportunity is the size of the venture you hope to create. In this regard, businesses are generally organized into two categories: lifestyle business or enterprise business.

Lifestyle
Lifestyle businesses are typically smaller niche market opportunities. As such, they don't support the economics of venture capital investing and feature centralized ownership structures e.g. sole-proprietor, partnership, LLP or LLC. The pros include a greater degree of control by the entrepreneur, less accountability to investors and directors, and generally less risk. When your motivation is to "be your own boss" or if you enjoy being hands-on, these are the market opportunities to consider. Lifestyle businesses can be cash rich and afford you a comfortable lifestyle in the upper middle class.

Enterprise
By comparison, enterprise ideas address large "billion dollar" market opportunities. Ownership is less centralized among various shareholders including venture capital or angel investors. Enterprise businesses are inherently more risky and have a much bigger upside potential. It can be a much more exciting ride during the hyper growth "hockey stick" phase of the business lifecycle (if you get there). As an entrepreneur, you sacrifice control of the company in exchange for "a smaller slice of a bigger pie". Once their company is funded and handed off to a VC backed CEO, enterprise entrepreneurs start looking for the next billion dollar market opportunity assuming the role of "serial entrepreneur". Successful serial entrepreneur's are the rock stars of Silicon Valley and enjoy a greater amount of notoriety and prestige than their lifestyle entrepreneur counterparts. With successful exits they can enjoy early retirement (although rarely taken) and enter a philanthropic phase of life e.g. Bill Gates Of course, very few ever make it to this level of success.

Decision
Both organizational contexts require different managerial approaches, backgrounds, skill-sets and expectations. The risk-reward ratio is very different. Both options could make for equally interesting careers. In my own experience, AllDorm was actually a lifestyle business we thought was an enterprise business. The size of the market opportunity and the margins the business model generated being the determining factors. As I look to take on my next entrepreneurial endeavor, the question of whether to start a lifestyle business or join/create an enterprise remains...

Chile Earthquake Relief

A friend and fellow Bronco in Chile passed these recommended charities along to me for those wishing to help out after the devastating quake there. Thanks to Rodrigo for helping us get involved from Silicon Valley.

www.untechoparachile.cl ~ Directed by Jesuit Priest Eugenio Berrios

www.levantandochile.org

www.stanfordchile.org

Thanks for 5 Great Years!

Excited to be moving on from SCU to pursue new ventures (including more frequent updates of my blog). I sent the following out to the network announcing my decision. Thanks again to everyone I worked with and looking forward to seeing you soon...

Dear Friends & Colleagues,

I am writing to announce that I will be leaving my position as director of Santa Clara University's Center for Innovation and Entrepreneurship (CIE) in order to pursue entrepreneurial endeavors.

I am proud of the accomplishments we've made launching the CIE over the past 5 years. I am happy to leave the Leavey School of Business with the foundation for a great entrepreneurship program and excited to see CIE grow as it enters a new era of leadership.

I want to thank everyone who has contributed to or participated in our various programs, including the Advisory Board, Founders Awards, CIE Speaker Series, SCEO student club, Venture Capital Investment Competition, Entrepreneurship Certificate, Fulbright BEST Silicon Valley Immersion, eCouncil, and Bronco Entrepreneur Team.

It has been a great pleasure serving Santa Clara University and Silicon Valley over the past five years. Thanks again and hope to stay connected.

Best wishes,


Kevin Holmes '01, MBA '10
Email: kholmes79@yahoo.com
LinkedIn:/in/kevinholmes
Blog: http://www.kevinholmes.org
Twitter: @kevinholmes

Return of the venture-backed IPO?

In related news to Leavey School Professor Robert Hendershott's recent research findings, news today of the imminent OpenTable IPO which could break the venture-backed IPO dry-spell of the past 15 months.

"Will the Old Venture Model Work with New Web-Based Start-ups?"

New research from my colleague Professor Robert Hendershott in the Department of Finance at Santa Clara University suggests that the traditional venture capital industry, evolved for relatively capital intensive start-ups like semiconductor firms, is a poor fit for the next generation of web-based start-ups. However, the same forces that make venture capital a poor fit also make venture capital less relevant, providing an alternative path for entrepreneurs to create the next cohort of leading web firms. You can download the full paper here.