15 minute read
Cover story: Why being an entrepreneur
The barriers to entrepreneurship today haven’t fallen so much as shifted. As always, the smart money is on those who understand the landscape and are willing to go all-in.
By Hayden Field
Advertisement
t 8 years old, Crystal Cave ’09 knew how to read analytics reports. She dreamed of business school. And in her grandfather’s ofce, she often played at being CEO of a company. Te man she called “Poppy,” Robert Higgins, founded wholesale record distributor Trans World Entertainment Corporation. On February 14, 1972, he walked into a bank with an idea and walked out with a loan, proceeding to grow the company from an initial $30,000 to an IPO in 1986. Tough he has since passed away, the company still operates upward of 200 brick-and-mortar stores under multiple brand names.
And Cave, the founder and CEO of size-inclusive clothing brand Poppy Row, is a long way from playing pretend. Te decades between their ventures have been good for entrepreneurs. Tere are new sources of capital emerging every day, by way of online funding platforms and venture capital frms. Te rise of e-commerce has lowered the barrier of entry for founder hopefuls. And social media makes it easier to reach a like-minded audience and build a community.
Entrepreneurship today is also markedly more difcult than in the past. Tere’s an overwhelming sense of sameness in pitch after pitch. New technology is siphoned of into tired buzzwords peddled by founders and sought out by investors. And for any kind of product or service, the market is likely already fooded with competitors. But take heart, say experts including Bentley alumni. Te obstacles to entrepreneurship have been rearranged regularly for decades, and there’s no sign they’ll stay put in the future. Here’s a look at the current landscape by founders who’ve experienced it frsthand.
READY SOURCES OF CAPITAL LOWER BARRIERS OF ENTRY
hether you’re spending $100 or $100,000 to start your company, the money has to come from somewhere — and research suggests that 90% to 95% of entrepreneurs who hire require fnancing to launch their businesses. Tough the top three sources of capital are savings, business loans and personal credit cards, founders have other vehicles for getting where they need to go: crowdfunding websites, revenuesharing platforms, grants, accelerators, incubators and more. Investors, who are always looking to outperform the market, often monitor these outlets to seek out new ideas and meet potential founders where they are. Venture funds are launched regularly via new crops of angel investors and recycled capital, and the constant cycle of startup acquisitions and IPOs means there’s a lot of cash on the move.
Cave launched Poppy Row through Kickstarter (“a great way to validate the brand need”). Heather (Currier) Baker ’94, founder of GH2 Fitness and Training, took an alternate approach: She and her husband, Ross, funded their gym via a business loan, retirement funds and savings.
Over the past decade, the typical dollar amount of an early-stage funding round has increased dramatically. According to research on 21 of the top venture frms, in 2018, the average seed round hit $5.6 million, compared with $1.3 million in 2010. Over the same time period, the average Series A round increased at a similar rate. Last year’s total amounted to $15.7 million, more than three times that of 2010.
One byproduct of venture frms raising ever-larger funds: Tey’re investing in later funding rounds with larger sums of money. Companies are taking longer to go public, sometimes opting to stay private and raise amounts like $500 million from the private sector. “Te need to go public for the purpose of raising capital to fuel growth has signifcantly diminished,” says Mike Mangini ’01, managing director of VC frm SignalFire. Te capital landscape for entrepreneurs could likely transform again. Tat’s partly due to industry hot topics like open markets and blockchain, which would theoretically allow anyone to invest in an idea, with no minimum threshold.
Are you an entrepreneur? Share your story at magazine@bentley.edu
very month in the United States, three out of every thousand people launch a business. Other data from the Ewing Marion Kaufman Foundation pegs early-stage entrepreneurship at close to a 20-year high in 2017. Why the infux of new founders? Some entrepreneurs cite a lower barrier of entry to starting a business, largely due to advances in technology.
When Samantha Sorabella ’17 started her business — a brand featuring Cape Cod-inspired photography and jewelry, with Instagram as its primary platform — she knew the frst step in locating a relevant audience would be connecting with local shops, businesses and photographers on social media. She attributes those partnerships, which led to giveaways and ads, as a driving factor in the account’s growth to 51.3K followers. After fnding a business on Instagram, Sorabella can make initial contact, send sales pitches, and provide data and statistics from past partnerships, all without scheduling an in-person meeting. Te approach saves her precious time as an entrepreneur — and she believes it’s led 4-year-old Capeology to much faster growth than it would have seen otherwise.
“It’s a way for your customers to see what you’re up to 24/7 and create that brand loyalty and trust that’s really going to set you apart from competitors,” she says of social media. “Even if you’re selling the same thing, if a client feels like they trust you more or resonate with your brand more, they’re going to go with you at the end of the day.” Tose perks are largely applicable across the retail sector. New businesses can start selling without any kind of physical presence, and entrepreneurs can build an audience online frst with less capital (and less risk). “Tat’s the biggest thing, that there’s just a lower barrier to entry in the sense that anybody can start any business,” says Cave. “Now you can launch brands completely digitally, which is what I’ve done, and not have a retail presence, not do wholesale.” Te myriad resources available to entrepreneur hopefuls goes beyond dollars. Since 2004, the number of Google searches for “how to start a business” has stayed fairly constant — but the number of results returned has grown exponentially. Whether your venture is based in photography, retail, health care, technology or another sector, there are countless articles, videos, podcasts, Q&As, step-by-step guides and communities online that can help save time and avert trial and error.
In cities across the country, you could go out every single night to a diferent event ofering resources for entrepreneurs, says Woody Benson ’80, a venture partner at Launch Capital. “Tere are so many people who want to give back in the form of
MIKE MANGINI ’01
podcasts, books, lectures, advice and ofce hours,” he says. “Tere are so many tools and support groups available that really didn’t exist years ago.” Tis democratization of access applies even to tech startups. Whether you’re building an app, platform or other service, “lowcode” or “no-code” solutions have unlocked options for people who aren’t trained as developers. And if you do build something that goes viral? In the past, it would almost certainly crash without complex server infrastructure that you’d built yourself (or spent a signifcant sum hiring someone else to build). Over the past decade, cloud computing — or storing and processing data by way of remote servers instead of a local or personal one — has made it easier to grow your startup and its user base without experiencing crashes.
Mangini recalls spending tens of thousands of dollars on servers while building one of his former companies. “It’s mind-blowing,” he says. “If you unpack what cloud computing brings to the startup ecosystem, anyone can easily scale technical infrastructure, leveling the playing feld in a tremendous way. “People are able to build startups faster, reach customers more efectively and, really, more than ever, fail fast. Tat is so important when you’re building something: to try something, tease it out, fgure out what works and what doesn’t, and continue to iterate until you’ve found something the market actually wants.”
NO NEW IDEAS UNDER THE SUN
n other ways, starting a company today is more difcult than ever before. Janak Joshi ’00, MBA ’01 knows how hard it is to sell a startup idea. During his frst job out of college, he pitched to a venture capitalist and was denied more than 100 times.
“In the late ’90s in Boston, entrepreneurship was thriving, but it was old-school and pretty brutal,” says Joshi, who’s now CTO of Life Image, a health care network for sharing images and clinical data. “Tis was Shark Tank on steroids.” Benson, for his part, has been investing in founders for almost two decades. In his experience, entrepreneurship happens in waves — every fve years or so, a new crop of startups aims to transform an industry. In fact, he says, it’s possible to track burgeoning industries and technologies by the entrepreneurship waves that sparked them: microcomputer, cloud mobile social, enterprise software and software as a service (SaaS), social media, on-demand consumer services and, currently, machine learning and artifcial intelligence (AI). “Te reason venture capital funds are called ‘vintage funds’ is they’re sorted by year, just like fne wines,” says Benson. “Tese waves generate these vintages that are marking the peaks of the journey. An idea that looked absolutely ridiculous 10 years ago may look great now.”
But alongside waves, there are troughs, and it can be difcult for an early-stage company to make it in an environment where only about half of new establishments survive fve years or longer, according to estimates by the U.S. Small Business Administration. Tat means it’s vital to examine the driving reasons behind the desire to start a business: Does it skew toward the potential glamor of working for yourself, or is it a nagging feeling that it’s your responsibility to bring a new product, service or solution into the world? In a bull market that’s more than 10 years old, and alongside an exploding tech ecosystem, it’s easy to idealize launching a company. “Tere are more and more people who are trying to start businesses because of the ‘shiny object’ of starting a business versus having an innate burning desire to go solve a problem and doing anything you can to get to that endpoint,” says Mangini. “Starting a business is wickedly hard and scaling one is even harder. It consumes your entire existence for the period of time that you’re building it. Know that you’re going to go all-in or not — and now’s a greater time than ever to do that — but give yourself a real clean gut-check on your motivations for doing so.”
Since the word “entrepreneur” is an umbrella term that can be construed in many diferent ways, it’s important to clarify which type someone is referring to (or ofering guidance for). As Mangini puts it: “Tere are many diferent favors of ‘entrepreneur.’” One might be following your passion to open a cofee shop; another might be running multiple franchise locations of a national brand. For his part, Mangini seeks out tech entrepreneurs he believes are on track to build something transformative.
When it comes to great ideas, it is easy to believe there’s nothing new out there. “It’s really hard to have new ice cream favors invented that aren’t combining old ice cream favors,” says Benson. “It’s very hard to fnd something today that’s really unique.” Mangini confrms that, over the past few years, he has listened to thousands of similar-sounding pitches. One of his biggest takeaways? Many of the most transformative ideas seem simple and obvious. You might think, I can’t believe this doesn’t already exist, or, Surely someone else has thought of this. Ultimately, he says, it comes down to timing, team and execution.
If you’ve got the drive and a plan you believe in, good news: Many investors prioritize investing in people over ideas. Benson is currently interested in areas like automation of the world’s ships and waterways, machine learning, AI and fntech, but he says the entrepreneur behind a business is a better indicator of its potential value. “I just try to fnd really interesting people who want to do really interesting things in big and dynamic ways and build big, proftable companies,” says Benson. “It’s always people frst. Next-generation opportunities meet visionary entrepreneurs.”
HEATHER (CURRIER) BAKER ’94
OVER-SATURATED MARKETS
eather Baker had always been interested in ftness, and after giving birth prematurely, she wanted to stay home with her newborn and remain active at the same time. She invited friends to join her to work out in her basement and bring their newborns; within six months, more than 50 people were part of the group. Before long, Baker was launching her very own gym.
She has welcomed expansion (members now number 550) but also wants to maintain the level of personalization and fexibility that drew people to her basement in the frst place. So GH2 Fitness and Training operates from 4:45 a.m. to 8:30 p.m., ofers classes between 30 and 45 minutes in length, and accepts client requests for additions like core classes, spin and Olympic lifting. Another recent addition: a protein shake and cofee bar inside the gym. “We have a lot of competition,” says Baker. “We have to be diferent.” When it comes to fntech, e-commerce and a whole host of other budding areas of entrepreneurship, experts say personalization is the future if you want to stay competitive. Te rise of audience data collection — American frms likely spent more than $19 billion in this category last year — has been a boon for companies large and small. All can now make educated decisions on how to personalize customer experience, right down to the product or service being sold.
And today’s consumers demand personalization on an almost unprecedented scale. Research from Epsilon, a global marketing frm, suggests that 80% of people are more likely to buy when brands ofer personalized experiences. In the retail sector, digitally native brands are now making use of physical stores to personalize consumer shopping experiences — likely on a larger scale than would be possible through an onlineonly experience, says Cave.
In her own business, she aims to accommodate a wider range of sizes and, through that, create more precise and personalized clothing pieces. Tat personalization extends to the customer service experience. Poppy Row recently incorporated a visual chatbot that allows image-sharing between customer service agents and customers, even ofering styling tips and enabling women to put together outfts as part of the chat experience.
Cave recalls the days when department store employees remembered frequent shoppers’ names and past purchases. In her view, emerging technologies will allow for a greater degree of human connection and personalized interaction that we currently lack.
“On a daily basis, we’re getting so much information; it’s hard to remember everything,” she says. “Tese containers can remember it for you and provide prompts, like the best personal assistant ever.”
Personalization can also help people see your brand as “less robotic,” says Capeology’s Sorabella. Her Instagram-centric business solicits audience opinions through polls and direct messages — for example, asking followers whom they’d like to see the account work with next. “Ten it feels like they have a say in selecting what’s to come,” says Sorabella, who works hard to partner with the recommended companies. Te upside of saturated markets: more choices for consumers. In particular, Mangini is excited for the coming “tidal wave of innovation,” as startups aim to help humans live better lives. In enterprise, commerce, logistics, health care, banking and even personal decision-making — it’s all being disrupted.
“Every day, we see entrepreneurs who have a look of no-fear in their eyes, willing to step up, take a chance, fail if they need to, for the prospect of leaving their mark on an industry,” says Mangini. “Improving humanity: Tat’s a theme we’re going to — I hope — see a lot more of over the next 10 or 20 years.”
Listen and Learn In Bentley’s new podcast — How I Made It — eight alumni entrepreneurs and execs discuss building their businesses, careers and second acts. Listen at bentley.edu/howimadeit
Next-Gen Founders Bentley is a tried-and-true launching pad for student businesses. Check out these current ventures.
As told to Kristen Walsh and Molly Mastantuono
JEFE CLOTHING An apparel company offering bold, vibrant and elevating designs Founders Marketing majors Leonardo Paul ’20 (right) and Joshua Elysee ’21 Launched September 2018
Passion for Fashion Paul and Elysee attended the same charter school in Cambridge, Mass., where they bonded over a mutual dislike for the sameness of the required uniform. In fourth grade, Elysee paired a tie with his polo shirt. On monthly dress-down days, Paul would coordinate outfts inspired by his favorite musicians. At Bentley they discovered a shared dream to launch a clothing line.
What’s in a Name? The Spanish word jefe (pronounced hefay) translates as “boss” but has a deeper meaning. “A boss is someone who simply gives directions, whereas a jefe is more a leader who guides people in the direction they should be going and encourages them to continue growing,” says Elysee. “We want our company philosophy and our fashion to help inspire people to reach their full potential.”
PEOPLE COLD BREW A company selling canned cold-brew coffee Founder Aman Ailani ’20, a Management major with a concentration in Entrepreneurship Launched January 2020
Born for Business As a child in Dubai, Ailani sold dates harvested from palm trees in his backyard. In sixth grade, he persuaded a friend — and talented artist — to join him in creating comic books, which they sold to classmates for 25 cents apiece.
Due Diligence Ailani’s 30-page business plan outlines everything from product design and production to distribution and marketing. Grab-and-go drinks as a category grew by 54% last year, he points out, and industry sales are projected to hit $1 billion by 2022. “Coffee is something millions of people consume every day, whether the economy is lean or booming.”
DREAMS OVERDUE A company that runs immersive trips for young people to Colombia, Guatemala and Costa Rica Founder Rina Rabinovich ’21, a Management major with a concentration in Entrepreneurship and minors in Chinese and Information Design and Corporate Communication Launched October 2018
Global Inspiration Before starting at Bentley, Rabinovich opted for a gap year of experiential learning. She set off from Vietnam on a 14-month backpacking trip to 28 countries. It deepened her appreciation for other cultures — and inspired her resolve to start a travel-focused business.
Journey to Self-Discovery To deliver similarly life-changing trips for other young people, Dreams Overdue takes care of all the details, from accommodations to meals to activities. The latter includes pursuits like surfng and zip-lining along with language lessons, yoga and meditation. “I provide an environment that allows for self-refection,” Rabinovich explains, helping travelers “grow into the best versions of themselves.”
