Working for yourself doesn’t come with a guarantee and might seem like risky business, particularly in today’s uncertain global economy. That said, start-up businesses have traditionally thrived in times of recession – take General Electric, Walt Disney, Burger King and Microsoft as just a few examples – while entrepreneurs and the jobs they create act as a catalyst for recovery in times of stagnant economic growth.
Is it time to take that plunge? We’ve put together a panel of experts and experienced entrepreneurs – including Hamid Bouchikhi, Professor of Management and Academic Director of ESSEC Ventures, Fabrice Cavarretta, Assistant Professor of Management and Arijit Chatterjee, Assistant Professor of Management at the ESSEC Asia Pacific campus, as well as entrepreneurs Perrine Bismuth, Associate Director of la Deuxième Maison, Matthieu David, General Manager of Daxue Consulting in Beijing and Sven Lung, Chairman of Waiheke Investment – to discuss innovative business ideas, finding access to capital and the allure of emerging economies.
How have technological innovation and globalization really changed the game?
First and foremost, technology has made entrepreneurship more accessible. “Today you can launch a business with 100 000 euros,” explains Sven Lung. “The cost of development today has been drastically reduced and this has really accelerated the level of innovation and the duplication of business models.”
Fabrice Cavarretta adds that often times, in terms of business and globalization, the internet is the first thing that comes to mind. However, he would argue it’s more than this, that there is also “a wave around hardware that’s really fascinating including new solutions like 3D Printing and new robotics systems with open source hardware solutions.”
To give us a scenario and illustrate what this means for globalization, he explains that a teenager from his or her suburban bedroom could theoretically be capable of creating a product using open source hardware/software and Linux code. 3D printing technology would then allow that person to send the finished design to Taiwan for production. It could be shrink-wrapped and on the market very quickly and with relatively little investment. He adds that 20 years ago this was not possible. If you wanted to work in robotics, you had to invest in very expensive equipment and everything was under private license.
But while technology and innovation are making entrepreneurship more accessible, Hamid Bouchikhi would caution against thinking that there are good and bad times to start a business: “There are entrepreneurial waves driven by technology, globalization, deregulation and so on. But I don’t think we should believe there are certain times that are right for entrepreneurship. […] I would say that entrepreneurial activities have always existed and will always exist.”
Should a non-technical entrepreneur launch internet start-up?
With technological advancements in mind, one of our Google+ followers asked if it was a good idea for a non-technical founder to launch an internet start-up. Sven Lung felt strongly that this kind of technical skill was not the most important for an entrepreneur. He says that the technical questions come later and “the most important thing for an entrepreneur is to always be thinking of the next great idea and how to adapt that idea in the market place.” Then to answer technical issues, one must surround themselves with those individuals that have the right skills, the technology geeks so to speak.
Where in the world is the best opportunity?
According to Professor Arijit Chatterjee, more than just technology is changing the dynamics of entrepreneurship. Emerging economies and especially the development of the Indian and Chinese markets have added more than 2.5 Billion people to the equation. He says, “this is about both supply side and demand side. This is a huge change for how business happens. And it’s not just affecting high-tech, it’s on all points of the spectrum.”
Is there therefore more opportunity in developing countries? Matthieu David, a young French entrepreneur who chose to launch his first business in China ultimately made his decision based on both economic and personal reasonings. He ultimately chose China not only because the costs would be lower but also because he would be gaining international entrepreneurial experience, learning more about China and learning the language. In a sense this was minimizing the risk because profits aside, there was something to gain. And of course there were financial benefits to launching in China since the costs of going to market were low. “Angel Investors are also helping to fund companies here,” he adds. “My company for example has been funded by Kima Ventures.”
However, Matthieu David cautions against going global without due diligence since branching out in China can be very difficult: “I’m working with a client right now who’s looking to sell baby food in China – licenses and accounting are different, […] there are a lot of barriers still. The world is not that flat.”
What about developed economies? As Sven Lung puts it, “sure, there are opportunities in emerging economies, but there are opportunities everywhere. […] For example, there is lots of capital in England right now where there are very few good entrepreneurs. Investors are looking at France to deploy their capital. […] As advice for young entrepreneurs who want to launch their start-ups, I would say go to England. It’s 2 hours away from Gare du Nord and you have lots of capital there.”
But while the issue of French taxation policy came up, and the possibility that it could drive away young entrepreneurs, Perrine points out that the French government is doing a lot to promote social entrepreneurship above all. “For social business, for social entrepreneurship there are lots of funding solutions emerging. For example, there are equity funds like Citizen Capital that are not only taking into account economic performance […] I think this is a good trend for funding in France, motivating young entrepreneurs who want to give meaning to their jobs. There are lots of young entrepreneurs who want to start their own business not to get rich but to give meaning to their career.”
Hamid Bouchikhi however notes that we should not forget that Europe is a single market. Even if there are costs associated with the language and cultural differences between European countries, these are only transaction costs. The United States and Asia are seeing Europe as a single market and are using this to their advantage. “As Europeans, we sometimes continue to see it as 27 different countries,” he explains. “The barriers that currently exist in Europe will not be broken until a generation of European entrepreneurs comes along to lower them.”
Fabrice Caverretta tells his students that the dilemma of where to start your business is nuanced. If you want to compete with a Chinese manufacturer on cost, of course, don’t do it in France. But it’s important to remember that there is great opportunity in France where you have a lot of talent and great sophistication, especially in the areas of media and luxury goods. “For a French person to head to China to start a business can be very risky. I’m not saying don’t do it, I’m just saying be careful.”
If you don’t see success, when is it time to pivot?
One of our Google+ Followers asks: if you’re not seeing growth, when is it time to pivot? “I think the main quality of an entrepreneur is to be able to change his business,” says Perrine Bismuth. “You might have an idea in mind when you start your business but you have to listen to the market, your suppliers, your employees and change your business. This is the only way to have a long-lasting business.”
She draws this from her own personal experience as an entrepreneur, having started an initial business focused on games for children. “Now I’m running a sustainability consulting agency. It’s quite a change, but I’m with the same partners and the same team. We worked for three years on the first project and if we hadn’t changed our business model, we would have had to close our doors.”
Sven Lung however notes that it’s important to be cautious when pivoting: “I was just reading the book Venture Capitalists at Work […] they say that one pivot in 10 is successful. […]The clock is really the cash. If you don’t have six months of cash ahead of you, you should not yet think about pivoting but should first try to raise more money. Keep in mind that only 10% of firms succeed in pivoting.”
For achieving success, all participants agreed that experience, networking and forging partnerships are key. This is where business school – and incubating programs like ESSEC Ventures – can be a huge factor for success since it allows you to make those connections and build your business background.Click here to watch the Google+ Hangout in full.
What's a Google+ Hangout?
ESSEC Knowledge Google + Hangouts use a new online video conference tool to allow professors, business leaders and other experts to interact and share ideas online. They also let students and members of the public follow the video debates live at the ESSEC Knowledge Google+ page and ask their questions in real time by posting in the comments section of the video.