Professor Raiton’s Inside Perspectives: Entrepreneurship, Creativity, Innovation

by BNET Editorial

Everyone has a creative spark, but many factors can inhibit its ignition. Part of a manager’s role is to see the spark in his/her people, encourage its ignition, and then champion its success. In some cases, however, a manager’s dampened spirit makes it impossible to recognize creativity in team members. When seeking creativity in others, start by looking inward.

In today’s organizations, fresh ideas have become the primary source of differentiation and competitive advantage in the market. Rehashing old formulas does not suffice. When success depends on expanding knowledge boundaries, knowledge management becomes increasingly important.

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The following is from Tech Confidential partner Ask The VC, where Brad Feld and Jason Mendelson of Mobius Venture Capital answer questions related to venture capital investment and startups:
Q: Say I have an angel (SEC accredited) who’s ready to invest at an amount well below $100k. How would this impact on a future round with VCs? Is there some standard or average pre-money and post-money that happens in angel deals? Also, the angel in question is a family member of a friend, so would it be better to have them invest as a family/friend financier rather than an angel, and how exactly would that work?

A: (Brad) Let me address the last question first.  There is no real difference between a “family/friend” investor and an “angel” investor other than semantics.  Structurally and functionally they are doing the same thing.  Now - there might be an emotional difference when you have to see your “family” at Thanksgiving, but that’s it.

Regarding how a VC will view this, sophisticated VCs are used to having angel investors as early investors in your company.  Your life will be made easier if you treat the angel investment as a real investment and document it legally as such - I’ve written about this in What’s The Best Structure For A Pre-VC Investment. 

Insuring that your angel investors are accredited is important as this is likely one of the things that will matter to the VC.  If your angels can be specifically helpful to your company (because of their background / experience in companies similar to yours) you should make sure the VCs know about them.  In addition, you should try to enlist your angels in getting you connected to VCs that they know and have worked with.

Finally, there is no standard pre-money/post-money in angel deals.  We typically see pre-money ranges between $1m and $3m for angel deals, but they occasionally go higher and sometimes go lower.  Be careful not to price the angel round too high as the VCs are going to likely ignore the angel round pricing and - if they price their round lower - it can be a difficult conversation with the angels who supported you early on.

By BRAD STONE, New York Times

Compared with other forms of human interaction, online social networking is really not all that social. 

People visit each other’s MySpace pages and Facebook profiles at various hours of the day, posting messages and sending e-mail back and forth across the digital void. It’s like an endless party where everybody shows up at a different time and slaps a yellow Post-it note on the refrigerator.

Now a new wave of Silicon Valley companies is bringing live socializing back into a medium that has, in the parlance of the technologists, grown overly asynchronous.

Vivaty, a start-up based in Menlo Park, Calif., is creating 3-D virtual chat rooms that people can add to the Web pages and social networking profiles on the sites where they spend most of their Internet time.

The company has been quietly working on its technology for three years and will begin a private test period on Facebook this week in advance of a wider introduction this summer. It is backed by the blue-chip venture capital firms Kleiner, Perkins Caufield & Byers and Mohr Davidow Ventures.

Vivaty turns a flat profile page into a three-dimensional live chat room. Users choose characters to represent themselves from a list of preternaturally handsome avatars — a requirement for any such service — and proceed to one of a dozen environments, like a gothic urban warehouse or seaside villa.

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By MATT RICHTEL, New York Times

Invention may be mothered by necessity. But determining the father can require a paternity test.

Take the sound recording. Researchers said last week that they had discovered a recording of a human voice, made by a little-known Frenchman two decades before Thomas Edison’s invention of the phonograph.

An unusual case of innovation misconception? Hardly.

The reality is that the “Aha” moments of industrial creation are preceded by critical moments far less heralded. Behind and beside every big-name inventor are typically lots of others whom history forgot, or never knew. And it’s unusual that an innovation is created in a vacuum (including the vacuum, which itself claims several progenitors).

“It’s rare that you’ve got a major breakthrough that wasn’t developed by multiple people at about the same time,” said Mark Lemley, professor of intellectual property at Stanford Law School.

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By G. PASCAL ZACHARY, New York Times

One of the oldest barriers to innovation is “Not Invented Here,” a persistent bias of even the most creative people toward their own creations and against those of people who work for other companies. And the problem of N.I.H. isn’t limited to business; it can also infect the military and government research agencies.

To help counteract N.I.H., large corporations have promoted technology alliances with rivals, as well as the concept of “open innovation,” to draw on a wider circle of big brains — not on their payroll — to work on core technical problems. These efforts arise from the recognition that no single innovator or team, no matter how loyal to an employer or successful in the market, has a monopoly on wisdom.

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 STOCK MARKET SLUMP SLOWS IPOS

By Pete Carey, Mercury News

A slumping stock market has stalled the Silicon Valley public offering assembly line that produced almost two dozen of them last year, and that slowdown will probably slow the creation of new start-ups over the next year or two.

That’s a sentiment shared by venture capitalists and entrepreneurs in interviews recently, though they don’t agree on how badly the current economic downturn will damage the valley’s start-up breeding ground.

Initial public offerings of stock in tech companies have virtually dried up because no one wants to debut in a falling stock market. The Nasdaq is down almost 15 percent this year.

That will have a long-term impact, venture capitalists say.

“We’re going to have to put more of our money in our existing portfolio, which means we’ll have less money to invest in new business,” said Donald Caldwell of Cross Atlantic Capital Partners, a Philadelphia venture firm that backed NetSuite of San Mateo when it went public in December. Caldwell said he thinks it will be one or two years before exit opportunities improve.

“It doesn’t mean that nothing gets funded, but at the end of the day your first priority is to your own.”

So far in 2008, there have been just four venture-backed IPOs nationwide, “way below where we would like to be,” said Mark Heesen, president of the National Venture Capital Association.

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(View the Video)

1. USE BRAINSTORMING TO COMBINE AND EXTEND IDEAS, NOT JUST HARVEST THEM
Andrew Hargadon’s How Breakthroughs Happen shows that creativity occurs when people find ways to build on existing ideas. The power of group brainstorming comes from creating a safe place where people with different ideas can share, blend, and expand their diverse knowledge. If your goal is just to collect the creative ideas that are out there, group brainstorms are a waste of time. You may as well stick to a Web-based system for collecting ideas. Even an old-fashioned employee suggestion box is good enough for this limited task.

2. DON’T BOTHER IF PEOPLE LIVE IN FEAR
Groups bring out the best and the worst in people. If people believe they will be teased, paid less, demoted, fired, or otherwise humiliated, group brainstorming is a bad idea. If your company fires 10% of its employees every year, people might be too afraid of saying something dumb to brainstorm effectively.

Stanford professor Robert Sutton says great ideas can always come out of meetings, but you have to know the rules.

We’ve all sat through meetings designed to spark exciting new ideas only to be disappointed by their boring, obvious mediocre output. So fruitless and frustrating is group brainstorming that many managers say the whole effort is pointless. Maybe it’s better to just let individuals come up with ideas on their own.

And maybe not. We asked Robert I. Sutton, a professor at the Stanford Engineering School and co-founder of the Hasso Plattner Institute of Design, for advice. Sutton (bobsutton.typepad.com) and associate Andrew Hargadon, of the University of California at Davis, do research on innovative organizations. Sutton’s next book, The No Asshole Rule: Building a Civilized Workplace And Surviving One That Isn’t, from Warner, will be out in February, 2007.Here’s Sutton’s take on getting innovative ideas out of meetings, plus his Eight Rules To Brilliant Brainstorming.It is total nonsense to conclude that if you want creativity, you ought to keep your people in solitary confinement where they can’t “waste time” listening to and building on the ideas of others.

 From YoungEntrepreneur.com Blog 

What are the common mistakes that new entrepreneurs make and how can you avoid making them yourself? Here is our top 10 list of mistakes people make when starting a business:

1) Not enough money.

The most common reason why new businesses shut down is that the owner runs out of money. Cash flow is critical to a startup business. You could be profitable and still have to close your doors because your customers are taking too long to pay you. Cash is king in a startup venture and you need to prepare for it.

One option is to make sure you have enough startup capital from your own investments or outsiders (bank loan, private investors, etc). A second option is to ease into the business so that you start doing it on a part-time basis until you know that it will make enough money to support you.

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