Session 1 Entrepreneurship

Entrepreneurs in 21st century

Myhts about entrepreneurs

• They are born, not made

• They are gamblers

• Are motivated by money

• Young and energetic

• Love spotlight

Technology and digital transformation in 1990s

• Limited access to internet, low speed

• Business relied on physical locations

• Traditional advertising

• Software development was niche

• E-commerce was nascent

• Amazon founded in 1994

Technology and digital transformation in 21st century

• High-speed internet

• Technology revolutionized conectivity

• Social media platforms

• Global marketing tools

• Cloud computing and AI advanced technology accessible for businesses

• E-commerce is ubiquitous

• Shopify and amazon

GlGlobalization and market access in 1990s

• Entrepreneurship was localized

• Limited global trade access

• High costs and barriers to entry global markets

• Barriers in logistics, and language

Globalization and market access 21st Cent

• Global markets are more accessible due to improved logistics

• Improved online tools to access international markets, Alibaba

• Cross border payment services

• Simplified international transactions

• Enter to global audiences with tailored products

Business models and funding 1990s

• Startups - high capital

• High costs of operations and infrastructure

• Venture capital geographically concentrated, silicon valley

• Brick and mortar business models dominated

Brick and mortar

Business models and funding in 21st century

• lean start up methodology

• Crowdfunding to reduce initial costs

• Venture capital is decentralized

• Growing hubs in Europe, Asia and Africa

• Subscription models

• Software as a service

• Gig economy platforms

Social values in entrepreneurship 1990s

• Focused on profitability

• Shareholder value

• Secondary → environmental considerations

Social Values in entrepreneurship in 21st cent

• Increasing social entrepreneurship

• Sustainability

• Consumers value purpose-driven

• Societal challenges (climate change and inequality)

• ESG frameworks influence investors decisions

Learning and knowledge access

• 1990: Formal education or in-person mentorship. Information less accessible, books and journals

• 21st cent: Online learning platforms, democratization of knowledge, communities on platforms, LinkedIn Reddit, access to data to enable decision making

Risk perception

1990: entrepreneurship was seen as risky and unconventional

21st cent: entrepreneurship is celebrated and encouraged, millenials and Get Z are inclined towards freelancing, and influencers, success stories, normal risk-taking.

Challenges in the modern era

• Complexity: Saturated and competitive markets

• Technology dependence: Cybersecurity, data privacy, tech obsolescence

• Global crisis: Climate change or covid forced adaptation

Predominance of start-ups in the world

• Top 50 AI start-ups: Open AI, Perplexity, Photoroom, Notion, Databriks, Hugging Face, Midjourney.

• Raising funds quickly, converting in unicorns

Dot Com Bubble burst

• Nasdaq peaked in 2000

• 2,7 billions were lost

• 50% of dot comes survived

• 5 trillion in market value of technology companies was wiped out

Types of entrepreneurs

1. Opportunity-based

2. Necessity

3. Innovation-driven

4. Hybrid entrepreneurship

5. Social entrepreneurship

6. Small and medium sized enterprisesn SME

1. Economic theories

Classical: create a product, and sell it, and make profit from it

Neoclassical: fits to the customer preferences, adapt the products based on customer perception

2. Psychological theories

Mental and emotional

3. Sociological theories

Networks, experience and background

4. Anthropological theories

Cultural forces and attitudes shaped behavior

5. Theory of effectuation

A new way of understanding the entrepreneurship process of new venture creation under conditions of UNCERTAINTY, using DECISION MAKING logic.

Theory of effectuation, How entrepreneurs create their own future?

• By taking action and making things happen.

• Creating opportunities and solving problems

• Use resources that are available

• Do not make predictions or plan too much

What is the desire of entrepreneurs?

• Improve the state of the world and the lives of others

• Enabling thecreation of firms, products, markets and services

The theory of effectuation

• The bird in hand principle

• Affordable loss principle

• Lemonade principle

• crazy quilt principle

• Pilot in the plane principle

Bird in Hand principle

• Use the means available to them

• Not wait for the perfect opportunity

• Take action with what they have

• What I know, who I am and Whom I know

Affordable loss principle

• Evaluate opportunities considering if the downside is acceptable, rather on the attractiveness of the upside.

• This is about limiting risk

• Understanding what they can afford to lose at each step

Lemonade Principle

• Instead of making what if scenarios to deal with the worst case scenarios, entrepreneurs interpret bad news as potential clues to create new markets

• Embrace surprises that arise from uncertain situations

• Remaining flexible rather than tethered to existing goals

Crazy quilt Principle

• Partnerships with people and organizations with self-selecting stakeholders

• building partnerships rather than beating competitors

• Obtaining pre-commitments from key stakeholders, suppliers or customers helps reduce uncertainty in the early stages of creating an enterprise.

Pilot in the plane principle

• Try to control as much as you can

• Work in what you can control

• Try to ensure the actions that will result in the desired outcomes

• Future is not found or predicted, it is created

Commercial entrepreneurship

• Effectiveness in profit and shareholder value

• Economic activity to generate value for entrepreneur and investors

Social entrepreneurship

• Social value for recipients of social goods

• Effectiveness is measured in social change, social needs met and social impact