Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Chapter 1 The Power of Entrepreneurship

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © An entrepreneur is the person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials. Definition of entrepreneurship Schumpeter An entrepreneur is the person who perceives an opportunity and creates an organization to pursue it. Simpler

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Business in the US 99.5% are small businesses (with 500 or fewer employees) 24 million businesses Have only 1 employee Part-time employees Full-time employees

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © 2 years10 years 1 year 81 % survive 5 years 10-year survival rates of business establishments 40 % survive 65 % survive25 % survive

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Entrepreneurship Revolution Strikes Gold Netscape Communications: $6 million of own money + $6 million of VC money = $2.2 billion of market capitalization on the first day of IPO eBay: Benchmark Capital’s investment of $5 million in eBay multiplied 1500-fold in just two years 182% ROI

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Venture Capital Investments in Internet-related companies Source: Venture Economics Netscape IPO 1995 Amazon.com IPO 1997 Yahoo IPO 1996 eBay IPO 1998

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Rackspace Founded in 2000 Provides hosting and “cloud computing” services IPO on August 8 1 st venture-backed IPO since March 18

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Changes in the Entrepreneurial Framework Conditions Education, Professionalization Training Cultural and Social Norms GovernmentR&D transfer Physical Infrastructure Human Infrastructure Financial

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © R&D observations Innovations don’t travel well within university communities without a significant investment in developing networks and marketing concepts Innovators are rarely entrepreneurs –No one wants to run a business –No one uses the word “opportunity” – they solve problems

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Total Entrepreneurial Activity [TEA Prevalence] 2004: By Country Japan Slovenia Hong Kong Belgium Sweden Croatia PortugalHungary Italy Finland Germany Netherlands Spain Denmark South Africa Singapore Greece France United Kingdom Israel Norway Ireland Poland Canada United States Argentina Australia Brazil Iceland New Zealand Jordan Ecuador Uganda Peru AVERAGE #/ 100 Adults, Years Old [95% Confidence Interval] TEA (total entrepreneurial activity) is the percent of the adult population that are either nascent entrepreneurs or baby businesses’ owner-managers or both. It measures the overall entrepreneurial activity of a nation.

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © TEA (necessity) is the percent of adults who are trying to start or have started a baby business because all other options for work are either absent or unsatisfactory. TEA (Opportunity)/TEA (Necessity) 2004 R 2 = ,00020,00030,00040,00050,00060,000 GDP per capita, US$ TEA (Opportunity)/TEA (Necessity) TEA (opportunity) is the percent of the adult population that are trying to start or have started a baby business to exploit a perceived opportunity.

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © TEA vs. GDP per Capita in PPP (2005) R 2 = % 5% 10% 15% 20% 25% 30% 05,00010,00015,00020,00025,00030,00035,00040,00045,000 GDP per Capita 2005, in Purchasing Power Parities (PPP) Percentage of population between years Eastern Europe EU-14 Countries Middle Income Countries VE NZ HU HR LV AR CL TH BR CN JM MX ZA US IS CA AU SG SI ES GR JP NO IE DK SW UK

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © TEA 2004: by Age Categories and Country Income Group low income countriesmiddle income countrieshigh income countries #/ 100 Adults, Years Old years year years years years

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © TEA 2004: by Gender

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © TEA 2004: Education by Country Income Group (GDP per capita) 0%20%40%60%80%100% low income countries >$10,000 middle income countries high income countries >$25,000 up to some secondarysecondary degreepost secondary

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Informal Investment and Classic Venture Capital Percent of GDP

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © 21ST CENTURY ECONOMIES: ANGLO-SAXON OR SOCIAL MODELS? Anglo- Saxon Economic Systems Anglo-Saxon economic systems have a high prevalence rate of high-expectation entrepreneurial activity.