Explain Business – Entrepreneurship Focused Forum

Now here is a neat little forum for the budding entrepreneurs. It is run and managed by Stanford Alum entrepreneurs and offers advice on “starting a business or running a small business” especially in these trying times.

Even though the forum is less than a month old, already lots of folks have asked some interesting questions. And they have been duly answered by experts. Questions like,

• One man ad agency - how much should I charge?
• Do I need to incorporate if I am launching an iPhone App?

The forum is unlike the usual forums. All the questions follow a flat hierarchy and are characterized by tags rather than topics. The most recent questions automatically pop to the top thus making it easier for users to read/answer them. You can also instantly vote for any question that you like. And of course, you can even subscribe to get an alert if someone answers your pertinent question.

I enjoy this format much better over the typical boring mundane forums where everything is overly structured and answers are many levels deep. We love this forum so much that we have added a link to Explain Business on our blog. Yes, our readers can now ask questions directly on that forum and get an instant response back. So start asking your questions on Explain Business and let Stanford alum answer them for you.

Impediments to Development of Entrepreneurship in Developing Economies

Countries that have overcome some basic barriers to growth have succeeded dramatically on the world scene. Growth in economies is always directly proportional to the startups and entrepreneurs who make it big. The entrepreneurs, by definition, revitalize an economy. They are at the forefront in jobs creation, intellectual property ownership, industrial output and overall productivity gains for the country. They pay taxes and usually bring in lots of foreign direct investment as well.

In the past 50 years, countries like India, China, South Korea and Malaysia have leap frogged ahead of the fledging and often unstable neighbors to become one of the economic giants. Each one of these countries have many self made billionaires, who many decades ago were struggling entrepreneurs with big dreams. But what made them succeed while equally good entrepreneurs from other countries are still struggling to make their ends meet? Surely, these and other countries still have unemployment, very large rural population, rampant corruption and very high cost of doing business. But what is it that has made them break out of the pack and get ahead.

Here we list some major impediments to entrepreneurship development.

Lack of access to Finance:   

Without money and investment at critical times, any startup will fail. Entrepreneurs need money to grow just like any major enterprise in the world needs money to grow. Usually developing economies have very poor and archaic financial systems that do not work in favor of startups. And banks, they charge interest rate of almost 20% and above which to a startup is impossible to pay off. Thus they never succeed.

Human Capital:  

Having trained man power and a large knowledge workforce is essential for growth for any economy. Usually, developing economies have a very small and poor quality workforce. The education system, particularly, the higher education system is weak and produces very few high quality engineers, doctors and many other professionals. Hence, the startups that they work in never go beyond a startup as they are unable to expand beyond a certain size and complexity.
 

Access to Information and Markets: 

Many startups still lack access to markets to sell their goods and technical information to keep abreast with latest developments around the world. Usually, these fledging economies are closed to the outside world and with little direct access to buyers of their products not only locally but internationally. Therefore, living in isolation, they never really work to their full potential.
 

Political Instability: 

Malaysia, China, India never seem to have any political upheavels. They never seem to go to war with anyone either. Yes, there are border tensions, but nothing that would destabilize their country. On the other hand, many Latin American, African and Asian nations still have military coups, unstable political democratic structures and corrupt and inept leaders. Together, this is a recipe for disaster. These political think tanks with highly polarized and biased military junta are more concerned to make money for themselves than build a better nation. Hence, their policies are usually not beneficial towards fledging entrepreneurs.
 

Short Term Thinking over Long Term Objectives: 

Political instability causes many entrepreneurs to think short term and rarely do they make long term plans. They theory goes, that the country would be turned upside down within the next 5 years, so why make plans beyond two years? Hence, if you dont think long term, you cannot grow. And if you cannot grow, you cannot succeed. And so the startups never get out of this vicious circle and die out.
 

Unstable Currency and High Inflation: Most of these countries have currencies that depreciate in value in double digits annually. The inflation is above 20% annually. So unless the startup is growing faster than the rate of inflation, it will actually be a loss making enterprise. Since, these economies never stabilize, hence, the entrepreneurs are swept away during any major upheaval.

Nokia Sports Tracker

We all tend to go gaga over cool apps that are built for iPhone. But sometimes, in this all hoopla we forget that there is innovation and creativity going on beyond the Apple platform. And Nokia is no exception.

Quite recently, I downloaded and started using a really cool app built for Nokia Symbian phones called Sports Tracker. Yeah, I do own a Nokia E71 device that AT&T sells in the US as the thinnest smart phone on the planet. But thankfully, I do not use AT&T and therefore I am not subject to confused pricing and often patchy service. Enough about AT&T and E71 as that can be discussed at another time.

Nokia Sports Tracker, uses the built-in GPS to keep track of our outdoor activities (walking, hiking, running, cycling, ski etc) through the touch of a button. It not only tracks our speed, the distance and time but will also automatically upload this information to our training diary on line. And yes, you can share that information with friends and create a social network around it. It also rudimentary calculates your heart rate and calories burned.

Nokia Sports tracker is cool as one does  not need to install any special device (in your shoe for example) to use. It uses the built in GPS to track where you are what you are doing. Once you press “Start” a workout, it begins calculating information and tracking you on a map. The elevation above sea level (altitude), the speed of walking/cycling/running, the distance traveled, are all calculated in real time and stored in your phone. You can also share your workout live with friends as well (comes in handy if you are competing).

In the past I used to try to keep track of my workouts using pen and paper. Now I use Nokia Tracker. So far, I love this app and hope to see more of such gems coming from Nokia in near future.

Apple vs Amazon --- Let the Games Begin

Around the turn of this century (21st that is), Apple was getting itself ready to go beyond the highly competitive (and low margin) PC business and into the feverishly controlled and secretive music industry by introducing a tiny cigarette pack size device called an iPod. Driven by 5GB micro hard disk which promised to hold thousands of our favorite songs and could run them for many hours at a stretch was something that we did not even know we wanted. And the industry giants like Sony thought it made no sense and just outright went on an anti-mp3 crusade.

For Apple, it was truly a radical departure from its core business of making computer hardware and software. But with Steve Jobs cunning insight, and ability to see what we want before we know we want it, has turned the company into a media giant. What happened since that day is nothing short of a revolution for the electronic industry. Today, iPods are no longer just music players, they are essential accessories in our lives. It is hard to not run into someone who is not listening to a Podcast, a song, or watching a video, playing a game or gesturizing something on their iPods/iPhones.

What Apple got right and what Microsoft, Google and Nokia don't get is that Apple is not trying to get into the music or phone business. No, it's not into a PDA or gaming market either. It is essentially about being a leader in the distribution, use and viewing of digital media using an electronic device preferably a hand-held like an iPhone. Something that Amazon has been aspiring to do with its Kindle devices for the past many years.

Apple with its well and tightly integrated iTunes desktop, store and hand held devices (iPods and iPhones) has created a unique eco-system that is hard to rival or match. Kindle, from Amazon, comes in close with its ability to let users download what they want to read at a touch of a button. However, it still lacks as a complete device in many ways including not letting them run interactive media (like games, videos or even music). It does not support Wifi and still runs on some proprietary mobile data network (making it hard to use outside the USA). And worst of all the display is still black and white. Which is great for reading books but makes a boring display for doing everything else. And oh, it is heavily dependent on tons of buttons as the screen is not yet touch sensitive.

It is touted that within a few months Apple will announce an iMac Touch/iPad, a tablet PC with no keyboard or mouse, but just a huge touch screen. In short, a glorified version of iPod Touch that will probably have built in access to a 3G network (along with Wifi) allowing users to do anything and everything digitally. A device that will take on Amazon at a game that it thought it had created and had a complete monopoly over. Users who are already more comfortable dishing out money at iTunes Store will probably use it to buy/read books, watch movies, share photos and do whatever their heart desires online.

Apple's strategy of going after the digital content and dominating that space has truly secured their place for the next decade. They are likely to dominate this market place for many years to come while traditional rivals like Microsoft and Google (with Android) will be left behind wondering what hit them. And for Amazon, it finally has a competitor that has its game plan all worked out against them.

The next decade is all about digital content. It will be all online and will be fueled by handheld devices. Apple has already geared itself to that challenge and will likely dominate this segment while its rivals will be once again left wondering what did they do wrong.