Turning Ideas into Action
Entrepreneurship takes many forms, but whether it involves creating apps, financial instruments or investing in the social good, what entrepreneurs have in common is their role as a catalyst in turning possibilities into realities. Here IESE alumni reflect on the ups and downs of being an entrepreneur, demonstrating that it is as much a state
of mind as it is a way of doing business.
“I never worked a day in my life,” Thomas Edison said. “It was all fun.” This comment and Edison’s extraordinary career exemplify the spirit of entrepreneurship, a restless spirit that approaches life as an adventure, filled with opportunities, excitement, risk and, of course, failure. But then, to quote another great entrepreneur, Henry Ford, “Failure is simply the opportunity to begin again, this time more intelligently.”
MAKING THE POSSIBLE REAL
Entrepreneurs come in many shapes and forms. Edison and Ford were both inventors and businessmen, men whose tinkering in workshops led to the founding of two colossi of American business: General Electric and the Ford Motor Company. Today, invention is more of a collective enterprise. Steve Jobs didn’t invent the
iPhone, Apple did, but Jobs was undoubtedly the catalyst. And that is the true function of an entrepreneur, to be a catalyst: someone with the vision and determination to bring together the ideas, talent and finance to make the possible real.
Prof. Pedro Nueno, who holds the Fundación Bertrán Chair of Business Initiative at IESE, says “the key thing is to spot an opportunity and be able to turn it into a profitable business proposition: this is fundamental to all entrepreneurship.” Prof. Juan Roure, the founder of IESE’s Network of Private and Family Offices Investors, says “entrepreneurship involves spotting opportunities and seeing how they can be made viable.”
Entrepreneurship is in Javier Cebrián’s blood. Cebrián (MBA ’78) is an engineer who, before he became an investor, set up various national and international joint venture companies. He says that his entrepreneurial spirit comes from “a mixture of genes, education and circumstances.” His father passed on his taste for business adventures to his children. Cebrián also recognizes that Prof. Pedro Nueno nourished his enthusiasm for entrepreneurship. “Creating and developing a new business requires a lot of optimism and energy as well as a great capacity to survive in turbulent waters,” says Antonio Dávila, professor and director of Entrepreneurship at IESE.
Cebrián was one of the first investors in the IESE investment fund FINAVES, and he highlights the importance of what it brings to the entrepreneurial spirit. “Entrepreneurship is one of the things our society needs most,” says Prof. Nueno.
Cebrián is the president and founder of the Bonsai Enterprises group of companies, which for over more than 10 years has been investing in the Internet and new technology sectors from its risk capital wing Bonsai Venture Capital. “We try to bring together the standards and ambition of venture capital, the intimate involvement of the business angel and the passion that entrepreneurs have to help other entrepreneurs”, he says. He believes that risk capital in Spain is “predominantly financial in its focus and often forgets the importance of the individual.”
At the age of 50, Cebrián sees investment as “a way of continuing to work and learn” from new generations. “It’s a way of keeping yourself up-to-date,” says Prof. Nueno, holder of the Fundación Bertrán chair of Entrepreneurial Initiatives at IESE. He says that becoming an entrepreneur in later life is more and more common because life expectancy is greater and people are staying healthy longer. Increasingly, people with a couple of decades of corporate life under their belt are deciding that it’s time to do something on their own account. “If you take early retirement at 55, what are you going to do with the rest of your life?” Nueno asks.
Age is not only not a limitation, it can be an advantage. First of all, because of the accumulated experience which can be of enormous help in starting a project. Secondly, according to Santiago Corredoira (G-EMBA ’11), because “you know yourself better, you know what you’re worth and you know your limitations.”
Corredoira has reinvented himself several times over during his professional career. After studying law, he worked as a legal advisor for various companies. In 2001 he joined Lanetro, a project that was a victim of the dot.com bubble and he ended up with a job that extended far beyond his legal role. “They needed somebody versatile who was able to negotiate the commercial aspects of the contracts and at the same time oversee the legal side of the company’s development.” Far from feeling out of his depth, Corredoira says he felt “very comfortable.” Later he took on an executive position in a technology company, Zed, and from there went on to work in Silicon Valley where he now runs a small consultancy, StepOne, which gives advice to Spanish companies that want to set up in the United States.
Since then he has worked in various projects and says that now, at the age of 43, he really feels that he is the “founder” of his own project, adding that entrepreneurship came to him naturally. In San Francisco, where he managed the Spain Tech Center, an incubator run by the Spanish government to help technology start-ups get going, he met “two great professionals” with whom he shared interests and values and they very quickly decided that they wanted to work together on a project in the mobile entertainment sector. In fact, he says, it’s the team that really makes entrepreneurship exciting. “Finding the right people isn’t easy, especially when you’re young.”
John Erceg (MBA ’96), founder of the reservation portal Budgetplaces.com, recommends launching a new project while maintaining your current job, whilst doing so in an ethical manner. “Establish your company in your free time, in the time that other people spend on their hobby, without neglecting your current job.” Erceg worked in Hewlett Packard when he launched his first company, which, in fact, failed after a short period of time. “The two first business ideas I had failed, but I learned a lot from them,” explains the Californian, who stresses that failure is a “tough but great teacher.” In July 2011, after 10 years of bootstrapping, Erceg sold a majority holding in Budgetplaces.com to Palamon Capital Partners. The company, which has its headquarters in Barcelona, currently employs 100 people.
INVESTING IN INNOVATION
Many entrepreneurs are investors. “There can be no entrepreneurship without investment,” says Jürgen Rilling (MBA ’99), founder and managing director of MiraBlau, a German investment and consultancy group.
Rilling is an investor in FINAVES, IESE’s seed capital fund created by Nueno in 2000. FINAVES “finances, with the help of private and institutional investors, business projects led by IESE alumni,” said Alberto Fernández Terricabras, the FINAVES director.
Rilling worked for a variety of companies before becoming an investor. He says that, before backing a project, various factors have to be borne in mind, but the most important one is the people behind the enterprise. Prof. Christoph Zott says that “When it comes to attracting investors, successful entrepreneurs know that credibility is fundamental.” The entrepreneurs involved have to be able to communicate the passion they feel for their idea. It’s also important that they and the investor have a shared business outlook. And, of course, you need to see that the project is in some way different, original and something that people want and are prepared to pay for. Rilling says that in this exchange, the entrepreneurs acquire “a friend who goes along with them” and an experienced consultant who can advise them on setting up projects as well as investors who make the project a reality, who get to know new sectors and have the satisfaction of contributing to making a dream come true.
“Investing enriches you both as a person and professionally,” says Pere Botet (PADE ’94). Until 2001 he worked at the supermarket chain Caprabo, which he co-founded. He now administers Inderhabs Investment and also works with FINAVES. He believes that his previous experience has been essential to his ability to contribute to other people’s projects. “Having been in charge of a large business means you can offer ideas and ways of doing things,” Botet says. He views investment not just from a financial point of view, but also as “delivering and creating value with the entrepreneurs.”
He warns future private investors that “it is highly possible that a project you back will fail” but adds that “the ones that turn out well compensate for the ones that don’t and you get a lot more than just money out of it.” In fact, if all you’re looking for is financial returns, he counsels against private investment because there are other better options.
Néstor Farías Bouvier (MBA ’68) became an entrepreneur at an early age. Once he had completed the MBA program at IESE he went back home to Argentina with a business idea. The then Dean of IESE, Juan Ginebra, suggested that he should open an Argentina branch of the SAPIN consultancy, which Prof. Ginebra worked for along with other business people. The idea was to build bridges between Spain and Latin America. SAPIN Spain went out of business a year later but Farías Bouvier had already set up consultancies in Buenos Aires, Caracas and Rio de Janeiro. So, overnight, he became an entrepreneur in search of projects and vessels. He now runs his consultancy business, which also has an office in Brazil and partners in China and India.
Over the years he has worked on many projects in a range of sectors such as pioneering telecommunications in Latin America, land communications, construction and software. Farías Bouvier is a chemical engineer who, at IESE, acquired the knowledge he needed to put his ideas into practice. He describes investors as “innate explorers who are not afraid of setting off on business adventures to unknown destinations.” He points out that those who risk their own money are much more committed to projects.
Farías Bouvier is part of IESE’s Network of Private and Family Offices Investors which he describes as, “a framework for discussion in which best practices are shared and create useful synergies and in which you acquire knowledge and experience to broaden your outlook.” He would like the network to operate in Latin America in order to continue building bridges between the two continents.
According to Roure, the Network of Private Investors not only minimizes risks but allows investors to learn from each other. The professor also recommends diversification because “new projects always involve a certain amount of risk.” Furthermore, it gives investors a “more varied and enriching experience.”
“These days firms want to grow profitably and intrapreneurship is an excellent way of achieving this,” says Prof. Mª Julia Prats, professor of entrepreneurial initiative at IESE. In fact, profitable growth is the main aim of intrapreneurship.
lThere are three different levels at which you can be an entrepreneur without leaving the company: through initiatives that help growth, the setting up of mould-breaking projects and strategic transformation. The key, explains Prof. Prats, is integrating entrepreneurial initiative inside the organization. This can be done through having a flexible organization capable of launching projects in a systematic manner to continue to regenerate the company, through acquisitions, as in the case of ISS; through joint ventures or corporate venture capital, or creating an project incubator. This is what Telefónica has done with Wayra, which was originally launched with the aim of speeding up innovative projects that emerged from within the company but which, for some time now, has driven external initiatives. Through the Wayra Academy and the organization of different events, the company looks for the best business ideas in the digital sphere to help them grow.
Ariel Gringaus (GCLA ’10) was a member of the jury at WayraWeek Chile 2012. WayraWeek is an event carried out in diverse countries such as Spain, Germany and the UK. The goal is to select 10 entrepreneurial projects that later will receive support from Wayra. Gringaus is partner and founder of the Chile Entrepreneurs Association and of Endeavor, which gives recognition to entrepreneurs around the world. Gringaus has created various companies. His most recent venture was Colegium, which develops tools for managing schools. “The main schools in Latin America use this system for managing and communicating with families.” “We hope to be able to export it to Europe in the near future,” he says.
Another thing to bear in mind are the available resources and whether the company prefers to look for external financing or to use its own money. We shouldn’t lose sight of the fact that “the aim is to achieve sustainable growth,” says Prats.
At PricewaterhouseCoopers, for example, they use intrapreneurship for internal development using their own funds. In the case of IBM, sometimes they use external finance, says Phil Westcott (MBA ’11) who joined the company in 2011. When he looked at the list of services, he was surprised to discover that some wanted to create a better and more intelligent planet. However, there weren’t any projects designed to reduce global inequality. As a result of this, Smarter Impact was born. Westcott set it up in conjunction with his work as a strategy consultant.
Smarter Impact is a new approach that seeks inclusive economic development, he says. It seeks to find solutions based on data that encourage economic development in the least developed areas. For example, only 50 percent of people in India have a bank account but 90 percent have a mobile phone. “This is a great opportunity because this connectivity is a source of useful data,” he says. He adds that the challenge is to take advantage of, consolidate and make sense of this data so that leaders in all of the sectors have the information necessary to achieve inclusive economic growth, a task that involves collaboration between business and governments.
Getting an intrapreneurial project up and running is neither a simple nor a linear process, warns Prats. “Executives need to be prepared to face the setbacks that will occur during the process.” Furthermore, you have to deal with the company’s structural limitations (changing processes and increasing flexibility without losing efficiency) and overcome internal resistance on the part of staff and management (change mentalities and customs and create incentives for new ways of doing things).
Nevertheless, there are mechanisms for incentivizing initiative within the company. According to Westcott, even when recruiting it is possible to detect the “entrepreneurial spark.” Furthermore, entrepreneurial initiatives need to be included in training programs and through mentoring. In this respect, it’s highly recommended that employees be allowed to dedicate some of their working week to their own projects and to reward such initiatives through bonuses and promotions, he says. Finally, he advises creating a platform to help seek finance because “in this way the employee will work on their idea with the conviction that it can be put into practice.”
Mar Alarcón (PDD ’08) has always been motivated by the relationship between sustainability and maximizing resources. In 2005 she helped to set up Social Energy, a renewable energy company. Later she worked with Grameen Bank in Bangladesh and after a few years working in China returned to Spain. On her return the first thing she did, almost without thinking, was to buy an apartment and a car. A year later she realized she’d only filled the gas tank once and said to herself that this was “neither normal nor acceptable.” She then learned about the growing global movement for shared consumption and various car-sharing schemes that existed in other countries and decided to import the idea to Spain. In July 2011 Social Car, a car-sharing scheme, was born.
In spite of initial difficulties, within a year there were 3,000 car owners willing to rent their cars and a community of 9,000 people interested in using them. Alarcón believes that clients “are so satisfied they return” and even create links among themselves.
Eduardo Balarezo (GCLA ’09) is convinced that small decisions can lead to major change. With this philosophy, he created Lonesome George & Co. in 2006, which seeks to spark social change through education as an agent of change.
Balarezo was inspired by Lonesome George, the last known Pinta Island Tortoise that lived in the Galapagos
Islands until his death in 2012. He warns that “in recent years, human activity has drastically altered ecosystems. We need a change, a new way of thinking and acting that is more responsible toward our environment.” He launched a project to prevent the extinction of other species, because “there is always a Lonesome George to fight for, somewhere nearby.”
Social Car and Lonesome George & Co. are examples of social businesses because its emphasis is on social rather than financial benefits. “Social entrepreneurs typically put their companies at the service of society. Creating companies with a clear social mission gives them an ethical and moral commitment to society,” says Lucio A. Muñoz (PDD ’09), the founder of Eurogroup Human Resources and author of the book The New Socially Responsible Entrepreneur. “Of course this doesn’t mean you forget to be financially profitable given that both concepts are perfectly compatible.”
“You can’t just focus on the social aspect. If you want to guarantee sustainability, you have to keep an eye on the financial aspects too,” says Prof. Fernández Terricabras. The product or the service being offered must be of good quality and sold at a reasonable price because “no one is going to buy products just because they are social if they’re not any good,” he says.
As in any other company, the aim is to create value for interest groups or stakeholders (shareholders, employees, clients and suppliers). The difference is in companies with a social mission “the social aim becomes another stakeholder,” says Sven Huber (MBA ’01). He is a partner and founder of boolino, a social network aimed at parents who want to encourage their children to read.
“Developing the reading habit early on affects cognitive development and learning ability in children, and so encouraging the habit extends their educational and professional options,” he says. Although at the moment it only exists in Spain, boolino has an international outlook and in the course of 2014 is expected to begin operations in Latin America and Europe.
Huber encourages anyone who’s thinking about launching a project with a social mission to do so because “professional satisfaction has much more to do with the content and the milieu of your work than with the economic aspect,” as long as you can cover the basic necessities.
After a decade working for the Bertelsmann group, where he held various executive posts, Huber felt the need to set up his own project. He chose the book sector because it was one he knew well, having been director general of Librerías Bertrand. He says the key factors for establishing a project is the creation of the team, “learning to get a lot out of limited resources” and obtaining finance, which he describes as “not easy.”
This is one of the main problems that entrepreneurs stumble upon when they try to establish their projects. Aware of this reality, Fernanda Rodríguez (G-EMBA ’03), Jaime Ferrer Dalmau (G-EMBA ’04) and Pablo Turletti (G-EMBA ’07) have created the Hope Project, which aims to create a meeting point between entrepreneurs and social investors.
This digital platform initially had the support of Victoria Velázquez (G-EMBA ’10), who as strategic advisor, turned it into a means of impact investment for social entrepreneurs, who, as well as getting financial support, can find other types of support such as material resources (someone who lends some office space or computer time) and volunteers willing to lend a hand.
Catalina Parra (MBA ’96) and José Martín Gutiérrez de Cabiedes (MBA ’96) also discovered that the Internet is the perfect place to be an entrepreneur. In 1999 they created Canalsolidario.org, “the first vertical website in the world of social causes” says Parra. They later set up Hacesfalta.org, a website for volunteers which puts them in contact with NGOs. Since then they have launched various communal projects to encourage interaction and social participation in social causes using new technologies.
“Our function is to be catalysts between society, companies and NGOs so that good things can come of it,” Parra says. She adds that it’s essential that social businesses have a clear mission and know how to communicate it to their collaborators because this will be the main driver of their activity. Teamwork is fundamental. “Social entrepreneurs have to understand that they are not the key player in the initiative that they have set in motion but rather a part of the collective that succeeds in taking it forward.”
In spite of the crisis, Parra believes that “dozens of social entrepreneurs” are emerging and her new project, UEIA Generation, is aimed at these entrepreneurs. It is the first social entrepreneurship accelerator based on new technologies in Spain and one of the few that exist in the world. It has already received 100 proposals of which only 10 have reached the incubation phase, although they expect to seek out more. They don’t only offer finance but also training.
Parra and Martín Gutiérrez set out as a couple to be entrepreneurs. “There are even multinationals that have emerged out of marriages,” says Nueno. One example is Tous, the business founded by Salvador Tous and his wife Rosa Oriol (PADE ’98) and which is currently run by the third generation of the family.
All of these examples show that the entrepreneurial spirit is not dependent on age or occupation, nor on personal or professional status. The first step towards being an entrepreneur is wanting to do it. After that you need to understand that success is not the key to happiness, but rather the other way round. As Anita Roddick, founder of The Body Shop put it: “Success to me is not about money or status or fame, it’s about finding a livelihood that brings me joy and self-sufficiency and a sense of contributing to the world.”