Professor Sheds Light on Starting High-Tech Firms
FOR the would-be entrepreneur in high technology the old maxims ring hollow:Go West, young man? Entrepreneurs tend to congregate within a few miles of the laboratories where they were trained. Pull yourself up by the bootstraps? "Horatio Alger stories are wrong. They're wrong because they talk about the individual. The team is important in real life." Too many cooks spoil the broth? "The more co-founders, the greater the likelihood of success." These are some of the myth-breaking findings that Edward Roberts has discovered. Mr. Roberts knows his high-tech entrepreneurs. As professor of technology management at the Massachusetts Institute of Technology (MIT), he has studied them for more than 25 years. He is also chairman of a local consulting group, general partner in a venture-capital firm, and author of a new book called "Entrepreneurs in High Technology." These entrepreneurs are different in some ways from people who start firms in other industries, he says. They tend to be younger (about 32) and less likely to fail than entrepreneurs in general. While as many as 90 percent of all start-up firms fail within the first five years, only about 15 percent of high-tech start-up firms fail within five years. That doesn't mean the other 70 percent prosper gloriously. Many just hang on for years, Roberts says. About 15 percent of high-tech start-ups become significant financial successes. It takes a special kind of expertise to make it. "The people who take on entrepreneurial work are development-oriented engineers - not research-oriented scientists," Roberts says. "The difference is that scientists are searching for more new knowledge.... Entrepreneurs take understanding and solve problems. The more successful ones are those that take advanced knowledge from the lab and move them to the market rapidly." They have different motivations. "I have a friend, Murray, who was never a very successful entrepreneur: never passed $300,000 in sales, never broke into the black," Roberts says. But when asked to rate his success, Murray "rated himself a 6 out of 7. I said: 'Come on, Murray. How can you do that?' [Murray answered] 'I made all the decisions myself. I don't have a boss telling me what to do. It was fun. Often, entrepreneurs' self-evaluations don't mean much. One highly successful entrepreneur, who had built a net worth of about $60 million, rated himself only a five, Roberts says. We had such great potential, Robert says the entrepreneur explained. High-tech entrepreneurs usually don't measure their success by their wealth, anyway; it's more often: "How many of my machines have proliferated" in the marketplace, Roberts says. "More entrepreneurs are driven by the need for independence than are driven by the need for achievement. But the successful ones are the ones driven by achievement." Entrepreneurs also tend to have self-employed fathers, just as Roberts did. (There are relatively few women entrepreneurs in high technology, although there are some standouts, such as Margaret Hamilton, who helped put an American on the moon at MIT's Draper Lab before starting a software company.) "I grew up in an entrepreneurial home," says Roberts, who was raised in nearby Chelsea, Mass. "It wasn't a successful, wealthy home. It was a home where I knew everything about how the business was run." Roberts's father ran an oil-delivery business. He never had more than one employee. As children, Roberts and his sister would race to see who could balance the books first and figure out that day's profits. For now, the national slump in computer manufacturing has put a cloud over the state's high-tech region, known as Route 128. But the region has the right infrastructure and culture to sustain risk-takers, Roberts says.