Book Review: Hungry Start-Up Strategy
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Entrepreneurship has become an increasingly recognized career path. Many business schools now offer courses on entrepreneurship, and have become business start-up networks. College students have created successful businesses. College graduates have gone the start-up route, instead of working for an existing organization. Business executives and academics have chosen the start-up route as a new career path. In the financial services industry, the consolidation and constant layoffs have prompted some to explore starting a business.
Entrepreneurs may not always share similar backgrounds, but one thing they always have in common is a drive to succeed. Case in point, the purpose of Hungry Start-up Strategy: Creating New Ventures with Limited Resources and Unlimited Vision (BK Business)—the operative word being "Hungry." The book is for those who don't have a lot of capital to invest, and haven't taken entrepreneur classes at a business school. Hungry Start-Up Strategy offers them a systematic guide to this process. The author, Peter S. Cohan, interviewed 162 start-up CEOS for this book (a list of all the CEOS and their companies is included) and many of the start-ups are summarized to illustrate an instructive lesson. What makes Cohan equipped to advise others? Aside from his position teaching strategy at Banson College and starting his own strategy consulting firm in 1994, he invested in six start-ups. Three were sold for a total of $2 billion.
Some parts of financial services are very entrepreneurial. Investment banks, hedge funds, and private equity companies are creating new businesses, entering and existing businesses. Some of those who leave this world with significant capital go the start-up route. The decline in Wall Street bonuses is a push for some to look outside to create personal wealth, and get a lot more job satisfaction and fun. Many others are part of more traditional institutionalized organizations. Some are not getting the forward movement and career rewards they seek. Others question the future of these firm's business models. For all these groups, Hungry Starts-Up Strategy offers a look into other career options along with a checklist to see if start-ups are for them, and if the answer is yes, the routes ahead to success.
The biggest hurdle is usually start-up money. The book lists some possible sources, which include personal savings, friends and family, angel investors, incubators, and business plan compeititions. Venture capital comes in at a later stage. Venture capital brings not only capital, but experience and expertise. The negatives are giving up equity and possibly control. But before looking for start-up funding, it is essential to have a clearly thought-out path for the future. This can be especially important for those with no operating business experience. This is a serious challenge for most financial services professionals who operate out of existing business strutures. They know a lot about how to analyze financial statements, trade securities, finance companies, but have little or no hands-on management experiece. This was dramatically illustrated in the recent financial crisis. Lehman Brothers, Bear Stearns, and Merrill Lunch were filled with top tier financial experts, and yet went over the edge into collapse.
A key part of the process is expressed within the book's subtitle: "Unlimited Vision." There must be a vision of a future that becomes a compeling driver for the business founder. The "Unlimited" part should be reflected as the potential size of the market that will eventually attract top calibre management talent to join the team, bring in skills and experience the founders lack, get the financing essential to grow the business, and eventually create a profitable exit. Peter Cohan concludes the "ones that have a growing consumer base will survive."
For financial professionals the current scene has a lot of unhappy news, anxiety producing events, and career road blocks. But it also contains some career and money making routes, especially in the entrepreneur start-up world. Hungry Start-Up Strategy is highly recommended for those seeking sunlight amidst the clouds.