“Unhappy users in the EDA industry don’t continue to file bug reports; they start writing business plans.”Michael “Mac” McNamara.
Bug Reports vs. Business Plans
“Unhappy users in our industry don’t continue to file bug reports; they start writing business plans.”
Michael “Mac” McNamara talking about the EDA Industry
I was reminded of this remark that Mac made at an SDForum event several years ago as I was reading the “Who Are User Entrepreneurs?” study which summarizes findings on innovation, founder characteristics, and firm characteristics released in February of 2012. I was alerted to it by a press release from Kauffman released yesterday “Nearly Half of Innovative U.S. Startups Are Founded by ‘User Entrepreneurs.”
Here are some interesting passages from the study, with some further commentary mixed in.
What is User Entrepreneurship? User entrepreneurship is defined as the commercialization of a new product and/or service by an individual or group of individuals who are also innovative users of that product and/or service. A user entrepreneur tends to experience a need in her life and develop a product or service to address this need, often before founding a firm. As a result, user entrepreneurs are distinct from other types of entrepreneurs in that they have personal experience with a product or service that sparked innovative activity and in that they derive benefit through use in addition to financial benefit from commercialization.
I would suspect that these entrepreneurs bring domain knowledge and often an ability to offer differentiated services based on their own inventions allowing them to bootstrap.
We find key differences among users who founded firms around innovations meant for use in a previous job or business (professional-user entrepreneurs) and users who founded firms around innovations meant for personal use (end user entrepreneurs). […]
The differences may have as much to do with education and socio-economic background and the causality may run in the other direction.
Professional-user entrepreneurs appear to have more experience along a number of dimensions than do other entrepreneurs in both the full sample of firms and the subset of firms conducting R&D in their first year of operations. Although the founders are, on average, the same age, they report higher educational attainment and more years of industry work experience, are more likely to have founded a firm before, and are more likely to have founded a firm in the same industry before. Their firms are less likely to be founded at home, less reliant on self-financing, more likely to receive venture capital financing, more likely to have revenues— and, among firms with revenues—generate higher revenues and are more likely to possess patents and trademarks than both the full sample and subset of firms conducting R&D. […]
There are certainly many “change agents” who improve the robustness and viability of the firms they work at (but didn’t found). Also called intrapreneurs or bricoleurs. These folks may set out on their own to start a new company as well.
End-user entrepreneurs appear to have a demographic profile distinct from the full sample of firms and the subset of firms conducting R&D in their first year of operations. End-user entrepreneurs are more likely to be members of minority groups: they are more likely to be female; more likely to be American Indian, Alaskan Native, or Black; and less likely to be Asian. Their firms employ fewer workers, have lower revenues, are more likely to be founded at home and operate from home five years after founding, are more heavily self-financed five years after founding, are less likely to receive bank financing, and are more likely to possess patents than are entrepreneurs in the full sample and subset of firms conducting R&D.
What are the implications
- In fast moving fields, especially when you are selling to businesses, good user relationships are essential for encouraging enhancement suggestions that are viable and , if ignored, will lead to new competitors springing up.
- The harvest of insights from early users can be as important as the revenue and the testimonials a business relationship generates.
- Delivering the initial version of your product as a service looks like it may be a marker for success. Other techniques for “selling the result” instead of the product may be equally potent (e.g. selling the holes in the wall where the customer wants them instead of selling a drill).
- The Kauffman report has footnotes to Eric von Hippel’s “lead user” concept: customers whose needs that will become general in a marketplace, who face them months or years before the majority of customers in a market will experience them. It’s not hard to imagine entrepreneurial lead users striking out on their own with a clear view of an emerging market if current solutions prove unsatisfactory.
Note on Intrapreneur from Intrapreneur.com
in-tra-pre-neur (In¹tre-pre-nur) n. A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation [intra(corporate) + (ENTRE)PRENEUR.] -inftrapre-nouri-al adj. -intra-pre-neuri-al-ism n. -in’trapre-neuri-al-ly adv.
The word entrepreneur is more than 150 years old, having come into English from French in 1828. But it is not until very recently that we find its intracorporate counterpart, intrapreneur, meaning “a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation.” This coinage is generally attributed to management consultant Gifford Pinchot, author of the 1985 book entitled Intrapreneuring; others insist its true originator was Norman Macrae, deputy editor of the Economist, although Macrae himself denies it. Still, whatever its exact source, in the scant number of years since its inception the term intrapreneur has gained currency very quickly. It has also given rise to various derivatives, such as the aforementioned gerund intrapreneuring, the noun intrapreneurship (as in a September 30, 1985, interview with Stephen Jobs in Newsweek: “The Macintosh team was what is commonly known as intrapreneurship-only a few years before the term was coined – a group of people going in essence back to the garage, but in a large company”), the adjective intrapreneurial, and another noun, intrapreneurialism (“what has become known as intrapreneurialism, where people within the corporation acquire more adventurous small business outlooks,” by Ian Hamilton-Fazy in “An Uneasy Co-existence,” Financial Times, October 23, 1984). Broad use of a word and the development of numerous derivatives are strong signals predicting staying power within the language. Intrapreneur and its spinoffs are of particular interest to etymologists and lexicographers because they illustrate the constant changes inherent in a living language
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