Book Forward| by John L. Hennessy, President of Stanford University
I am delighted to see this book on technology entrepreneurship by Dorf and
Byers. High-technology companies are both an important part of our world’s
economic growth story as well as the place where many young entrepreneurs
realize their dreams.
Unfortunately, there have been relatively few complete and analytical
books on high-technology entrepreneurship. Dorf and Byers bring their years
of experience in teaching to this book, and it shows. Their personal experiences
as entrepreneurs are also clear throughout the book. Their connections
and involvement with start-ups—ranging from now established companies like
Sun Microsystems and Yahoo to new ventures just delivering their first
products—add a tremendous amount of real-world insight and relevance.
One of the most impressive aspects of this book is its broad coverage of
the challenges involved in high-technology entrepreneurship. Part I talks about
the core issues involved in deciding to pursue an entrepreneurial vision and
what characteristics are vital to success from the very beginning. I am pleased
to see that building and maintaining a competitive advantage and the critical
issue of market timing are key topics. During the Internet boom, while several
great new companies were built, too many entrepreneurs and investors forgot
several key principles: have a sustainable advantage, create a significant barrier
to entry, and be a leader when the market and the technology are both ready.
Hopefully, the material in these chapters will help prevent future irrational
behavior by both entrepreneurs and investors.
Part II examines the major strategic decisions that any group of entrepreneurs
must grapple with: how to balance risk and return, what entrepreneurial
structure to pursue, how to find and cultivate the best employees and help make
them productive, and the critical issues of intellectual property. Indeed, these
are problems that every company faces, and ones that must be continuously
examined by the leadership in any organization.
Part III discusses the operational and organizational challenges that all entrepreneurs
must tackle. Virtually every start-up led by a technologist that I have
been close to inevitably wonders whether it needs sales and marketing. Sometimes
in such companies, you hear a remark like: “We have great technology and
that will bring us customers; nothing else matters!” I remind them that without
sales, there is no revenue, and without marketing, sales will be diminished.
Understanding how to approach these vital aspects of any successful business is
crucial. The related topics of building the organization, thinking about acquisitions,
and managing operations are also important. If you fail to address these
aspects of your company, it will not matter how good your technology is.
Finally, Part IV talks about putting together a solid financial plan for the
company, including exit and funding strategies. Of course, such topics are
crucial, and they are often the sole or dominant topics of “how-to” books on
entrepreneurship. Certainly, the financing and the choice of investors are key,
but unless the challenges discussed in the preceding sections are overcome, it is
unlikely that a new venture, even if well financed, will be successful.
In looking through this sage and comprehensive treatment, my overwhelming
reaction was, “I wish I had read a book like this, before I started
my first company (MIPS Technologies in 1984).” Unfortunately, I had to learn
many of the topics covered here in real-time and often by making a mistake
on the first attempt. In my experience, it is the challenges discussed in the earlier
sections that really proved to be the minefields. Yes, it is helpful to know
how to negotiate a good deal and to structure the right mix of financing sources,
especially so that as much equity as possible can be retained by employees. If,
however, you fail to create a sustainable advantage or have a sales or marketing
plan that is solid, the employee’s equity will not be worth much.
Those of us who work at Stanford and live near Silicon Valley are in the
heart of the land of high-technology entrepreneurship. With this book, many
others will get to share the extensive and deep insights of Dorf and Byers on
this wonderful process that builds tomorrow’s companies and business leaders.
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2008 McGraw-Hill Higher Education