Nelson Andrew J. - Technology ventures : from idea to enterprise

Thomas H. Byers

Stanford University

Richard C. Dorf

University of California, Davis

Andrew J. Nelson

University of Oregon

TECHNOLOGY VENTURES: FROM IDEA TO ENTERPRISE, THIRD EDITION

Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions 2008 and 2005. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

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ISBN 9780073380186
MHID 0073380180

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Library of Congress Cataloging-in-Publication Data

Byers, Thomas (Thomas H.)
Technology ventures : from idea to enterprise / Thomas H. Byers, Richard C. Dorf,
Andrew J. Nelson. 3rd ed.
p. cm.
Dorfs name appears first on the earlier editions.
Includes bibliographical references and index.
ISBN 978-0-07-338018-6 (alk. paper)
1. Information technology. 2. Entrepreneurship. 3. New business enterprises. I. Dorf, Richard C.
II. Nelson, Andrew J. III. Dorf, Richard C. Technology ventures. IV. Title.
HC79.I55D674 2010
658.1 1dc22

2009043315

www.mhhe.com

For our spouses: Michele Mandell, Joy Dorf, and Ann Carney Nelson. We warmly recognize their love and commitment to this publication that will help others create important enterprises for the benefit of all.

THOMAS H. BYERS, RICHARD C. DORF, ANDREW J. NELSON

Thomas H. Byers is professor of management science and engineering at Stanford University and founder of the Stanford Technology Ventures Program, which is dedicated to accelerating technology entrepreneurship education around the globe. After receiving his B.S., MBA, and Ph.D. from the University of California, Berkeley, Dr. Byers held leadership positions in technology ventures including Symantec Corporation. His teaching awards include Stanford Universitys highest honor (Gores Award) and the Gordon Prize from the National Academy of Engineering.

Richard C. Dorf is professor of electrical and computer engineering and professor of management at the University of California, Davis. He is a Fellow of the American Society for Engineering Education (ASEE) in recognition of his outstanding contributions to the society, as well as a Fellow of the Institute of Electrical and Electronic Engineering (IEEE). The best-selling author of Introduction to Electric Circuits (8th ed.), Modern Control Systems (11th ed.), Handbook of Electrical Engineering (3rd ed.), Handbook of Engineering (2nd ed.), and Handbook of Technology Management, Dr. Dorf is cofounder of seven technology firms.

Andrew J. Nelson is assistant professor of management at the University of Oregons Lundquist College of Business. Dr. Nelson holds a Ph.D. in management science and engineering from Stanford University, an M.S. from Oxford University, and a dual B.A. from Stanford. He is a Kauffman Foundation Junior Faculty Fellow in Entrepreneurship and has received research awards from the Institute for Operations Research and the Management Sciences (INFORMS) and the T&J Meyer Foundation. He is well known for his studies on technology diffusion networks and the commercialization of university research.

by John L. Hennessy, President of Stanford University

I am delighted to introduce this book on technology entrepreneurship by Byers, Dorf, and Nelson. Technology and similar high-growth enterprises are both an important part of our worlds 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 technology entrepreneurship. Byers, Dorf, and Nelson 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-upsranging from established companies like Google and Genentech to new ventures just delivering their first productsadd 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 technology entrepreneurship. Part I talks about the core issues involved when deciding to pursue an entrepreneurial vision and what characteristics are vital to success from the very beginning. I am pleased to see that key topics include building and maintaining a competitive advantage and market timing. During the Internet boom of 2000, several great new companies were built, but 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 with which any group of entrepreneurs must grapple: 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 issue of intellectual property. Indeed, these are problems faced by every company, and ones that must be continuously examined by the leadership in any organization.