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The Origin and Evolution of New Businesses
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The Origin and Evolution of New Businesses

Amar V. Bhide
Oxford UP, 2000
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Editorial Rating

7

Qualities

  • Innovative

Recommendation

When Jann Wenner launched Rolling Stone magazine, he did no market research and considered himself merely an "amateur journalist." When Bill Gates and Paul Allen started Microsoft, they had no business plan, only a brainstorm that they should write a program in the BASIC computer language. Such seat-of-the pants planning is typical among entrepreneurs, says author Amar Bhide. Successful entrepreneurs don’t need unique ideas and long resumes, Bhide writes. Rather, they must be able to adapt quickly to changing business conditions, and they must enter industries in a state of upheaval, where established players are lacking. Bhide offers a revealing look at the characteristics that make for successful start-ups. In spite of his often-dense prose, Bhide gives plenty of real-world examples to illustrate his concepts. getAbstract recommends this book to entrepreneurs and to those thinking of starting their own companies.

Summary

What Makes a Start-Up Successful?

Most entrepreneurs launch their companies without a revolutionary idea and without deep pockets. They often enter crowded, low-profit industries. Consider the eight most popular types of business start-ups in 1996: construction, restaurant, retail store, cleaning services, real estate, car repair, consultant, and beauty salon. These industries pose few barriers to entry, because they require little training and capital. But those same factors also limit the businesses’ profitability. So what makes a successful start-up? The most profitable start-ups tend to move into industries more apt to produce high profits, such as computer software. Unstable industries are most hospitable to start-ups. A market in a state of flux makes it easier for an entrepreneur without a great idea, training, or capital to turn a profit. Research shows that entrepreneurs who start promising businesses, compared to those who start retail stores or restaurants, tend to be better educated and more affluent. They also have unusual abilities to adapt and to handle ambiguity.

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About the Author

Amar V. Bhide is an associate professor at Harvard Business School. He is a former consultant at McKinsey & Co. and a former trader at E.F. Hutton. Bhide has a doctorate and MBA from Harvard Business School and a bachelor’s degree from the Indian Institute of Technology. His previous book is Of Politics and Economic Reality.

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