Reflections & analysis about innovation, technology, startups, investing, healthcare, and more .... with a focus on Minnesota, Land of 10,000 Lakes. Blogging continuously since 2005.

Category: Entrepreneurship (Page 1 of 59)

MN Entrepreneurs and the Fortune 500 – A Look Back to One of My Favorite Posts

graphic showing the state map of Minnesota with the words Fortune 500 over itI’ve been writing about Minnesota startup founders for a long time. I can’t remember the first post I wrote about one — probably sometime in 2006. But I do know I’ve penned innumerable such posts over the years. One of my favorite recurring subjects was Robert Stephens, founder of The Geek Squad. I did a search recently to unearth just how many times I wrote about him. It was twelve! Yes, that many posts about just one of our state’s many successful tech founders! Why?  I guess because he was such a fascinating and quotable guy — and of course because I admired his success. Some of my posts about Robert were lengthy features, while others just mentioned his participation in certain local events. Here’s my list of all those posts.

What does Robert have to do with the Fortune 500? His firm was acquired by one: Best Buy. Which you surely know if you live here. And both firms were, of course, founded right here in Minnesota. The significance of his acquisition cannot be overstated: it became the basis of a massive services business for Best Buy, which continues to this day.

My favorite post about Robert was headlined and dated thusly:

text of the headline of Graeme's favorite post about Robert Stephens

Why does this one stand out for me? Because it isn’t just about one of my favorite founders, but also one of my favorite topics: branding. I re-discovered what a great read it was (if I do say so myself!) when I went back to it after so many years. (Warning, it’s a long one.) The full post is here.

Speaking of Fortune 500 firms here in Minnesota… some years after the above, I wrote a commissioned piece on this topic: “Minnesota Has Long Had a High Per-Capita of Fortune 500s. How’s That Working Out?” I didn’t write about Best Buy in that one, but I did quote at least one other Minnesota founder, whose firm was acquired by a Fortune 500 — for close to a billion dollars.

Recently, I was reminded that I only focused on Twin Cities-based Fortune 500s when I wrote that article. How could I have forgotten an out-state Fortune 500: Fastenal, founded and based in Winona MN to this day.. No, it isn’t a very high-tech company, but what an amazing growth story it has been over the years! The recent passing of its iconic founder and CEO, Bob Kierlin, reminded us all of that. I just posted on LinkedIn about him. Some of his very wise words were included there.

The lesson in all of this? Minnesota grows some great ones!

 

My Predictions Post for 2025: All Bets Are Off

[Disclosure: This post was in no way, shape, or form written by “A.I.” It is purely “H.I.”]

Well, it’s now early February, so I got through the whole month of January without writing my perennial New Year’s predictions post. Last year, it look me three weeks into January before I gathered up enough angles to blather about. This year, there were tons of predictions swirling around in my head around yearend that I thought were bound to come true — but those were so obvious to me that I thought spewing them out would sound stupid. or just plain boring. So, the spirit never moved me to hammer out a post.

an AI-generated image of men looking at a Predictions Market wall display

Image created by me using ChatGPT’s DALL-E.

This year, I think I’ll just revisit my last year’s predictions and crow about how many were right — or that exceeded my expectations. I’ll also grade any that were wrong or “to be determined.” Here we go, with my words from last year’s post stated first in italics:

AIThe hype curve has peaked. Enjoy the ride down into the trough of disillusionment. I won’t say anything more because… are there any more words to say at all that haven’t already been said about AI in 2023? A breather is needed for sure, because the hype has been getting out of control as we sit here in early 2024. (Note: I am not anti AI, I am anti *AI hype*… ) Verdict: WRONG! The hype did not let up, I’m sure you all agree.

StartupsI predict the number of startups will pick up somewhat in 2024 (from 2023’s dismal number). Verdict: RIGHT! According to Crunchbase, the overall number of startup formations, as measured by global venture funding, did slightly increase in 2024 compared to 2023, with the majority of this growth attributed to the significant rise in investment directed towards AI-related startups.

VCIn 2024, I will not be surprised if more VC funds shut down. Pitchbook reported in December that 38% of VCs “disappeared from dealmaking in 2023.” Verdict: RIGHT! Consider this recently from Pitchbook: “More venture firms than ever are becoming zombies. In 2023, 15,303 unique investors participated in at least one VC deal in the US. But this year, that figure has dropped to 11,425 investors, according to the Q3 2024 PitchBook-NVCA Venture Monitor.” Ouch.

AppleMy price target for $AAPL shares is $220 by yearend… Verdict: RIGHT! But, actually, the share price of my favorite stock  exceeded that number, by a lot: it was $250 on 12/31/24! (Okay, I can’t pass up the temptation to predict a price by the end of 2025. Let’s go with $290!)

Sports / NationalWill gambling on NFL games get out of control? One senses that a crackdown must be coming. Right on cue, Minnesota legislators are trying to have sports betting legalized in our state. Verdict: RIGHT! Sports gambling TV commercials increased in frequency, as any viewer of pro sports on TV can attest — yuck!! But WRONG! – no gambling crackdown appeared that I have seen. Perhaps in some states? Here in Minnesota, thankfully, sports betting still has not been legalized.

Sports / LocalThe Vikings will do better. Which isn’t saying much. And Gopher football damn-well better improve as well! 2023 was embarrassing. One highlight in 2024: we’re finally going to the Rose Bowl! Verdict: RIGHT! On both counts. And my personal favorite of the year was getting to see that Gopher win vs. UCLA in-person at the Rose Bowl! Some awesome memories.

Higher EdCollege enrollments will continue to drop nearly everywhere, but prices will of course not fall nearly as fast… if at all? Verdict: RIGHT! At both public and private non-profit four-year colleges, there was a 6% decline in enrollment in the fall of 2024. For 46 states, Inside Higher Ed found the average drop was almost 7%. What about costs? In 2024-25, average tuition and fees increased by 2.7% for in-state students at public four-year institutions, and by 3.9% for students at private nonprofit four-year institutions, before adjusting for inflation.

Minnesota State GovernmentComplete DFL control will end — it has to! Verdict: Unfortunately, TBD. If you live here (or, if not, you may have seen national coverage), our legislature is still completely dysfunctional — not even in session at this late date! Don’t get me started on this. [Update 2/7/25: progress! So, this pick could turn into a RIGHT!]

Anywhere But the CityWithin the state, the escape from the central Twin Cities to the metro area suburbs and rural MN will continue… Verdict: RIGHT! The populations of Minneapolis and St. Paul both appear to have decreased in 2024 compared to 2023. Minneapolis has had an annual decline of 0.44% per year since 2020. And St. Paul’s decline has been even more during that time, though specific 2024 data is not yet available. Meantime, census data shows the populations of the suburbs and prime out-state locations (meaning where property valuations are especially increasing) are both on the rise. The population of Crow Wing County, for example (which encompasses part of the Brainerd Lakes Region), grew by 3.69% since 2020, with an estimated growth rate of 0.61% in 2024. And, in a study entitled “The Best Places to Live in the Midwest” conducted by Consumer Affairs, Plymouth MN ranked among the top 10 best Midwest cities to live in, while its larger neighbor Minneapolis ranked in the bottom five. (Sigh, it used to be a great city.)

The Media Business …. Let me go out on a limb 🙂 — the media industry will continue to contract in 2024. Many more jobs will be lost. Verdict: RIGHT! Nearly 15,000 jobs were eliminated in 2024 across broadcast, television, film, news, and streaming — “extending a two-year run in which the news and entertainment businesses were dealt body blows,” as reported by The Wrap.

Not a bad performance for me, with eight RIGHTS and only two WRONGS (plus one TBD). But, as far as making a long list of predictions for 2025?  I’ve decided that all bets are off! Why? Well, with an improving economy, a promising outlook for increased M&A activity, and, yes, even a better environment for early-stage startup funding, it could be a blockbuster year. So, frankly, it’s beyond my wildest imagination to make predictions right now!

Yes, I remain, as always, an unapologetic optimist!

This ‘Office Is Over’ Thing Has Been Coming for a Long Time

Marketwatch article headline

Article headline today (a recurring theme).

The media wants to make a huge deal about how going to work in an office is suddenly becoming passé — the media being mostly centered in New York City, I might add, which also happens to be the largest commercial real estate market in the U.S. But like many things the media gets wrong (or gets late), this trend has been going on for years. Especially for knowledge workers and those who work in the tech industry. They may try to pin it on “upstarts” like Airbnb and its cheeky CEO, Brian Chesky, in articles like this.

photo of Brian CheskyBut we all know this mentality, if you will, has been reality for millions of people for a decade or more.

I’ve been saying for years — ask my friends — that “my office is wherever my MacBook Pro is.” I don’t say it to be funny. It’s simply the truth.

Apple MacBook Pro M1

MacBook Pro M1 by Martin Katler via Unsplash

It’s a prime reason I’ve been an active investor in $AAPL for decades. That was even before it produced its first laptop — which, for you younger types, was called the PowerBook. It was life-altering.

That was my first Apple laptop, and I’ve owned more laptops from my favorite company than I can count since then. (Yes, I keep upgrading to the latest and best.) So, as a self-employed business

Apple Powerbook photo

Apple Powerbook, early 1990s – photo by Everyday Basics via Unsplash

owner, I’ve been doing this “office is anywhere” thing for a long, long time. Which makes me find this latest lament about the demise of the office to be quite amusing.

And who doesn’t get that this mentality/reality is hugely less costly than an office lease?

——-

p.s. To those of you who were smart enough to invest in $ABNB early on, my hat is off to you. Because it has certainly enabled a large part of the movement away from the traditional office, as it continues to do. And it has created no less than an industry of its own at the same time, enriching legions of property entrepreneurs.

I Told You We Were in a Startup Boom

man standing in fireworks

Photo by Rakicevic Nenad via Pexels.

And it seems to be raging even more. Thank you, Great Resignation. You’ve started something big.

A new survey from Digital.com has found 43% of Americans plan to start a business in 2022. Whoa, that would be a big number! With findings like this, it certainly appears entrepreneurship is continuing to gain ground as a career choice. And this news comes on top of almost 5,000,000 new businesses having been launched between January and November of 2021, according to the Census Bureau. I call it a major (positive!) trend coming out of the pandemic.

[When I say I told you, you may recall I wrote about this topic some five months ago, but these latest numbers just drive the point home even more.]

Of the 1250 adults surveyed across the U.S., more than 2 of 5 – or four in ten, if you prefer – said they were planning to launch a new venture. What’s more, though some of these will surely be “side gigs,” 55% of these aspiring new business owners say they will leave their current jobs during the year. Yes, quitting is a hot thing. The number of job openings has gone ballistic nationwide. Time to feel even more sorry for your neighborhood job recruiter, I guess.

Taking the Leap

It seems the decision to go it alone is just not as daunting as it used to be. People are increasingly looking to be masters of their own fate, this data is showing us. They are emboldened. And you know what’s especially surprising in the results of this survey? One-third of these planned new startups in 2022 will be launched by first time entrepreneurs.

What kinds of businesses will these founders be pursuing? The survey said the most popular categories are these: “retail” (presumably including ecommerce), which came in at 14.6%. followed by “business & finance” at 10.91%, and “computer & IT” at 10.17%.

“One of the drivers for The Great Resignation is that people want to feel a sense of purpose,” said Dennis Consorte, Digital.com’s small business expert. “Business ownership can give you the flexibility to pursue what matters to you in a way you believe will be most meaningful and impactful.”

Having It Both Ways

What about launching a new business without quitting one’s current job? Yes, it happens – a lot, traditionally. (I did it early in my career.) And this new survey finds that practice will likely be continuing this year. In fact, I daresay it will become more common. Some 29% of survey respondents don’t plan to leave their current job during 2022.

What’s one big factor at play here? It’s this: 26% of the employed and self-employed individuals who responded to the survey currently work fully-remotely, and 40% more work both remotely and in-person. As the survey sponsor so astutely notes: “Remote work may allow for more flexibility to simultaneously continue current work while beginning a new endeavor.”

Thank you Covid, I guess? It’s making entrepreneurship easier! Especially when that new business can be run totally online. And the survey found 32% percent of these planned new businesses intend to operate that way.

Why Start a New Business?

The survey asked respondents who plan to launch a new venture what is motivating them. The chart below tells the story.

chart showing reasons to start a business

How to Finance It?

It’s easy saying you’ll start a business, but a little thing like money always comes up. Well, get this: 13% of the entrepreneurs who responded to this survey reported having raised more than $100k for their planned new venture! Twenty-nine percent said they’ve raised more than $50k, 57% raised more than $25k, and 87% raised at least some amount of money. Female entrepreneurs reported raising slightly less money than men. What about investing some of one’s own money? That matters, too – and 34% of these entrepreneurs said they’ve invested between $6k and $50k of their own cash.

“If you want to pursue a startup full-time, then it’s a good idea to have at least 6 months’ savings and to adopt a frugal lifestyle,” said Digital.com’s Consorte. “Raising money can often help you move faster, but it can come at a high cost. Start with friends and family, and opt for models where you don’t have to give up too much equity in the beginning. You’re going to need it if you get to a point where you want to bring in institutional investors.”

Great advice there! Read more about this eye-opening survey here and here.

A final note: As the survey sponsor says, “Whether or not these plans turn to action remains to be seen. But what’s clear is the exploding interest in entrepreneurship.”

Amen! I, for one, will plan to follow up with some yearend data. Meantime, as 2022 gets underway – likely a strong recovery year for workers as the pandemic eases — be sure to support your local entrepreneurs!

 

The Startup Surge to End All Surges?

Photo by Chuttersnap via Unsplash

As big trends go, I’d label this one blockbuster. Startup formation is on fire. It jumped 24% year-over-year in 2020 here in the U.S. Consider this from the Economic Innovation Group:

“A new Census Bureau dataset allows us to track early-stage entrepreneurial activity in almost real-time. For the duration of the pandemic, the Bureau’s Business Formation Statistics series has provided a detailed look at the number and character of new business applications on a weekly basis. Its findings suggest that the pandemic delivered a massive shock to American entrepreneurship that has seriously altered established trends in new business formation. Counter to expectations, 2020 shaped up to be the best year for business applications on record.” (Emphasis mine.)

bar chart of business applications

Then there’s this analysis from Oberlo:

“In 2010, the number of new business applications came in at 2.50 million. But as new business statistics show, in 2020, 4.35 million applications were submitted. That’s a whopping 74 percent more. It is also a 24.19 percent increase from 2019 and the biggest increase of the past decade by a mile.”

[Note: This post first appeared as an article on Grit Daily.]

I’ve experienced (and survived!) at least five technology/business cycles since going entrepreneurial and founding my consultancy more than three decades ago. And each of these cycles drove a startup surge that was considerable. (One, the dot-com cycle, saw a reversal for a few years after it peaked in 2000. So, surprisingly, did the startup surge driven by the advent of the smartphone era, but that was due to the financial crash of 2008.) I benefited greatly from every single one of those surges – getting to partner with so many wide-eyed entrepreneurs who were doing some crazy, innovative things and reaped some big rewards.

But this latest explosion of startups – call it the Covid Surge, the #WorkFromAnywhere Surge, the Digital Transformation Surge – whatever name you want to hang on it, this baby stands well above the rest.

line chart of new business applications

It’s More Than Just the ‘Cool Kids’

Today, it seems everybody wants to be a startup. Or at least work for a startup. Or start planning a startup. Or marry someone who has a startup. There’s even a term for those who wish they could do a startup, or who dream about doing it someday: “wannapreneur.”

Quite simply, these people just do not lust after a traditional career anymore. Seriously, when do you remember a time you felt this sorry for big corporations? They’re so unloved. (Wiping a tear.) Who in their right mind wants to work for one company for the rest of their career – or, hell, even five years anymore?

You, Mr. or Ms. Millennial, GenZer, GenXer, or even Boomer, have other ideas about how you want to live your life. In charge of your own destiny – that’s what. With a chance to build wealth well beyond what you could as an employee for the rest of your life.

Do I get an amen?

The Great Resignation: ‘Been Nice Knowing Ya, Boss’

What I say is driving this latest startup-surge-for-the-ages is not Covid, and not #WorkFromAnywhere, per se – rather, a by-product of it. It’s called freedom. People got a taste of freedom of when they want to work, and where. And, for many, how they do that work – without being under the nose of some boss.

Surely you’ve seen multiple stories by now about how so many people are quitting their jobs rather than go back to the office. LinkedIn alone will bury you in them. (Which raises the question, why do they write so much about all this quitting when it obviously affects their model? No question they’re quite dependent on big companies and their recruiting ads, and all the ladder-climbing robots who flog their corporate accomplishments on the platform. Makes you think LinkedIn is really going to need that freelance marketplace platform we keep hearing rumors about if it wants to keep growing anywhere near like it has.)

Granted, not everyone who’s quitting their job is doing a startup. Some are taking different jobs (duh). A slew of others would describe what they’re doing as simply “going freelance.” But many if not most of those are forming a legal entity to do that – the Company of Me – which shows how serious they are. It seems fair to assume the majority of these new entities are “solopreneurs” initially. That may or may not fit your definition of a startup – but, regardless, today we’re looking at huge company formation numbers overall, those that have already happened in 2020 and the similar numbers rolling in for 2021.

If you’re into economics, more great insights come from this article, including the following:

“There is a widespread perception that small businesses create the most jobs in the United States and other advanced economies. Research suggests that it is new businesses (emphasis mine), not small ones, that create these jobs (Haltiwanger et al. 2013). Studying the patterns in startup activity is hence an indicator of future employment growth.”

A Telling Finding

Amazingly, a survey just published by Digital.com found that one-third of workers who quit their jobs within the last six months started a business. That is just an unprecedented number in my experience!

graphic of workers starting businesses

More insights from the survey:

“Sixty-two percent of respondents say they are starting a business to be their own boss, and 60% say they are passionate about pursuing a business idea… Although many respondents say the pandemic influenced their decisions, they also cite several reasons for leaving the workforce. Forty-four percent of workers quit their jobs because they want better wages and benefits, 42% want to focus on their health, and 41% desire a more rewarding career. Sixty percent of new entrepreneurs learned about launching a startup business during the pandemic lockdown.”

Many startups begin life as personal service companies. Some of those actually go on to become product companies, whether hardware, software, even manufacturing businesses. A great many upstarts during the Covid era were founded as retail or ecommerce ventures. Online shopping went ballistic during the pandemic, and so many smart entrepreneurs took advantage of that.

It’s Easier Today

Historically speaking, entrepreneurs in the U.S. today have it pretty nice.

Consider all the factors that make their plight not nearly as difficult as it used to be:
• The low cost of starting a business
• The speed of creating a business entity (at least in most states; looking at you, California)
• Accessibility to capital, with a myriad of funding sources
• The low cost of capital these days
• And so many resources to learn how to do a startup, with organizations (both for-profit and nonprofit) practically tripping over each other to help entrepreneurs. These resources encompass many low-cost and even free services – coaching, classes, mentorship, accelerator programs, competitions with cash awards, and the list goes on.

Speaking of resources for starting a business, the outfit that sponsored the above survey, Digital.com, offers a wealth of links for new entrepreneurs.

So, What Are You Waiting For?

There’s never been a better time. But then, I’m biased.

 

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