Case Study 1 - Fred & Marilynn Wilke, Sports Stats Inc



Starting Your Own IT Company

December 2, 2004

Sarah Anderson

Matt Selter

Erin Wilke

Jermaine Williford

IS 6800

Executive Summary

These days, it seems that everyone is trying to become an entrepreneur. A 2002 survey by the Global Entrepreneurship Monitor has estimated that 460 million individuals worldwide were either attempting to start their own business or managing one less than two years old. (31) Still, it is not for everyone. Approximately only about 50% of small businesses make it past the three year mark. (32) We will explore the personality characteristics of entrepreneurs to determine what it takes to become a success. Some examples of these characteristics include the following: leadership skills, passion, moderate risk-takers, need for achievement, innovative, creative, motivated, hard-working, competitive, analytical, persistent, outgoing, optimistic, adaptive, and planning. We have provided four cases studies of successful, modern-day entrepreneurs who embody these characteristics.

Entrepreneur: Definitions and Characteristics

An entrepreneur is defined as “someone who perceives an opportunity and creates an organization to pursue it. (33) The entrepreneurial process “involves all the functions, activities, and actions associated with perceiving opportunities and creating organizations to pursue them.” (33) The entrepreneurial process is made up of personal, environmental, and sociological factors. A good combination of these factors in an individual or group of individuals provides the makings for a high level of entrepreneurial ability. (33)

Personal factors include such characteristics as: achievement, age, commitment, education, experience, job dissatisfaction or loss, a high locus of control, risk taking, and vision. (33) Entrepreneurs are often overachievers. They usually show signs of entrepreneurial ability early in life, and will generally begin their business at a younger age. They are committed individuals; throwing themselves into everything they take on. They usually have a commensurate level of education and experience; both are necessary to some degree in making a business successful. Many people who begin their own business have lost a job or are dissatisfied with their present line of work. Entrepreneurs have a high locus of control. “People with an internal locus of control are those individuals who also believe themselves to be in control of their destiny.” (35) They do not just sit around and wait for things to happen to them; they take charge and make things happen for themselves. Entrepreneurs are moderate risk takers in the sense that the risks they do take are usually calculated; they do not just throw caution to the wind. Finally, entrepreneurs have a vision. They have a clear idea of what they want to happen and how to get there. These factors are only a part of the entrepreneurial process, but definitely important ones.

The second part of the entrepreneurial process is the environmental factors. These include creativity, competition, government policy, investors, opportunities, resources, and role models. (33) Entrepreneurs are stimulated by a creative environment. They are motivated to succeed by the competition around them. The government can often provide assistance to those who wish to start their own business; recent policies provide tax cuts to small business owners. Investors can also provide assistance to help an entrepreneurial dream take off. Entrepreneurs seize the opportunities around them, capitalizing on niche markets. The resources they require are usually within reach. Finally, role models are powerful motivators for those who wish to begin their own business. “Role models are very important because knowing successful entrepreneurs makes the act of becoming one yourself seem much more credible.” (33)

Finally, there are the sociological factors of the entrepreneurial process to consider. These consist of family responsibilities, networks, teams, and parents. “Family responsibilities play an important role in the decision whether to start a company. It is, relatively speaking, and easy career decision to start a business when a person is 25 years old, single, and without many personal assets and dependents. It is a much harder decision when a person is 45 and married, has teenage children preparing to go to college, a hefty mortgage, car payments, and a secure, well-paying job.” (33) Successful entrepreneurs usually have excellent networks and teams of people willing to provide assistance wherever it is needed. It is not an easy thing to start a business on one’s own. Support also comes from parents or other family members. Often times, people who have relatives that have started their own business go on to start one themselves. (34)

Most entrepreneurs can be described by the ten D’s (33):

• Dream – Entrepreneurs have a vision of what the future could be like for them and their business. And, more important, they have the ability to implement their dreams

• Decisiveness – They don’t procrastinate. They make decisions swiftly. Their swiftness is a key factor in their success.

• Doers – Once they decide on a course of action, the implement it as quickly as possible.

• Determination – They implement their ventures with total commitment. They seldom give up, even when confronted by obstacles that seem insurmountable.

• Dedication – They are totally dedicated to do their business, sometimes at considerable cost to their relationships with their friends and families. They work tirelessly. Twelve-hour days, and seven-day work weeks are not uncommon when an entrepreneur is striving to get a business off the ground.

• Devotion – Entrepreneurs love what they do. It is that love that sustains them when the going gets tough. And it is a love of their product or service that makes them so effective at selling it.

• Details – It is said that the devil resides in the details. That is never more true than in starting and growing a business. The entrepreneur must be on top of the critical details.

• Destiny – They want to be in charge of their own destiny rather than depend on an employer.

• Dollars – Getting rich is not the prime motivator of entrepreneurs. Money is more a measure of their success. They assume that if they are successful they will be rewarded.

• Distribute – Entrepreneurs distribute the ownership of their business with key employees who are critical to the success of the business. (33)

Despite having all of these things in place, many businesses still fail. Approximately only about 50% of small businesses make it past the three year mark. Reasons for this include insufficient funding, developmental difficulties, financial control issues, problems in sales and marketing, or just plain lack of skills. (32) Obviously, starting a business is not for everyone. “In entrepreneurship, as in any other profession, luck is where preparation and opportunity meet.” (33) Following are four cases studies of modern-day IT entrepreneurs who have what it takes to be successful.

Case Study 1 - Fred & Marilynn Wilke, Sports Stats Inc.

Fred and Marilynn Wilke are two local entrepreneurs who began Sports Stats, Inc. Fred had the programming background and initiative to launch a creative idea into a small business, while Marilynn supported the company logistically. Today their dreams have transformed into one of the most popular high school sports websites in the country.

Fred grew up as a very competitive athlete in several sports, but mainly focused on basketball throughout high school and college. Ultimately, a basketball scholarship propelled him to complete his undergraduate degree in Business Administration from SIU Edwardsville. After college he enlisted in the U.S. Military, where he served for over 12 years. His commitment in the military afforded him a chance to return to school to complete his Masters in Business Administration, also from SIUE. Fred always had a love for computers and programming. He would constantly experiment to find new and more efficient ways of doing things.

Marilynn grew up the oldest of five children which forced her to have a strong leadership role within her family. She was a very accomplished tennis player and has always been a true visionary. Her creative ideas have propelled her to begin several companies since they began Sports Stats. In 1993, she helped create a not-for-profit AIDS ministry and today she manages her own massage business. Marilynn has never been a very technical person, but she was the backbone of their company for many years.

Fred and Marilynn were married for over six years and had a one-year old son when they decided to begin their first company in 1977. They wanted the option to work from home and create their own hours. While Marilynn concentrated mainly on running the family, Fred still worked full-time as a professor of business at Florissant Valley Community College to pay the bills. They had 14 part-time employees who mainly worked on weekends answering phones and only one full-time employee other than themselves.

They noticed there was a need in the area to support high school sports. The St. Louis Post-Dispatch simply listed scores of specific games and nothing more. They incorporated a much larger picture of play-by-plays, touchdowns, sacks, and particularly the game highlights and achievements for specific individuals. The planning stage to create the company took about six months. During this time they focused on advertising their ideas to area coaches, buying a computer, remodeling their basement to run a business, and working with an accountant and a lawyer to ensure they were following specific business regulations.

The first step was purchasing a computer. They took out a loan and bought a $20,000 computer, which could be bought for $400 today. The hard drive on the computer was so small that everything had to be saved on floppy disks and was immediately printed out. At times, one article had to be held on five different disks. This was extremely time-consuming.

The next step was convincing area coaches to call in game statistics after each game at no charge. In return, the coaches would receive a weekly report and a scorebook for area schools. They recruited companies to advertise in the scorebooks to make money. Then, the scorekeeper would call in the scores to the local newspapers who paid a mere $2 for one story! They focused on football first, but eventually expanded to baseball, soccer, and men’s and women’s basketball. Several other companies had tried to incorporate advanced statistics for high school sports, but all failed. Sports Stats was several years ahead of college sports during this time period. The specific statistics they created were only used in professional sports. Although the company was immediately popular, it continued to be a challenge to make a profit.

Their largest challenge was convincing coaches to call in scores and statistics in order to meet a strict 11 p.m. deadline to the newspapers. In 1977 there were no cell phones! This required the coaches to return to their offices, homes, or use a pay phone to make a five minute phone call since most football games weren’t over until around 9:30 p.m.

Sports Stats remained independently owned until 1981 when Fred and Marilynn decided to sell the company to the St. Louis Post-Dispatch for $225,000. The Post-Dispatch was able to expand the company into a million dollar enterprise, mainly due to their name recognition, specific databases, and programming applications. The Post-Dispatch also promised Fred a part-time job which became a full-time management position within weeks of selling the company.

In 1992 Sports Stats was incorporated into the prep sports section on the website. Today, is the leading website in the St. Louis area, reaching 35% of online adults per month ((). High school coaches continue to call-in scores daily in order to produce 10,000 new webpages every night. Sports Stats extended the company by selling action photos online and currently report information on over 40 different sports.

The prep sports website has become extremely popular with teenagers because they love seeing themselves on the internet. In 2003, had 23,000,000 monthly page views. In comparison, Sports Stats () averaged 1,382,900 monthly page views for 2003 (2). It is noted from the chart above that the highest page views are in September and October during football season and decreases in the summer months when high school sports are inactive. There was a 23.5% increase from 2002 to 2003 in the total number of page views (2). Overall, the chart proves the increasing popularity of Sports Stats over the years.

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In recent news, an article from Monday, November 22, 2004 on the website, stated “Pulitzer, Inc. announced [yesterday] that it had hired an investment banker, Goldman Sachs & Co., to advise the company as it explores ‘a range of strategic alternatives to enhance shareholder value, including a possible sale of the company’”(3). Analysts believe the sale of the Pulitzer company is inevitable.

A stock quote as of November 26, 2004 on finance. (4) shows how their stock prize has increased by 17%, with shares up to approximately $64 per share. The below stock quote compares Pulitzer, Inc. to Gannett Enterprises, who is expected to buy all or part of the Pulitzer company. In a follow-up interview with Fred Wilke after this information has been publicized, he stated “I do not believe this will affect Sports Stats directly. I believe our mission and policies will remain the same if a new owner is instated”(5). No announcements have been made, as of November 28, 2004, regarding specifically what will happen to the Pulitzer company.

Pulitzer vs. GCI

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Fred continues as a manager for Sports Stats and also a professor of Business and Information Systems at Florissant Valley Community College. He’s very involved in coaching competitive baseball and recently began a new baseball league for high school boys in St. Charles, MO. He also enjoys creating and designing model railroads located in the basement of his home.

Marilynn was a homemaker for several years after selling Sports Stats and then began several different career paths. She was a travel agent for over five years and an office manager at State Farm Insurance for five years. Today, she is a licensed massage therapist who works at the Spa of Winghaven in O’Fallon, MO and is also currently running her own small massage business.

Fred and Marilynn have very different, but distinct personalities. Fred has always worked 60+ hours a week for his businesses to succeed. His love for technology has been dominant in his analytical, but competitive personality. Marilynn is very persistent, outgoing, and envisions things before making them a reality. Although they are both very different, they always set high, long-term goals, trust their instincts, take only calculated risks, and have always been very careful spending money. They continue to challenge themselves and make the necessary sacrifices in every aspect of their lives in order to succeed. Fred and Marilynn both believe the most important aspect in having a successful new business is to truly believe in the product or service, and the rest will follow (5).

Case Study 2 – Randy Schilling, CEO Quilogy

Randy Schilling began Quilogy twelve years ago as a one-man company with $5000 of his personal savings. Since that time, he has transformed the company into a 45 million dollar company, with 14 nationwide offices and 300 employees that train more than 20,000 IT professionals every year. They continue to become more profitable every day. It is stated from their website that “Clients choose Quilogy when they want to access the most current thought leadership and wish to have vendor certified, highly credentialed consultants implementing their business needs.”(6)

Quilogy specializes in technical consulting with an array of full-service e-business professional services, such as creating websites, CRM, ERP, application development, offering outsourcing solutions, and then helping to integrate these solutions into companies through technical training and support. Specifically stated in a 1997 article from the St. Louis Business Journal, “[Quilogy] offers Microsoft, Powersoft, Riverton, Rational, State of the Art and Sybase products as well as the training and consulting to go with them”(8). The relationships with the aforementioned companies in combination with every Quilogy employee being vendor certified in all Microsoft applications (9) makes Quilogy highly credible to new clients.

Larger firms located in New York or Chicago have a disadvantage in the mid-west due to the distance barrier. Quilogy tends to focus on businesses ranging from $50 million to $2 billion often overlooked by these larger firms. Quilogy has achieved a niche in these middle-markets by offering real-world business needs for each specific client.

Quilogy’s main focus is in the areas of manufacturing, healthcare, public sector, and other client-specific services. Some of their main clients include the Chicago Brookfield Zoo, Seattle’s Children’s Hospital, the United States Air Force, Nebraska Public Schools, St. Charles City-County Library District, and Mario Olives, just to name a few. Each client has a different objective for improving their current processes through the technological applications offered by Quilogy.

A specific case study found on Quilogy’s website shows how they equipped the U.S. Air Force with a powerful technology solution known as LeaveWeb.  The Air Force had a very paper-intensive manual process for the administration of their leave program. LeaveWeb automated this process and streamlined approvals. Its functionality resulted in a worldwide roll-out of LeaveWeb, reduced staff hours to process leaves by 75% and omitted paper processes (6). That was a $34 million annual savings for the U.S. Air Force.

Randy has always had a very strong technological background. He received his Bachelor of Science in Electrical Engineering from the University of Missouri-Columbia in 1985. In high school he did not have an opportunity to take advanced math and science courses. In turn, he felt he was unprepared for the challenging courses he was faced with in the Engineering program at Mizzou. He was a typical ‘B’ student, but took great pride in completing his degree. He felt this was one of the most difficult tasks he’s ever faced.

His first job in 1985 was with Illinois Power Company in Decatur, IL as an Electrical Engineer. During this time he was doing advanced technical work, but he was still fascinated to learn more about computer engineering. His main mentor at this time was a colleague from the IL Power Plant, Hank Norris. Randy was forced to create his own database to hold essential information for his job when the generators went down one day at work. The new system he created saved the company time and money by centralizing all of their information into one database. During this period he was also attending University of Illinois-Springfield part-time in the evenings to complete his Masters in Business Administration.

In 1990, Randy rekindled the flame with his high school sweetheart, got married, moved back to St. Louis and started a new job with a Chicago-based consulting company named Grant Thornton. Randy became frustrated because his new job was not a technology-focused company and he was still very interested in computer-related work. Randy stated in an article from that “I was convinced that the shift from mainframe computers to client/server technology would open up all kinds of business-to-business training and consulting opportunities” (9). His frustration and opportunism in the technology field forced him to begin Solutech (as Quilogy was originally named) in August of 1992.

The company began with Randy as the sole employee. He used $5000 of his savings to start the company and it was profitable immediately, mainly due to decreased overhead costs. The early nineties was a difficult time to create a technological company due to the competitiveness during the “” internet craze. It is noted from the chart below, as a result from research on the Quilogy webpage (6), specifically how the average revenues and total number of employees continues to progress through the years. Randy foresees continued growth into the future, with over 1,000 employees and target revenue over $100 million, while also expanding offices into new markets.

AVERAGE REVENUES AND TOTAL NUMBER EMPLOYEES AT QUILOGY (6)

| | | | | | | | |

| |1992 |1994 |1996 |1997 |2002 |2004 |Future |

| | | | | | | | |

|Employees |1 |10 |50 |100 |450 |520 |1,000 |

The biggest challenge he faced was balancing the budget in the early stages with a deficient accounting background. He used several credit cards to budget the costs of materials and would usually buy necessary items at the last minute before a workshop to decrease costs. He quickly learned how to improve in this aspect of the business.

The legal processes and strict regulations required to begin your own business was also extremely difficult. His attorney did not advise him to set appropriate property rights while naming his company. When they expanded into California, he unconsciously learned of another company with the same name of Solutech. The opposing company was going to sue for over a million dollars to keep the company name.

A September 2004 interview in St Louis Commerce Magazine stated “Randy had been thinking for some time about changing the name of his technology company (7)”. He felt this would be a great opportunity to reposition the company in the market under a new and improved name, as many successful companies have done in the past. His seven year-old son, who loved Harry Potter, ultimately became the creator of the company’s innovative, new name. He was learning about a Quill in the Harry Potter books which Randy combined with technology to become Quilogy. The main criteria he was looking for was something under 7-8 characters for increased name recognition and to improve on-line searching capabilities.

Randy strongly believes the world is run by average students who are the hardest workers and the most persistent - not necessarily the smartest people. He’s never afraid to make changes in his business model and strategies for the company. He believes running a business cannot be taught and advises to learn through experience. His favorite quote is from a colleague at Apple Computers which states, “Don’t be afraid to be crappy, but don’t stay crappy” (9). It is essential that you’re not afraid to experiment and possibly fail, but you must learn from your mistakes. Always make quick changes and ask for feedback from your employees and co-workers.

Randy’s main personality traits include:

• Collaborative manager

• Strong blend of technical and creative traits

• Great programmer

• Analytical

• Mixture of left & right brained personality

• Competitive

• Persistent

• Life-long learner

• “Thinks outside the box”

• Loves to read

Randy’s foremost goal is to produce a $100 million company within the next five years. It’s very important to the morale of his employees to set appropriate goals that are not too lofty to reach. He originally dreamed of simply becoming profitable, then improving to a $1 million company, then $10 million, and now after twelve years Quilogy is a $45 million company. He wants to continue to expand and grow to reach his goals. He also expects to demand a higher cost for increased service to customers in exchange for a unique product, which will ultimately determine the company’s success in the long-run.

Case Study 3 – Jeff Bezos,

Jeff Bezos, founder and CEO of , was Time magazine’s Man of the Year for 1999, and is currently worth an over $2 billion. Jeff Bezos left an extremely successful career in Wall Street, and moved across the United States to Seattle, to start a company that would compete with some of the world’s largest and most established retailers. Ultimately, Bezos would make more successful than its competitors. (17)

The eldest son of Miguel "Mike" Bezos, an Exxon Corp. executive, and Jacklyn Gise Bezos, Jeff Bezos has strong family ties, and still maintains a close relationship with his younger brother and sister. (17) At a young age, Bezos dreamed of becoming an astronaut or physicist; a dream that was triggered by his grandfather, a retired Atomic Energy Commission manager. Demonstrating ambition and intrigue, Bezos worked on science and engineering projects that eventually took over his parents' garage. (17) His passion for inventing was proved when he built his own Infinity Cube, a cube made up of motorized mirrors which allows the user to stare into in an infinite world. The story of this young prodigy can be found in the book Turning On Bright Minds: A Parent Looks at Gifted Education in Texas. Bezos spent many summers on his grandfather's ranch in Cotulla, Texas, where he exercised his hands-on engineering abilities by doing such chores as fixing windmills. (17)

Following graduation from Miami's Palmetto High School, where Bezos was elected class president and valedictorian, he went on to study electrical engineering and computer science at Princeton University. After becoming a 1986 summa cum laude, Phi Beta Kappa, Princeton graduate, Bezos joined FITEL, a high-tech start-up company in New York. (17) Two years later, Bezos began working for Bankers Trust Company in New York, where he led the development of computer systems and became the company's youngest vice president in 1990. (17)

Vice President was only the first of many important positions Bezos would hold in the early stages of his career. Bezos went on to work for D.E. Shaw & Co. in New York from 1990 to 1994, where he helped build one of the most technically sophisticated quantitative hedge funds on Wall Street, moving from self-proclaimed "in-house geek" to money manager. In 1992, Bezos became their youngest senior vice president. (17)

In 1994, Bezos left his job as vice-president of the Wall Street firm D.E. Shaw, moved to Seattle, and began to work out a business plan for what would become . (17) After reading a report that projected annual Web growth at 2,300 percent, Bezos drew up a list of 20 products that could be sold on the Internet. He narrowed the list to what he felt were the five most promising: compact discs, computer hardware, computer software, videos, and books. (17) Because of the large worldwide market for literature, the low price that could be offered for books, and the tremendous selection of titles that were available in print, Bezos eventually decided that his venture would sell books over the Web. He chose Seattle as the company headquarters because of its large high-tech work force and its proximity to a large book distribution center in Oregon. Bezos then worked to raise funds for the company while also working with software developers to build the company's web site. The web site debuted in July 1995 and quickly became the number one book-related site on the Web. (11)

"Obsess about customers, not the competitors", is the motto of Bezos' present obsession -- . (17) The company, known today as the most visible symbol of consumer electronic commerce, started when he discovered the exponential growth of the Internet. Bezos and his wife, Mackenzie, a novelist, moved to Seattle and planted the seeds of from their rented suburban house. (17) Before "opening" its doors for business on the Internet, Bezos and his team spent a year developing database programs and creating the web site. According to , although the profitability of the company is next to nil - all the extra cash is used for marketing and for buying other companies - the accomplishments of are tremendous:

• It beat Sears in market capitalization value (the number of outstanding stock shares multiplied by stock price), with $17 billion in 1998.

• It has gone public in May 1997, and is traded on the NASDAQ as AMZN. Its many employees have stock options and are now millionaires.

• It is to date the leading online shopping site, with sales for 2000 at $1.92 billion.

• More than 60,000 other web sites link to (17)

Jeff Bezos invokes a special kind of loyalty among his employees at who see him as a colleague and not a boss. (14) His work attire primarily consists of blue jeans and a button down shirt. Bezos’ personality is considered non-corporate along with many of his ideas of how to run a large company. He is even known to sometimes deliver products sold on directly to the customer's house.

It takes a special drive and imagination to start up a company that would revolutionize the way people buy things. His focus on customers and his drive to make his company the “Wal-Mart of the Internet” has won over investors, who at one point had the company at a worth of $40 billion US, in only 4 years. (17)

In 1997, when Barnes & Noble launched their rival Web site, Forrester Research chief George Colony famously predicted that Bezos's little venture was "Amazon.toast." (13) A lot of people in the press and on Wall Street, and inside the company as well, thought the critic was correct. But Bezos flourished. Later, when the 1990s finally ended, Amazon's shares fell from $100 to $6. (13) Bezos remained positive. "Jeff irrepressibly casts every challenge as an opportunity," says his longtime friend Linda Stone, a former executive at Apple and Microsoft. (13)

In 2003 the company posted its first full-year profit in 2003. According to Fast Company, it was on track for nearly $7 billion in sales and $400 million in earnings. (14) The stock has revived to $50 a share, giving the company a market value of $21 billion. (14) is one the few Web pioneers, such as eBay, Yahoo, and Google, that have endured the numerous setbacks of the Internet. It is also interesting to note that Bezos is the only founder in that group that is still running his company as the CEO. He is the only one to make the transition from the visionary of a small startup to the boss of a large corporation. (14)

When asked if he is lucky, Bezos states, “It couldn’t have happened without planetary alignment.” (13) His success comes largely from his ideas about running companies and creative innovation. His thinking is farsighted and instinctive. This is difficult for some to believe, because Bezos has a very distracting eccentric and hyperbolic personality. Bezos doesn’t consider himself a geek. While attending Princeton and majoring in electrical engineering and computer science, he maintained a 4.2 grade point average. (13) There, Bezos met David Risher, who would eventually become one of his future marketing executives, in the cafeteria.

Bezos likes to put many of his decisions into numbered lists. He arranges tasks in order of importance. According to Deutschman, “lots of businesspeople are highly analytical.” (13) What really makes Bezos stand out is that his decisions can’t be backed up by studies. He gambles on ideas that are too big, audacious and long-term to try reliably in small-scale tests before putting them into place. Bezos has implemented ideas that have hurt ’s sales and profits in the short-term; however, if you look at the long-term, those implementations have helped the company. Bezos is driven by the belief that what is good for the customer will ultimately turn out to be in the company’s enlightened self-interest. Bezos sees himself as a “change junkie,” and the culture he has implemented is dedicated to coming up with innovations. Still, he is unashamed and forward about copying ideas from competitors. (13) Even though has benefited from Bezos’s forceful convictions, he also listens to critics and their advice when they convince him that he is wrong. (13)

The inconsistencies are what make Bezos so unusual, yet competitive. Bezos obsesses over finding small improvements in efficiency at ’s huge warehouses while still sustaining an entrepreneur’s grand vision of changing the world. (13) Depending on the situation, Bezos has the ability to be rational or faithful. That could be the main reason he endured during the demise of the companies. According to Bezos, “The thing about inventing is you have to be both stubborn and flexible. The hard part is figuring out when to be which!” (13)

According to David Risher, Bezos's more memorable behind-the-scenes moments came during an off-site retreat. Risher states that, "People were saying that groups needed to communicate more. Jeff got up and said, 'No, communication is terrible!'" (13) The pronouncement shocked his managers. But Bezos pursued his idea of a decentralized, disentangled company where small groups can innovate and test their visions independently of everyone else. He came up with the notion of the "two-pizza team": If you can't feed a team with two pizzas, it's too large. That limits a task force to five to seven people, depending on their appetites. (13)

These pizza teams have created some of the site's quirkiest and most popular features. They created the “Gold Box”; a little animated icon of a treasure chest that gleams and wobbles at the top of the home page. A click to open the box reveals special offers that last for just an hour from the time of the click. (13)

Another popular innovation is the “Bottom of the Page Deals”, daily bargains on staples such as Clif Bars and Tampax. Bezos wanted customers to think of the site not just for occasional discretionary items -- books, CDs, DVDs -- but also for daily essentials. The idea was that the prices were so low (often 50% off on brand names) that they sank to the bottom of 's home page. Patty Stonesifer, a former Microsoft executive who's now an director, recalls Bezos coming into a board meeting with a cardboard box of sundries, such as toilet paper and packs of batteries, and spilling them onto the table. Stonesifer thought the idea was "innovative, playful, and fun for customers." Days later, the deals were running on the Web site. (13)

According to Deutschman, the Web makes it easy to try out ideas like the “Gold Box” and “Bottom of the Page Deals”, because you can measure results quickly and precisely. The risks and costs are low. One thing that has really distinguished from the rest has been the big gambles, such as “Search Inside the Book”. This feature lets customers search through the full texts of books and read several pages at a time for free as a way to get them to make a purchase. “Search Inside the Book” debuted with an astonishing 120,000-plus books. Each one had to be scanned digitally and indexed, a huge logistical challenge at a huge cost. The database took up 20 terabytes, which Bezos says is about 20 times larger than the biggest database that existed anywhere when was founded. (13)

A large-scale launch was the only way to see whether it would go over with 's 43 million active customer accounts. "If we had tried it in a tentative way on a small number of books, say 1,000 or 2,000, it wouldn't have gotten the PR and the customers' perception," says Risher. "There's an X-factor: What will it look like in scale? It's a big investment, and a big opportunity cost. There's a leap of faith. Jeff is willing to take those gambles." (13)

When Bezos described his primary goals for the interface, he stated that ’s goal is to turn visitors into customers, and to make the experience as welcoming as possible. (12) To achieve this, Bezos decided that it was important to have personalized for each customer. Implementing this required him to hire a chief algorithms officer. This officer is responsible for creating an entirely customized visit for each customer who visits, which is based on what they purchased in the past. These highly automated fulfillment centers cost around $300 million. (16) Yet, has spent three times as much on business technology. According to Chris Murphy of Information Week, Jeff has no regrets about the IT investments. This huge investment can be divided into the cost for the developers that made the custom applications running the business and the hardware to support it. (16)

Bezos himself explains his modus operandi this way: "For every leader in the company, not just for me, there are decisions that can be made by analysis." (13) He's setting up for the punch line: "These are the best kinds of decisions!" The booming laugh comes on cue. "They're fact-based decisions. The great thing about fact-based decisions is that they overrule the hierarchy. The most junior person in the company can win an argument with the most senior person with a fact-based decision. Unfortunately, there's this whole other set of decisions that you can't ultimately boil down to a math problem." (13) For those judgments, Bezos relies on his most senior executives, whom he regularly recruits from larger companies.

With decisions he deems to be fact-based, Bezos will make an extraordinary effort to study the numbers rather than rely on his team's best instincts and judgments. conducted a test to see whether it was worthwhile to advertise the brand on television. (13) It picked two markets, Portland and Minneapolis, which blended together to approximate the customer base for the entire country. Then it did no national advertising for 16 months while showing ads only in the two target cities. That was an unusual move, since such tests, which aren't often done by anyone, rarely last for more than three months. "We were unbelievably fixated on it," Bezos says. (13) While the ads did lift Amazon's sales somewhat, Bezos figured it wasn't enough to justify the costs, and instead he decided to put the money into offering lower prices. "That was a long, expensive test," he says, "but we were really determined to understand this for our company once and for all." (13)

Bezos believes in conserving money for the things that matter. ’s headquarters was a vacant Veterans Administration Hospital before Bezos purchased and remodeled it. According to Bezos, “If you look at the building, you can open the windows and get fresh air and natural light.” (13) The building is shaped like a T, so it has lots of windows. Amazon still hangs whiteboards in the elevators, just as it did in the beginning. A large room across from the company café, where employees used to play video games, is now a storage room for old PCs. (13)

It's hard to predict how Amazon will change in the next few years because Bezos is so committed to radical innovation. Bezos himself doesn't really know what will happen. "We have this weirdness in our business," he says. "The raw ingredients that make our business -- things like CPU processing power, bandwidth, and disk space -- get twice as cheap every 12 to 18 months. Disk space is 30 times cheaper today than it was five years ago.” (13) According to Deutschman, the real question becomes, what can you do with 30 times as much disk space, 20 times as much computing power, and 30 times as much bandwidth? After you answer that question next you must ask, how are you going to make customers happy with that? It turns out that these are not easy questions to answer." (13)

When asked who his greatest influences are, Bezos replied, “The two that come fastest to mind are my grandfather and my dad. My grandfather on my mother's side. I spent all my summers on his ranch from age 4 to 16. That was a huge influence. He was an incredibly self-reliant fellow, as most people who live in rural areas are. It was a little town of 3,000 people, and a cattle ranch. They'd build their own windmills, lay their own pipelines, do their own veterinary work. That was a big influence because one of the things I learned was if you put your mind to it, you can do most things, even the things you don't know how to do.” (15)

He continues, “The second person is my dad because he still, to this day, is the hardest working person that I know. Growing up, we always knew that each family vacation was subject to being canceled at the last second and it never occurred to us to complain about it. It just seemed totally normal.” (15)

Case Study 4 – Michael Dell, Dell Computers

Michael Saul Dell was born in Houston, Texas on February 23, 1965; little did his parents know then what was going to unfold for their son. (18) Michael’s partners were both professionals; his mother was a financial advisor and his father was an orthodontist. Michael recalls that as child in the 1970’s he and his parents would sit around the dinner table and discuss inflation and the oil crisis. (22)

Michael’s road to the empire known as Dell computers started in the second grade. There, he started to show his entrepreneurial spirit by selling candy. (22) By the age of 9 he had opened and was managing his own checking account. (21) By the time he had reached the third grade, he applied to the take the GED. When the sales person saw him she decided she had reached end of her sales pitch. (22) When Michael was 12, he started to find new ways of earning money. He started selling stamps via mail auctions and made $2,000 through this venture. (21) He used some of the revenues from his early ventures to pay his first computer, an Apple II, at the age of 15. (21) Shortly after getting his Apple II computer he took it apart to see how it worked and how to upgrade it; thus sparking his interest in computers. Soon he started upgrading computers and selling them to his friends at a profit. (22)

At the age of 16, he took a summer job selling newspapers over the phone. He quickly found out that the only people who wanted a subscription to the paper were people who had just been married or who had just moved into the area. In order to sell more papers, Michael went to the courthouses of neighboring counties and got lists of newlyweds and people who had recently moved to town. He then sent those people direct mail offers for the paper. His efforts paid off in the form of $18,000 in commissions. (22) Using the money he made from the paper sales, Michael bought himself a BMW and some more computers. (21)

In 1983, a then 18 year old Michael Dell went off to college at the University of Texas, in Austin, where he was suppose to become a doctor. (20) During his freshmen year, he started selling computers out of his dorm room, continuing what he had done through high school. This time, however, his parents were not around to make him study. (22) In fact, to keep his family from knowing what he was doing, he would hide all of the computers and components in his roommate’s bathtub. (26) As Michael got more and more into computers, he found that retailers knew little about the products that they were selling. He realized there was great gap of knowledge and he saw an opportunity. Upon this realization, he started spending even more time on computers, convinced that he could compete with current retailers on both price and customer service. He soon found that he could make a computer for $700 that would sell for over $3000 in the stores. (21) Michael set a goal to be bigger than IBM, which was the largest producer of computers at the time. (26)

By the end of his freshmen year, Michael was spending so much time selling computers that he decided to drop out of school. His parents thought that he was quitter, but they quickly changed their minds when they found out that Michael had sold over $180,000 in his first month of business. To start his business, he used his car as collateral to take out a loan from the bank. (30) “By May of 1984 he had set up in a 1,000 square-foot office in Austin. At that time PCs didn’t come with hard drives. But you could put together a kit to upgrade a computer with a hard drive. That’s how the company got started, selling upgrade kits for computers. “ The reason that Michael moved to an office was that he thought if he could sell $80,000 of computers out of an apartment, then he could probably see $1 million if he were to open an office and wear a tie. This small office didn’t last very long and, by the end of the next year, the company had already moved three times. (22)

‘"I firmly believe that if you're going to do something, you should do it better than anyone else," Michael says’. (26) Michael has done that, but the way in which he has done it is what makes him one of the great entrepreneurs of his day. Michael isn’t perfect however; he has made mistakes, but he learned from them. In his own words, “We screwed up all kinds of things, but there was so much inherent value in what we were doing that it masked all the mistakes that we made. Still, we didn’t make a lot of the same mistakes and figured out how we could progress. Even when we made mistakes, though, we kept to our core principles. From the beginning, there was definitely an ethic around the customer: How do we serve the customers? There was a philosophy in the company that we’re going to do what’s right, which is how my parents taught me to treat people as well as customers.” One of his mistakes happened in the early 90’s when Dell tried to sell computers in stores. It didn’t go over well, but luckily they were able to pull out of that venture quickly. (22)

By the time Michael had reached the age of 27 he was a CEO of a fortune 500 company making him the youngest ever. (21) When ask, how he gained so much of the computer market share so quickly? His reply: ”We’re providing pretty good value, plus there’s a network effect. If desktop customers are satisfied, they may buy a printer; notebook customers are satisfied, they may buy a printer. I think we change the game in terms of cost per page and the rate at which new technology is available to customers. Ultimately, this is a business that is ripe for change. Is change going to happen in one or two quarters? Probably not. But if you look at it over several years, you’ll see a lot of change occurring.” (24)

So what has made Dell such a great success? “The key is to balance growth with service and reliability- the thing that customers value most.” Michael Dell. (21) “Getting involved. Even if you can’t go on sales calls, or drop by meeting, use e-mail or the Internet to stay in touch with people at all levels of the organization and especially with those in faraway locations whom you don’t see as often as you’d like. “(28) And like all major companies Communications and Focus to the customers needs play a key factor. (28) “There are a lot of things that go into creating success. I don’t like to do just the things I like to do. I like to do things that cause the company to succeed. I don’t spend a lot of time doing my favorite activities.” Michael Dell. (23) All of this has made Dell the number one computer provider in the world, and has made its stock rise over 40,000% percent in the past 15 years beating out companies such as Gateway and Hewlett-Packard. (29)

The things that keep Michael going are his wife and 4 children. (19) Also, he is still having fun with what he is doing at his job. (22) When questioned on what the biggest thing in technology is going be he replied the Internet, saying, “Today’s Internet is more like the Ford Model T. It's functional, it's revolutionary for its time, but it will dramatically evolve over the next ten years." (21) Recently, before the age of 40, Michael Dell stepped down as CEO of Dell Computers, but he is still very active in the way the company is run. (27)

When he started, his dream was, “…to sell built-to-order computer systems directly to end users. I recognized there was a big opportunity there because of the inefficiencies of the indirect system.” (26) Obviously this has been achieved. As for an alternate career choice, Dell states, “I don't know. I was supposed to be a doctor, according to my parents. I like to build industries and grow industries. I don't think I'd want to be in any industry other than high-tech.” (25)

Dell vs. Gateway

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Dell vs. Hewlett-Packard

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When asked what legacy he would like to leave behind, Dell answered, “:Well, I don't plan to be remembered anytime soon. I'm 36 years old. But I hope they would think, this is a guy who built a company that created tremendous value for its customers, its employees and its shareholders. And perhaps, this is a guy who helped people realize the power of computing and the Internet. And then the last piece, which is something only a [few] people would know, that this is a guy who was a great dad and a great husband.”(26)

Dell defines an entrepreneur as, “Somebody who has a new idea or different idea and takes a risk and works hard to make it work. There's always a new challenge, whether it's a new product line, a new customer, a new service, or some new milestone.” (26) His ideas of entrepreneurial icons include Sam Walton and Henry Ford. He says that Walton, “…took a business and refined it with cost structure and logistics, and took it to levels nobody ever imagined.” (26) And Ford, “…designed a new business process and he created an industry—or at least revolutionized it”, according to Dell.(26) His dream dinner party would include Albert Einstein, Isaac Newton, Andy Grove, Bill Gates as guests. (25)

Conclusion

Some characteristics of successful entrepreneurial are compared with our four case studies and summarized in the table below. There is not much difference between the two smaller businesses and the two larger ones. All of the entrepreneurs were young when they started, and all but Dell had equivalent education and experience from which to build. They are overachievers, with passion and a vision of what they expect from the future and for themselves. They are all moderate risk takers. The main difference between the smaller companies and the larger ones is that the bigger companies ( and Dell) are much more competition-driven than the others. It is evident in all cases that these people have what it takes to make a business a success.

|Attribute |Sports Stats |Quilogy |Amazon |Dell |

|Age |Mid to late 20's, early 30's |18 |

|Competitive |Niche Market |Yes |Yes |

|Education |Yes |Yes |Yes |No |

|Experience |Yes |Yes |Yes |Yes |

|Family Support |Yes |Yes |Yes |Yes |

|Over-Achiever |Yes |Yes |Yes |Yes |

|Passion/Vision |Yes |Yes |Yes |Yes |

|Risk Taker |Yes, to a degree |

What does it take to become a successful entrepreneur? There are nine F’s for entrepreneurial success (33):

• Founders – Every start-up company must have a first class entrepreneur.

• Focused – Entrepreneurial companies focus on niche markets. They specialize.

• Fast – They make decisions quickly and implement them swiftly.

• Flexible – They keep an open mind. They respond to change.

• Forever-innovating – They are tireless innovators.

• Flat – Entrepreneurial organizations have as few layers of management as possible.

• Frugal – By keeping overhead low and productivity high, entrepreneurial organizations keep costs down.

• Friendly – Entrepreneurial companies are friendly to their customers, suppliers, and workers.

• Fun – It’s fun to be associated with an entrepreneurial company. (33)

The above case studies provide many examples of these nine F’s, as well as the ten D’s discussed in the beginning of the paper. “The crucial ingredients for entrepreneurial success are a superb entrepreneur with a first-rate management team and an excellent market opportunity.” (33)

The final measure of success, however, is the happiness of the individual(s) who are running their own business. It is evident that each of the people in the case studies has found a level of fulfillment and a sense of accomplishment with their current positions. They found their opportunity, seized it, and now enjoy the rewards of having done so. A successful entrepreneur is a happy entrepreneur.

References

1- , Viewed Nov. 6, 2004.

2- Averages from charts, Sports Stats, Fred Wilke, Nov. 5, 2004.

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4- finance., Viewed Nov. 28, 2004.

5- Fred Wilke, Founder of Sports Stats, Inc., follow-up interview by phone by Erin Wilke, Nov. 28, 2004.

6- , Viewed Sept. 27, 2004.

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9- Randy Schilling, CEO of Quilogy, interviewed by phone by Erin Wilke, Sept. 29, 2004.

10- Fred & Marilynn Wilke, Founder of Sports Stats, Inc., First interviewed in person by Erin Wilke, Sept. 21, 2004.

11- ", Inc." International Directory of Company Histories, Vol.56. St. James Press, 2004. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2004. . Viewed Nov. 1, 2004.

12- Bayers, Chip. “The Inner Bezos.” Wired 7.03 (1999). . Viewed 02 Nov. 2004.

13- Deutschman, Alan. “Inside the Mind of Jeff Bezos.” Fast Company 85 (2004). . Viewed 02 Nov. 2004.

14- Fishman, Charles. “Face Time with Jeff Bezos.” Fast Company 43 (2001). .Viewed 02 Nov. 2004.

15- Levinson, Meridith. “Interview with Jeff Bezos.” Darwin (2002). . Viewed 02 Nov. 2004.

16- Murphy, Chris. “5 Internet Myths from Jeff Bezos.” Information Week (2003). . Viewed 02 Nov. 2004.

17- “Man of the Week.” . 2000. . Viewed 02 Nov. 2004.

18- , Viewed Nov. 11, 2004.

19- , Viewed Sept. 27, 2004.

20- Viewed Sept. 27, 2004.

21- , Viewed Nov. 11, 2004

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23- , Viewed Nov. 11, 2004.

24- , Viewed Nov. 11, 2004.

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27- , Viewed Nov. 11, 2004.

28- Dell, Michael with Fredman, Catherine, Direct from Dell, HarperCollins Publishers

29- , Viewed Nov. 11, 2004.

30- , Viewed Nov. 11, 2004.

31- , Viewed Nov. 15, 2004.

32- , Viewed Nov 2, 2004.

33- Bygrave, William D., and Andrew Zacharakis, eds. The Portable MBA in Entrepreneurship, 3rd Edition. Hoboken:John Wiley and Sons, Inc., 2004.

34- , Viewed Nov. 8, 2004.

35- Smith-Hunter, Andrea, Joanne Kapp,  and Virginia Yonkers. “A psychological model of entrepreneurial behavior,” Journal of the Academy of Business and Economics. April 2003.

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