MR. McILROY: I would like to call this meeting to order again. As you know, this is the ninth session, so we are about three quarters of the way through our program. And in case you haven't noticed, the program is "The Comparative Legal Aspects of Entrepreneurship in Canada and the United States."
What I would like to do just to briefly kick off this session is to focus for a couple of moments on a couple of titles, and the first title I want to focus on is the title of this session, which is "Where Do the United States and Canada Stand vis-a-vis Other Countries Regarding Entrepreneurship?"
So in effect, what we are doing here, and what we have done for the last day and-a-half, is compare Canada, on the one hand, to the United States, on the other. We are going to go a little beyond that in this session in that Dr. Hisrich is also going to compare where Canada and the United States fit in vis-a-vis other countries around the world. So it is more of a comparative approach than we have seen thus far.
That's the title of the session; let me move to the title of our speaker: Dr. Hisrich. He is the Garvin Professor of Global Entrepreneurship and Director of the Center for Global Entrepreneurship at the Thunderbird School of Global Management. So you hear the word "global" there no less than three times. And, I think, just looking at his title you can tell that he is very, very qualified to speak on how Canada and the United States fit into the global order of entrepreneurship.
Now, as you may note, the Thunderbird School of Global Management is located in Arizona, and its mandate is: "We educate global leaders who create sustainable prosperity worldwide." So it is very much an institute that is in keeping with the theme of this program. And if you look at Dr. Hisrich' s background, you will see that he is eminently qualified, both from a scholarly perspective and also from a hands-on perspective.
Let me deal first with his scholarly background. Although he resides in Arizona now, Dr. Hisrich is no stranger to Ohio. He attended the University of Cincinnati where he obtained two degrees, his MBA and a Ph.D. He taught here for ten years, as some of you heard yesterday, and he built a very successful business program here at Case.
Now, in addition to his strong academic foundation, Dr. Hisrich has very extensive hands-on international experience, including his work in a couple of countries where you don't really think of entrepreneurship--that is a couple of countries that came out of the demise of the Soviet empire--and that is Russia and the Ukraine.
He is also a very prolific writer but he does not reside in an ivory tower. He has authored or co-authored over a dozen books, many of which are very successful, and they are listed in your program.
Given his expertise and his experience, we are going to be in for a very stimulating session. So I would ask you to please join me in welcoming Dr. Robert Hisrich.
Dr. Robert Hisrich *
DR. HISRICH: Thank you, James. Thank you very much for a wonderful introduction. James forgot to tell you that one of my books is How to Lie With Your Resume.
It is really thrilling to be here for a couple of reasons; particularly, it is good to be back to Cleveland. I had ten great years here at Case Western Reserve University creating what ended up to be ranked fifth in the world, an entrepreneurship program, before I left. And I have created two companies here that are doing very well, one in the medical software field and another one in medical devices.
And so I have really enjoyed my time here in Cleveland, and it is always good to be back to this part of the world. Similarly, it is always good to have Canadians here. I love your country. Basically, it is an economic love.
When I was at MIT, as a professor, we created a company called Polymer Technology, and we made the Boston lens, which was the first gas permeable hard contact lens in the world. (1) I had tremendously good patents on the lens-five patents that were almost unbreakable; we did not want to take the money to get FDA approval in the United States because we would have had to sell quite a bit of our company. So we went to Canada, and you made us a lot of money. I appreciate that a lot.
I particularly like Toronto because that's where we started. We obtained a distributor there--Boots Drugs and others distributed our solutions.
The company was later sold to Bausch & Lomb, so I am out of the lens business, but it was fun. When Henry called, two things concerned me: One, he said I want you to address this topic in 30 minutes. Of course, you know, you never say no to Henry, and never question how much time you are going to have; I thought how am I going to address global entrepreneurship in 30 minutes? Second, Henry indicated that I was on the program after lunch. I thought, "you never have a great audience after lunch, everybody is half asleep." In spite of these two negatives, it is fun to be here, and I know we are going to have a good time exploring this very important topic.
I am more eager for your questions than my talk as I talk all over the world. But I want to set the stage for looking at this topic of global entrepreneurship around the world. Let's first think together what it takes to form a company, as that's what we do as entrepreneurs.
I am going to address this topic through three lenses: one, from the academic lens because I've studied this process all over the world; two, from the entrepreneur lens, having created multiple companies both here and in Hungary and Russia and now one in China; and three, from a theoretical lens as we should understand some of the theory behind it. What does it take to form a company? Four things.
Number one, you have to have the idea. That's number one. We heard that talked about today in terms of the venture people. You need an idea that makes sense; most ideas aren't a business. when Mal was speaking, he said one out of a hundred people fail. There is a high failure rate in business start ups and about one out of a hundred ideas I see actually could be the basis of a business. You need to have the right idea.
All around the world there are innovation and ideas. While some companies are a little more innovative than others, but even in Hungary, under socialism and Soviet control, there was the Rubik's Cube. When I was in Hungary in 1989 living under the Soviet days, I saw a woman retailer who had the most beautiful vegetable stand that would be an incredible merchandising tool anywhere in the world. There is some degree of creativity and innovation all over the world.
The second thing you have to have is money. I have had venture money behind two of my companies--which is a particularly interesting topic all on its own; you need money, particularly money for startup.
In the United States, we are very fortunate. It is not the venture capital industry that affects entrepreneurs in the U.S. at startup but it is what you heard yesterday: the angel market. These angels are private individuals investing in companies. (2)
We did a study of U.S. companies asking, "Outside of family and friends and your own money, where did you get your funding to start your venture?" Eighty-seven percent of those companies received their funding from private individuals. (3) That's the key to the U.S. economy. Are we entrepreneurial? Yes. Do we form more companies than anywhere else in the world? Yes. (4) But it is the angel money in the United States that is so critical to entrepreneurs. That's what I am trying to develop as a member of an advisory board in the country of Slovenia; the goal is to provide startup capital and help Slovenians understand the importance of investing in startup companies.
Private individuals investing in a startup company is not happening anywhere in Europe or other countries in the world. (5) And this money is available in every one of these countries. There is wealth in China. (6) There is wealth in Slovenia. (7) There is wealth in Croatia. (8) There is wealth in Hungary. (9) How do we get that money to work for the betterment of the country's economy, as well as the individual entrepreneur? A country needs to incentivize these individuals to invest a percentage of their wealth in startup companies. I don't see this occurring anywhere else I have been outside the U.S. You need money.
The third thing you need is the entrepreneur. The entrepreneur takes the idea (either his idea or from an inventor) to the marketplace. He or she is the driver of that particular product and idea.
I have studied entrepreneurs all over the world, and the interesting thing which is really nice for entrepreneurs doing international business--is that they are more similar than different. We are "crazies" as I heard some venture people say. I am glad I am "crazy" because I love the process. I am passionate about the process. I understand the process and actually undertake the process. I meet entrepreneurs in China, Russia, Hungary or Ireland and they are very similar. We are more similar than different.
For example, in one study of entrepreneurs, we asked, "What motivated you to start your business?" The same comment was made, whether it was from a Russian or a German or an American entrepreneur: "We can't work for anyone else. We want to be independent." You heard Mal Mixon mention this the other day. Entrepreneurs want independence; they want to be their own boss.
The second reason given in terms of motivation for starting a business was that they want to make money. The third reason was that they are passionate about the idea and want the product/service on the market. They are really passionate about their ideas. These two reasons were also similar all over the world.
The only difference between men and women, in terms of these motivators across countries, was women had passion about the idea as second, and money as the third. These three reasons accounted for...