Accelerating Entrepreneurship and Innovation in Cyprus

S.P. KothariMIT Sloan School of Management

November 2015

Entrepreneurship and Innovation: The Dream Team

3 Types For obvious reasons Job creation Wealth creation

Optimism and confidence

Why Entrepreneurship and innovation?

Firm MV Sales # Empl. MV/Emp Sales/EmpApple $635B $231B 110,000 $5.8MM $2.1MM

Google 509B 65.8B 53,600 9.5MM 1.22MM

Starbucks 91.8B 19.2B 238,000 0.39MM 0.08MM

Infosys 38.2B 8.2B 176,200 0.22MM .05MM

3 Types Research and

Education: UniversityEntrepreneur

s – Educated and Risk

takers

Blossoming of Entrepreneurship

and Innovation

Capital – Angel

Investors and Venture

Capital

Friendly Govt. and Regulation

Society’s Tolerance for Failure

It Takes A Village ….

3 Types At least three types Research and Innovation Driven Entrepreneurship

E.g.,Tesla, Fitbit, and Shazam Efficiency Driven Entrepreneurship

E.g., Uber and Skyscanner Generic Entrepreneurship

E.g., Yandex and Alibaba

Entrepreneurship and Innovation – Not a Monolithic Phenomenon

Research and Innovation Driven Entrepreneurship

Most sought after, but also most challenging Research driven development of new products, services, or

technology with a market appeal Typically, commands premium pricing and portends growth.

Calls for a nexus of Academic institutions, Industry and the investment community, A non-intrusive government, and Conducive regulation and strong contract enforcement

Resource intensive with tremendous appetite for accepting failure, without getting discouraged. 

Entrepreneur competes with others from the developed economies So it’s a challenge for an entrepreneur from a less developed

economy to be competitive. 

Tesla Illustrates the power of research and innovation driven

entrepreneurship Interestingly, Martin Eberhard and Marc Tarpenning founded the

company in July 2003, not Elon Musk The two attempted to go against the then auto industry by founding

the first successful auto startup since Ford in 1903! Tesla focused its research on developing a more efficient motor and

battery Ended up using an AC motor which was reminiscent of an

invention of Nikola Tesla In addition, they were the first automobile to use a lithium-ion

battery

Tesla (cont.) Electric cars existed but didn’t meet commercial appeal

Tesla essentially developed a new industry looking at electric sports cars The goal was to start with a two-seat sports car and

move to more accessible markets The technological breakthroughs allowed for their new Tesla

Roadster to have a 300 mile range, zero emissions, and go from 0-60 in 3.9 seconds

Showed that there was not a need to trade a high horsepower engine for better mileage.

Fitbit Fitbit develops wearable technology that can track health

Huge market as health-consciousness and healthy lifestyle have gained tremendous currency

Founded in 2007 by James Park and Eric Friedman Fitbit is a perfect example of an innovation-driven startup that faces

adversity Almost went under seven times Development of their products was highly capital and research

intensive Faced many problems scaling technology down to size

Fitbit (cont.) The founders had no experience in manufacturing

They spent months in Asia finding suppliers Gained advantage over other competitors by spending time on

software development Differentiating their wearable from the pack

Shazam A British company Identifies a particular song by hearing a small snippet of it.

Shazam uses a smartphone to gather a brief sample of audio which it then uses to find a song by comparing it across a database of songs.

Shazam developed the technology and then used that as its flagship product

Shazam has since morphed into a company that is involved in the entire entertainment industry

The app has been used on more than 500 million smartphones

Efficiency Driven Entrepreneurship Produce a product or deliver a service more efficiently.  Existing product or service, perhaps with incremental tweaks.

Uber Uber: connects passengers to drivers using an application Founded in the Silicon Valley by Garret Camp and Travis Kalanick Uber seeks to make the taxi industry more efficient

Uses an algorithm and an easy-to-use app Its advantages over the taxi industry are numerous

Holds drivers accountable Gives each customer their own personal driver Cheaper

The company is hugely valuable – scalable model and it has an opportunity to go beyond the taxi business

Skyscanner Founded by Gareth Williams, Barry Smith , and Bonamy Grimes in

Scotland Skyscanner is a global search engine that compares flights, hotels,

and car hires (rentals) It was founded after one of the founders had trouble booking a

cheap flight to a ski resort The website compares the flights, hotels, and car hires in a more

efficient way by putting them all on one website. To further simplify the process, a mobile app was created in 2011

that has been downloaded over 30 million times.

Generic Entrepreneurship Produce a product or deliver a service that exists elsewhere

However, the product or service is not offered in your market; thus it meets an unmet demand. 

Efficiency tweaks, adaptability to local laws, customs, and traditions, etc. are all expected

Yandex Founded by Arkady Volozh Yandex is the largest search engine in Russia It got its start by taking the already successful search engine business

and bringing it to Russia Simply, it took an existing product and took it to a new market

Yandex (cont.) Its main competition is Google but because of several differences,

Yandex has maintained its hold on Russia Google is English based and doesn’t take into account the

complexity of the Russian language Being made in Russian, Yandex is perfect for the Russian

language and it also fits well in neighboring countries with similar languages

Also, a certain loyalty to Russian products is shown by the Russian population.

Alibaba Chinese e-commerce company founded in April 1999 by

Jack Ma Delivers a service in China that was provided to Americans

by Ebay and Amazon Alibaba has morphed into more than just an ecommerce

site It is investing in various Chinese companies and

branching out into different services such as Alipay Alibaba often acts as a middle man between buyers and

sellers particularly in the Chinese markets

Alibaba

How applicable is this to Cyprus? Everyone here could be on the list of successful

entrepreneurs! Take founder CEO of Dropbox and former MIT student

Drew Houston Got the idea when he left his USB drive at home on a 4-

hour bus ride Coded a way to sync files online Dropbox is now worth over $10 billion

Entrepreneurs’ goal is to find inefficiencies and address them What does in day-to-day life cause you problems?

Address it.

Tailoring Entrepreneurship to Local Settings

Generic and Efficiency Driven Entrepreneurship seem like promising options Cyprus is a small economy

Resources required for innovation-driven entrepreneurship are vast and pose a hurdle for countries like Cyprus– Universities like the University of Cyprus have the

potential to produce innovation-driven entrepreneurship– However, sprinkling limited economic resources across

a range of potential research and innovative opportunities will guarantee failure. 

– Political will is needed to make few concentrated bets with the possibility of many going awry. 

– Identify a select few areas with comparative advantage to make the investments and hope for the best. 

Tailoring Entrepreneurship to Local Settings

Cyprus may want to recognize the importance of tourism (for example) and leverage it Around two million tourists a year

There is a genuine opportunity to capitalize off this Generic Entrepreneurship is also an option with

emphasis on exposure to foreign technologies– Don’t have to reinvent the wheel, but could

emulate something that already works Encourage a culture of entrepreneurship and

innovation Several participants – stakeholders – have to come

together

The MIT Club of Cyprus Speed Networking Event

In Cooperation with the C4E at the University of Cyprus Structured Networking to enable youth to meet various

mentors To be held at the University of Cyprus on November 28th

Limited spaces available More information on

http://cyprus .alumclub.mit.edu/

The MIT Club of Cyprus Entrepreneurship Competition

In Cooperation with the Cyprus Entrepreneurship Competition at the University of Cyprus

Open to aspiring young entrepreneurs Call for Proposals deadline on December 18th December

2015 Competition to take place by end February/beginning

March More information on

http://cyprus .alumclub.mit.edu/ Prize: One week entrepreneurship course at

MIT Sloan School

Thank you!

Q & A