Innovation and Job Creation

 “It is all up to us entrepreneurs. It’s the small businesses

that are going to get America back on its feet again.”

Richard Branson – Founder, Virgin Group Ltd.

Alibre Design customers are a very diverse group. They work for companies of all sizes, creating just about every imaginable product. Many are self-employed or work part time on the side doing design or manufacturing consulting. Working with these customers and learning about the innovative businesses and products that they have created is one of the most enjoyable aspects of working at Alibre.

Unfortunately, the employment picture in the United States has dimmed in the last year, with the number of jobs declining for 11 months in a row. However, Mechanical Engineering is one of the jobs least likely to be affected by a recession.

According to the Jobfox Top 25 Most Recession-Proof U.S. Job Candidates: October 2008 survey, Mechanical Engineering is the 9^th most recession proof career, so mechanical engineers and designers are less likely to suffer during this economic downturn.

Small Business Job Creation
Depending on which statistics you use, between 70 and 90 percent of all new jobs in our country are created by small businesses.

According to the Office of Advocacy of the U.S. Small Business Administration (SBA), small businesses created 1.9 million jobs in 2004 (the most recent year for which they studied job creation.) Other notable statistics from an Oct. 2007 report from the Office of Advocacy include these:

·      In 2006, there were estimated 26.8 million small businesses, of which 6.1 million were employer firms. In other words, 20 million small businesses in the country have no employees.
·      Small businesses employed 50.9 percent of the nation’s non-farm private workforce in 2004.

You can look at what is going on in the economy and easily become depressed. But what sitting around depressed accomplish? You didn’t cause it, you can’t control it, and you can’t cure it. All you can really do is accept the things you can’t change and focus on changing those that you can. It is times like these that the entrepreneurial spirit of designers and engineers really shines, because just by focusing on the things that we do best, making great products and building innovative businesses that create new jobs, we can do more to help ourselves than all of the bailouts in Washington.

Most mechanical designers and engineer’s dream of creating products that make a positive difference in the world. At Alibre we dream of creating great product development software that enables engineers to turn their great ideas into great products. We are very much into entrepreneurship, and empowering product creation for thousands of budding entrepreneurs means that we get the satisfaction of seeing our work amplified by orders of magnitude.

My Experience as an Entrepreneur
Alibre is my second software company. The first, Micrografx, began operation in 1983, went public in 1990 and went on to become a global software provider with $100M in revenue and over 400 employees. I left Micrografx in 1996 and waited about a year before starting Alibre.

For as long as I can remember, I wanted to work for myself and really couldn’t envision working for any of the companies in my home town of Cape Girardeau, Missouri. Cape is a town of about 30,000 people; slightly smaller today than it was when I left for college about 40 years ago. When I was growing up, I did the normal things that kids of middle class parents do to earn money. I mowed yards, shoveled snow, waited tables, and washed dishes. When I looked around, I saw mostly small retail businesses that were family owned and I just couldn’t imagine spending my whole life working for someone else’s family business.

Fortunately, Cape has a small teachers college (where my father was an English professor) and they had just initiated a computer science program. As a teenager, I loved science fiction, especially stories about space travel and robots, so when I began contemplating college and career, I chose computer science because it was closest thing offered.

After college, I worked as a software developer and software development manager for about 8 years. While working for other companies, I told myself I was in training for the day when I would have my own company and continuously tried to think of product concepts and inventions that I could create.

Lessons from Entrepreneurship Class
While working in St. Louis, I attended night school toearn a Master’s degree at Washington University. Their program was great, because it allowed me to take both engineering and business classes.

I soon learned that Wash. U. offered an Entrepreneurship class. And it turned out to be the most memorable. The big semester project involved coming up with an idea for a new company and then pitching it to the class members. After the pitches we would all vote on the best ideas and then join one of the winning ideas. Needless to say, I pitched starting a software company, which no one but me got excited about, and I ended up on a team to start an Indoor Soccer club.

During the semester we were fortunate to have several successful entrepreneurs come to the class and present their stories. A consistent theme was the difficulty of raising money and how it was almost impossible unless you had done it before. As the semester came to an end, that was one lesson that stuck with me.

Identifying an Opportunity
Well obviously that didn’t stop me. I just had to look for examples of other people that had started companies without any financial backing and then try to think of how I could apply what they did to my situation. I decided to take a job in California in 1980 and was immediately immersed in the “Anything is Possible” mentality of the Silicon Valley. As I studied the companies there, it was striking how many had been started without significant backing and in their garages, like HP and Apple.

At about the same time, IBM announced the Personal Computer, and the Wall St. Journal pronounced it the “Greatest Entrepreneurial Opportunity of the Twentieth Century.”  This was what I was waiting for, but the pressure was intense. What could I do myself, without external funding, that we let me realize my dreams?

Developing the Product
I bought an IBM PC, on credit, from the local IBM office. I starting using it and teaching myself to program on it, all the while hoping and praying for an inspiration.

In my day job, I was a software developer and often had to prepare flowcharts and other diagrams to use in project proposals and documentation. They were always drawn by hand before being given to the Graphics Department to turn into professional-looking documents. The hand drawing process was laborious and piles of crumpled up attempts grew under my desk. Finally, I would have a clean draft that I could take to Graphics. They always had a backlog and it could take weeks to get the final drawings. Inevitably there were errors, or more likely the project had changed and the original drawings were now obsolete.

I noticed how coworkers were using the new PC’s for word processing and spreadsheets, while I continued to crumple hand drawings. Then it occurred to me, what the world really needed, what I really needed was a computerized drawing program.

Making the Leap
Well, that was it. I thought about it overnight and woke the next morning convinced that this was THE IDEA. I enlisted my brother George and we started working on what became known as PC Draw, the first drawing program for the IBM PC. George and I wrote the code for PC Draw on nights and weekends while continuing to work at our day jobs. We were able to get a free listing in the first issue of PC Magazine and we started receiving phone calls about 2 months before the first version was ready. We actually had orders before it shipped.

About the same time, I was amazed to receive an unsolicited offer for $5,000 in unsecured credit from Citibank Visa in the mail. Up until then, I had never dreamed that anyone would loan me that kind of money. I accepted the offer and we had our start up funding.

By then, my company had relocated me to Dallas where George and I converted the garage of my leased house into an office, extending the air conditioning ducts, putting down carpets, and painting the walls ourselves.

We decided that George would quit his day job first and he started selling PC Draw in January. To our amazement people liked it and bought it. I quit my job in February and we both began working full time for ourselves.

Reflections on Starting and Managing Companies
I have worked for myself for over 25 years; 14 at Micrografx and 11 at Alibre. I wouldn’t trade the experience for anything in the world. Here are five things for you to consider when starting your own company:

1. Decide what are you interested in
Entrepreneurship is not just about building a large company and making lots of money. Instead, it should be about doing something that really interests you, where you feel you can make a difference. The journey really is the greatest reward, so make it an enjoyable experience by picking something you love.

2. Imagine your dream job  
You will need a founding team with complimentary personalities and skills to build a successful company. Decide how you can contribute the most and in what role you can make the biggest difference. Even though you want to have good exposure to all the different functional areas of a business, identifying a particular function that gives you the most satisfaction is very important.

3. Look at other start-ups in your field
There are start-ups being formed every day and there is a good chance that you can identify some in your area of interest and research the best ones. This is much easier now than it used to be, all you need is a computer with an Internet connection and you can do very thorough research on what other companies are doing in your field. But don’t stop there, if possible visit local businesses or retailers that carry or use products in the area you are interested in. Focus on what you know and look for things that seem to be missing. What types of problems do you encounter everyday in your current position? Often something in your personal experience is the best source of a new product idea.

4. How will you pay for it?
This may be the biggest hurdle for any new company, and in today’s economy the alternatives are more limited and potential investors much more conservative. The best approach is to finance it yourself with savings, help from close relatives, or borrowing on credit cards or mortgages. The key is to have a product or service that you can start selling immediately to generate cash flow and to make the company self-funding without additional capital contributions from your wallet. Once you are up and running, with positive cash flow, banks and investors become realistic alternatives.

5.  Making the leap
If possible, start your new venture as a part time job while continuing your other employment. If you are working with partners, have each partner leave their previous position one at a time so that your new company is not hit with everyone’s payroll at once. Be prepared to sacrifice for 6 months to a year, you will almost certainly take a pay cut at first. You may have to juggle personal finances and delay payments beyond the comfort zone to make it through the first few months until cash flow is strong enough to pay you close to your previous salary.

Is it the Worst Time or the Best Time to Start a Business?
You will hear a lot of good reasons why this is the worst possible time to start a business. The economy is slow and money is tight, businesses and individuals are cutting back on spending. I know I heard the exact same reasons when I started Micrografx during the recession of the early 80’s.

Ask yourself, what will happen if I fail? Is it really that scary? In 1983, if Micrografx failed, I would have had to go back to work for another company as a software developer, and software development jobs were plentiful. Not a huge downside. If you are a talented mechanical designer or engineer, likely the worst that will happen to you is that you will have to get another similar job working for a different company.

Once you make the leap, it is all up to you and what matters most is your attitude, your faith in your idea and your belief in yourself. If you believe you will succeed and you work hard every day to achieve it then it will come. What you believe, what you commit to, and your perseverance will be the deciding factors, not what is going on in the environment around you.

Truthfully, there never been a better time to start your own company. With little more than a computer, an Internet connection, and a cell phone, you can begin your right from your home. With the ability to create and analyze 3D virtual prototypes on your own computer, send your designs online to a rapid prototyping shop, create virtual teams, and outsource manufacturing; you can keep your overhead down and grow your business with minimal upfront investment.

If you are successful, your life and your career will be greatly enriched and you will have the satisfaction of knowing that you did all you could to create jobs and help rebuild the economy.

Comments

[oli]

Dear Sir,

Very valuable article. I have save this document to my important folder.

Thanks

[David Parkes]

J. Paul:

An excellent article and right-on-the money when it comes to small businesses being at the heart of job-creation in this country.

All-too-often job-seekers focus on the "big companies" without realizing that 80% of Americans work for small businesses. Furthermore, it is small businesses - especially those that are growing - who need experienced resources to take them to the next level. The larger, more mature companies, simply do not have as great a need in this respect which is why I always counsel job seekers [I'm in IT recruitment here in D/FW] to think big, but target small. Indeed, companies such as Alibre are of the ilk which I point job seekers towards at the expense of the corporate giants.

On a related note, can you comment on how you attract IT talent to Alibre and, once acquired, how you then retain them?

Thanks again for the article and I must say that it's rather bizarre "blogging" with the guy who founded a Micrografx - a product which I used extensively back in the '90s when starting out in IT.

Cheers,
David

[Business Plan Presentation]

Hi,
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