The following is an edited excerpt taken from Entresutra, on the shoulders of foxes: A hedgehog on entrepreneurship and motivation, authored by Soumodip Sarkar. The excerpt is published courtesy of Bloomsbury.
The garage metaphor is evocative and synonymous with the entrepreneurial phenomenon. The “garage” conjures an image of bootstrap dynamism and success, so much so that a very prominent Silicon Valley venture capital firm headed by co-founder Guy Kawasaki has been christened Garage Technology Ventures.
While the startup “garage” culture is much more ingrained in the United States than elsewhere, many European and Japanese giants can also trace their origins to such humble spaces. Surprisingly even India, a country that doesn’t boast of many garages to begin with, has its own garage story.
India’s large biopharmaceutical company, Biocon had started out in a garage of a rented house in Bangalore, in 1978. With a seed capital of Rs 10000 (less than $200), entrepreneur Kiran Mazumdar Shaw set up a company which today has revenues inching towards the half a billion-dollar mark.
The garage metaphor operates at both the level of the entrepreneurial psyche, as well as at a subtler and important level, in terms of the role that the “garage” plays in the entrepreneurial process. Holistically, the “garage” can be read along at least four different dimensions.
The garage as a goal
First, the “garage” represents an inspirational ideal. It is a metaphor that symbolizes the dynamism of the early prototypical phase of entrepreneurship. This phase involves some fundamental aspects of the entrepreneurial path—grit, hard work, independence, the freedom of working for oneself, humble origins, as well as old-fashioned ingenuity.
We can safely say that a startup can be seeded and nurtured in other unlikely and unpretentious places as well
startups from garages, and other unassuming places like the garage, permit us to delve into the following question. What does a startup really need in terms of the supporting infrastructure? As we have seen, the early, mostly prototypical stage of many of today’s giant enterprises, had been incubated in garages, basements, dorm rooms, bedrooms, kitchens etc., we can safely say that a startup can be seeded and nurtured in other unlikely and unpretentious places as well.
In strategic terms, the location and the cost of the ‘incubator’ can be far more important than the actual size, the condition or the elegance of the place. The smaller bootstrap the startup costs, the lesser the strains on the fledgling enterprise.
The garage as independence
Second, this also enables the entrepreneur to delay the often inevitable roping in of external funds, such as from business angels or venture capitalists.
This bare-essentials strategy can be seen in the case of Google. Google founders, Sergey Brin and Larry Page, actually moved into the Menlo Park garage in 1998, after having managed to convince Sun co-founder, Andy Bechtolsheim to write out a cheque. With the money and the confidence that came from this important mentor, they could easily have had opted to go in for a space more than a garage, but they didn’t.
The startup space should be a part of an integral bootstrapping strategy of the entrepreneur
The incubating space need not be physically very comfortable or attractive, and yet should give the entrepreneur enough freedom to not have to worry unduly about high rents. The startup space should, therefore, be a part of an integral bootstrapping strategy of the entrepreneur. A strategy and philosophy that if sustained throughout the growth stages, can well serve the entrepreneur.
Financial bootstrapping is an art, a powerful resource for the entrepreneur. The capacity for ‘creative imagination’ is a typical characteristic of entrepreneurs and should be reflected in small business innovation. Bootstrapping finance involves the use of resources to start and grow a venture at the lowest possible or even at no cost.
The prototypical startup phase can be incubated in an unassuming place such as a garage, and this one such bootstrapping technique. A strategy and philosophy that if sustained throughout the growth stages, can serve the entrepreneur well.
The garage as effectual reasoning
A third dimension from which we should view the “garage” prism has to do with what the entrepreneurial process really involves. Stories of entrepreneurship and most academic accounts of the entrepreneurial process, tend to present it as different steps taken in a strategic universe. In this universe, an entrepreneur sets out with a goal to achieve, and draws upon certain decision tools to achieve the goal.
Cognitive scientists have a term for this approach—they call it “causal reasoning”. In this scenario, one sets up a goal and diligently looks for and acts in the best way to achieve one’s goal.
But do entrepreneurs really behave that way? Or is the startup process something fuzzier, something less clearly structured, with many surprises along the way?
The garage is part of the lean entrepreneur’s genome
Indeed, does the entrepreneur really have the goals well defined and does he really seek to know his operational environment? Importantly too, are opportunities revealed to us right in the beginning of the entrepreneurial process, or do new ones show up along the way, while others are proven to be more like mirages? Our “garage” story is a pointer towards this direction, something that recently emerging entrepreneurship research has termed as ‘effectual reasoning’.
In the logic of effectual reasoning, the entrepreneur does not necessarily begin with a specific goal, or with a clear vision. Instead, the entrepreneur starts equipped with a set of means and his or her goals emerge contingently over time.
This involves trying to make many small mistakes cheaply and as early as possible which would enhance learning. Success is individually defined, and not at the outset of the venture, and can be changing and evolving, depending upon the new set of contingencies that show up.
The “garage” represents the resources (minimum) that are required in the early stages of a venture’s lifecycle. It is part of the lean entrepreneur’s genome, where he (or she) reasons effectually—focusing on the immediate task at hand and leveraging social and professional networks to his (or her) advantage. The garage is where the entrepreneur evaluates and applies the means which are closest at hand and then moves almost directly into action without elaborate planning. The doing is a critical part of the process. Only when the entrepreneur grows and metamorphoses into a larger organization, that a clear goal starts to emerge and causal reasoning becomes more dominant.
The garage as public policy
There is yet another, a fourth dimension through which to view the “garage” prism. The garage metaphor can be strongly related to the way public policy is shaped and pursued in efforts to promote entrepreneurship.
Many policymakers, however, have bought the idea with a vengeance, that at least part of the answer, and to many the only answer, is via the creation of physical infrastructure like incubators. Yet there is a problem with that.
For instance, we have observed that some of the most successful companies around have had very humble origins. Many were nurtured in spaces such as garages, basements, dorm rooms, bedrooms, kitchens, and so forth. It would then be satirical to conclude that what one really needs in order to promote high growth startups is to build garages!
Many policymakers tend to confuse the lack of entrepreneurs with the lack of ‘garages’
This, of course, is a caricature, but it is intended to make a point. In practice, the policy is not really taken to such an extreme. Yet it remains true that many policymakers tend to confuse the lack of entrepreneurs with the lack of space for the entrepreneurs to work in, i.e., the lack of “garages’”. The lack of incubating infrastructure is taken as a reason for the slow growth of entrepreneurial development.
A greater supply of dedicated spaces doesn’t mean that high growth entrepreneurship would flourish. What government policy should instead really focus on, is creating the right environment that is deemed essential.
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