Kauffman Foundation: The Two Types of Entrepreneurs

images-4Bob Metcalfe, professor of innovation at the University of Texas at Austin, is known to say “the world’s problems will not be solved by another website.”
The co-inventor of Ethernet, which celebrates its 40th anniversary on May 22, and founder of 3Com, should know.
Metcalfe falls into the category of entrepreneur known as an innovator. He created an innovation driven entreprise that changed the world.
He’s even got his own law: Metcalfe’s Law.
To illustrate the difference between innovators and the other startups, the Kauffman Foundation has just released a report, “A Tale of Two Entrepreneurs: Understanding Differences in the Types of Entrepreneurship in the Economy,” detailing how “not all startup companies are created equal.”
Both “innovation-driven entreprises” and “traditional small and medium sized entreprises” can create valuable products, services and jobs, but it’s the big innovators that take on global problems and “can potentially create hundreds or even thousands of high skill jobs if they succeed.”
So the question begs does the high tech region of Austin and San Antonio have enough innovation driven entreprises? And if not, why not?
Certainly, the region has produced quite a few: Dell, National Instruments and Rackspace among others.
“People who use entrepreneurship as a ‘catch-all’ phase to capture a single economic activity make an important mistake,” Bill Aulet, managing director, Martin Trust Center for MIT Entrepreneurship and coauthor of the paper, said in a statement. “Each type faces different hiring challenges, funding needs, growth potential, risk levels and other needs that support organizations must understand to successfully help these companies.”
The Kauffman report details how innovation driven startups are often focused on global markets and are often founded by highly educated individuals with diverse skills and they require external investors. Whereas small and medium startups focus on local or regional markets and they require little outside investment.

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