10/27/2008

Vol II Issue II
 Table of Contents
 News Analysis—Government Intervention [3-4]
 News Briefs [5-7]
 Got Cash?—Capital for the Entrepreneur [8-9]
 Startup Tips [10]
 Industries Suited for Startups [11-12]
 America’s Top Entrepreneurial
Cities [13-16]
 Qualities of an Entrepreneur [17-18]
 Pitfalls to Avoid [19-20]
 Profiles of Startup Companies [21]
 Anderson Summer Entrepreneurship
Institute [22-23]
 Anderson Management Development Program
[24]

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 News Analysis:
Government Intervention—the End
of Capitalism?
By Fred Kim
Senior Staff Writer

Many have criticized a series of the government measures to prevent the

financial system from collapsing. We can divide the critics into two based
on what aspect of the plans they dislike. On one hand, there are people
who are afraid that the intervention would permanently alter the
government’s role in the country’s economy, ending the capitalism era.
On the other hand, there are people who are simply not convinced that
the infusion of a large amount of taxpayers’ money is designed to help
the overall economy, not just the few guilty parties on Wall Street. From
its involvement in the acquisition of troubled Bear Stearns by JPMorgan
back in March of this year to the $700 billion bailout plan that was
passed this month, the government of the United States has committed
about $1 trillion so far to shore up the crumbled financial system. Does
this signify the collapse of capitalism and free markets in the US? Would this enormous amount of money spent by the
government be effective in solving this crisis?

What history tells us

By no means is this financial crisis new in the 200 plus years of history of the United States. Triggered by the famous
stock market crash on October 29, 1929, the Great Depression lasted about 10 years, with its ending coinciding with
the onset of World War II. The current financial crisis resembles the Depression in that both the housing price and the
stock market plunged enormously, deflation set in and a huge number of banks collapsed. In the case of the Great
Depression, the overall condition of the economy and financial markets did not start to recover until 1933, when the
Roosevelt administration initiated a series of drastic government measures. Although Roosevelt’s decisive actions
involved extensive government interventions in the system, it did not end the era of capitalism. Thus, it is unlikely that
current government measures would put an end to American capitalism; it will merely reestablish the government’s
role in regulating and overseeing free markets.

Experiences of other nations offer further insight into the effectiveness of the government intervention during the
financial meltdown. Sweden saw a devastating series of bank failures in the early 1990s. However, the country could
recover quickly thanks to its government’s swift actions. On the other hand, Japan provides an example of prolonged
economic downturn as a result of no significant government help in its financial system.

What the experts say

Obviously, the current state of the
financial crisis cannot be seen as an
identical event to the Great Depression.
For that matter, the historic financial
crises in other countries have different

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variables other than government intervention that might have affected the outcomes.

So far, the actions of the U.S. government have not yielded much of a positive result. For instance, the Federal Reserve
has been steadfast in keeping the rates low in order to provide ample liquidity in the financial system. However, it has
not been able to lower interbank lending rates. Many banks are unwilling to lend their money to other banks at such
low rates. Thus, the Federal Reserve’s commitment to keep the rates low is not helping the interbank lending market at
all.

Also, the government has been putting a great effort to limit

foreclosures. For instance, as soon as it took over IndyMac, it
ceased the bank’s foreclosures. It is an understandable measure in
that rampant foreclosures are at the core of this whole financial
mess. However, tight restrictions on foreclosures deter mortgage
lenders from giving out loans because, without any collateral, they
will lose all their money in case of default. In fact, restrictions in
foreclosures keep the mortgage market from reviving.

Conclusion
During the congressional hearing, Ben Bernanke, chairman of the
Federal Reserve, compared the current financial markets as a
patient with clogged arteries. If left untreated, the patient will
inevitably suffer a heart attack. His remarks are confirmed by the negative ripple effects of Lehman Brother’s collapse.
Many experts, from economists to bankers, also agree that the government remedy is critical in solving the current
financial problem; but they insist that government measures should address the overall financial system instead of just
a part of the problem.

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 News Briefs

By Grace Chan
Senior Staff Writer

Credit rating agencies probed by Capitol Hill

Major credit rating agencies are being questioned for vouching for mortgage-backed securities. It is now becoming
more and more apparent that executives and employees at these credit rating agencies were often aware of the flaws
in the AAA ratings given to thousands of mortgage-related securities, whose subsequent downgrades helped to plunge
the nation into a financial crisis."The story of the credit rating agencies is a story of colossal failure,” said Rep. Henry
Waxman (D-CA), chairman of the House Oversight and Government Reform Committee. “Millions of investors rely on
them for independent, objective assessments. The rating agencies broke this bond of trust, and federal regulators
ignored the warning signs and did nothing to protect the public. The result is that our entire financial system is now at
risk,” he continued. Documents show that these credit rating agencies were pressured by bond and securities issuers to
“inflate” ratings, ultimately putting investors at risk. Standard & Poor’s, as well as Moody’s and Fitch, Inc., reaped large
profits evaluating mortgage-backed securities, giving them top ratings as long as housing prices went up. One of
Moody’s top executives, Raymond McDaniel, said, “Issuers of mortgage-related securities awarded business to
companies that produced inflated assessments.” These credit rating agencies are important because the high grades
they give out assured investors that their money should be safe. The inflated ratings led investors to buy mortgage-
backed securities in enormous numbers. This exposes an inherent conflict of interest, as credit rating agencies are paid
by bond and security issuers, not the investors who rely on these ratings to make their investments.

Argentina faces a possible second default within a decade

Argentina President Cristina Fernandez de Kirchner plans to seize over $29 billion dollars worth of private pension
funds, which increased concerns that the nation is headed towards its second default in a decade. Kirchner’s decision
further damaged the market, which is already battered by falling commodity prices and slower growth. It spooked
investors and triggered deep plunges in Argentine stocks and bonds. The last time the government sought to tap
workers’ savings to help finance debt payments was in 2001, just before it stopped servicing $95 billion of obligations.
South America’s second largest economy hasn’t had access to international capital markets since its 2001 default.
Holders of about $20 billion of defaulted bonds rejected the government’s 2005 payout of 30 cents on the dollar. The
cost of protecting Argentina’s bonds against default soared yesterday, as five-year credit default swaps based on
Argentina’s debt jumped 2.38 percentage points to 32 percentage points. Credit default swaps are designed to insure
against defaults. While the proposed takeover may decrease the chances of default in the short-term, it creates long
lasting damage to the credibility of the Argentine government and its financial system. It also does little to reassure or
encourage people to invest in its domestic financial industry.

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 Talk of GM-Chrysler merger stalls, Chrysler slashes 25% of its workforce

Troubled carmakers General Motors and Chrysler are looking to combine operations in order to eliminate billions in
overlapping costs. Even though GM has about $21 billion in cash and Chrysler has about $11 billion on hand, both
companies may face cash shortages in the future due to declining auto sales. GM is spending more than $1 billion
dollars a month to keep afloat until the markets recover, but it may well run out of money before auto sales improve.
The merger between GM and Chrysler would change the face of the automobile industry as Detroit’s Big Three (Ford,
Chrysler, and GM) becomes Detroit’s Big Two and some automobile brands may well be dropped. Out of Chrysler’s
three brands: Chrysler, Dodge, and Jeep, only Jeep is considered strong, while GM’s Buick, Pontiac, and MC brands are
considered troubled. The merger also faces major opposition from the United Auto Workers union and the companies’
dealers. It is likely that a merger would result in another round of job cuts, and just closing the factories and
dealerships would take a lot of cash. However, the UAW would probably not block the decision to close down factories
and buyout more workers if it prevents bankruptcy. On Friday, Chrysler announced job cuts of 5,000 workers or 25% of
its workforce, which likely signals the end of its independence. GM and Chrysler have declined to comment on the sale
or merger talk. Cash-starved GM would benefit by gaining access to Chrysler's $11 billion, while Nissan-Renault may be
interested in forming an alliance with Chrysler to increase its North American presence.

OPEC faces split, over plunging oil prices and oil quotas

The Organization of Petroleum Exporting Countries (OPEC), which formed five decades ago to unite oil producers, is
facing division as its members debate whether to cut oil production and raise prices as the world heads into a global
recession. Last week, Britain’s Prime Minister Gordon Brown said, “*It is+ absolutely scandalous that OPEC is
considering cuts as the global economy risks falling into recession.” The debate puts Saudi Arabia, OPEC’s biggest
producer and U.S. ally, against Venezuela and Iran. Both countries disagree with U.S. foreign policy and pushed for
higher oil prices. On Friday, it was announced that OPEC would cut oil production by 1.5 million barrels a day, but even
so, prices remained largely unchanged due to a decreased demand for crude oil. Crude oil is now trading at $64.15 per
barrel, down 56% from its all time-high of $147.27 reached on July 11, 2008. So why are oil prices so important? Saudi
Arabia only needs oil prices of about $30 per barrel to balance its government budget, while other countries such as
United Arab Emirates (UAE) needs $45 per barrel; Qatar $55; Iran $100; and Venezuela’s number is $120. Oil option
trading shows that many investors believe that oil will fall below $50 per barrel in the next few days. OPEC has noticed
a marked decrease in demand, and a report by the U.S. Department of Transportation noted that Americans have
drastically changed their driving habits. People are relying more on carpooling and public transportation. The decline in
oil prices is also contributed to the strengthening dollar. Investors usually buy commodities such as crude oil to hedge
against a weakening dollar, and then sell those investments when the dollar rebounds.

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 Freddie Mac’s stealth campaign to kill oversight regulation

Three years ago, Freddie Mac covertly hired DCI, a Republican consulting firm, to target Republican senators to kill
legislation for greater regulation and oversight. The regulatory overhaul bill proposed by Senator Chuck Hagel (R-Neb)
was submitted to the Senate in 2005. At that time, all GOP members of the Senate Banking, Housing, and Urban Affairs
Committee supported the legislation, while all Democrats opposed it. Hagel, along with 25 other Republican senators,
unsuccessfully petitioned Senate Majority Leader Bill Frist to allow a vote on the bill. They wrote, “If effective
regulatory reform legislation is not enacted this year, American taxpayers will continue to be exposed to the enormous
risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a
whole.” While these senators were pushing for this bill, DCI was targeting 17 Republican senators to defeat it. In the
end, the bill died because of a lack of sufficient Republican support and Democratic opposition. The Republican
senators targeted by DCI began hearing from their prominent constituents and financial contributors that they should
work to defeat Hagel’s bill because it would harm the housing boom. Eventually, nine of the 17 targeted Republicans
did not sign Hagel’s bill. Mike Buttry, Hagel’s chief of staff, said, “’It is outrageous that a congressionally chartered
government-sponsored enterprise would lobby against a member of Congress’s bill that would strengthen the
regulation of that institution. America has paid an extremely high price for the reckless, and possibly criminal, actions
of the leadership at Freddie and Fannie.”

Yahoo slashes 10% of workforce

On October 21, Yahoo (YHOO) announced that it would cut about 1,500 employees, or 10% of its workforce, in the
fourth quarter in order to reduce cost. Despite its decision to cut jobs, Yahoo has mainly matched Wall Street’s
forecasts and earnings reports, and in light of the current economy, Yahoo’s earnings report could have been worse. In
the past few months, Yahoo’s stock has been pummeled by worries that companies would cut their online advertising
expenses because of the economic slowdown. Online advertising includes Internet display ads such as banners and
videos. Earlier this year, Yahoo turned down many takeover bids from Microsoft (MSFT), a move that largely frustrated
several shareholders. Currently, Yahoo is trying to broker an ad-sharing deal with its main opponent, Google (GOOG).
However, this partnership has been put on hold as the Justice Department is investigating whether such a deal would
result in an online advertising monopoly, which would violate anti-trust laws.

Analysts cautious on American Express

The current financial crisis is taking its toll on American Express (AXP) as the beleaguered credit card giant reported a
24% drop in profits. The slowdown in consumer spending is hurting the company. Standard & Poor’s placed the
company on CreditWatch negative while Moody’s downgraded the company. However, the company has stressed that
it can fund its business for another year, and it has access to funding from the federal government. Some people have
expressed their opinion that American Express may need to consider a merger if the markets do not stabilize.

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 Got Cash?
Capital for the Entrepreneur
By Benjamin Lo
Staff Writer

You have that world changing idea – package, wrapped, and ready to go – but what do you do now? One of the top
reasons why most entrepreneurial ideas never get off the ground is a lack of funding. While the majority of potential
entrepreneurs are intimidated by the idea of raising capital, this does not
need to be you.
“Picking the right method to
For all startup businesses and ideas, the concern for capital is something help your idea and company
all entrepreneurs must consider. Even if you have the next Google or grow can mean the difference
Facebook it will be hard for you to go anywhere without the proper between starting a monumental
funding for your company to produce your product or market your idea. company and being on your way
toward debt.”
Most people have the misconception that there is only a limited number
of resources available to finance their entrepreneurial projects. Instead,
there are numerous methods of funding that are readily available for startups. The hard part of finding a source of
capital is discovering which one suits your business best. Picking the right method to help your idea and company grow
can mean the difference between starting a monumental company and being on your way toward failure.

Equity vs. Debt

Regardless of from whom or where you raise capital, as an entrepreneur, you must consider both equity and debt.
Equity is the monetary value of a business and, more importantly, the part of the company that is not owed to
creditors. Basically, equity can be considered as the right to share in the potential future profits of the company.

When deciding whether or not you would like to finance your startup using equity, you need to ask yourself whether
you are willing to share a stake of the ownership of your company for capital. Are you ready to allow others to
influence the decisions made in the future for cash now? Are you willing to provide a certain percentage of your profits
to another entity? Getting capital based on your company’s equity often involves venture capitalists or angel investors.

On the flipside, entrepreneurs have the choice of getting capital on the basis of debt. With this option, you can go into
debt by borrowing with the promise of paying it back with interest in the future. Debt financing is often preferred for
those who want full control of how their company will develop. Debt financing often involves traditional banks or
credit unions.

Often times, the best choice for your company will probably be a combination of the two – working with venture
capitalists and banks. It is often wise to use some form of equity backed financing to establish part of the capital that
would enable you to better utilize debt financing in the form of lower interest rates when you borrow.

The key to finding capital for any startup is picking the right group to back your company. Do not get stuck thinking that

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there is only one way you can find cash, and, instead, research all your options. Institutional venture capital, angel
investors, startup financing, and bank loans are just a few of the major sources of capital for entrepreneurs.

Institutional Venture Capital

Venture capitalists are by far the most talked about method of financing any startup, but it is often not the best option.
Venture capital often comes at the stake of ownership or equity. Startups will receive capital in return for a share in the
company. Venture capital is most reasonable for companies that are too small to raise capital in public markets and too
immature to receive a bank loan. In exchange for the high risk that venture capitalists assume by investing in smaller
and less mature companies, they usually get significant control over company decisions, in addition to a large portion
of the company's ownership, which means big shares in the company’s future profits. At the same time, many venture
capitalists will come in to help manage and develop your company as they too have a stake in your success.
Top Venture Capitalist for Early Stage Startups

Angel Investors
Angel investors are similar to venture capitalists except that your capital is often received from an individual as
opposed to a venture capitalist firm. Like institutional venture capitalists, angel investors demand a stake in your equity
and can ask for up to 50% in ownership and profits depending on the maturity of your business. Angel investors tend to
be easy to find and can often be located at many universities that offer entrepreneurship programs.

Startup Financing
Startup financing is often the most generic form – and many times the first – for raising capital that an entrepreneur
will think of. Startup financing is a very broad range of financing that avoids professional firms and services, including
partnering with friends and family, your own savings, and financing your assets. While combining money among friends
may not raise the $500,000 that often gets tossed around with venture capitalists and angel investors, startup
financing does eliminate many of the risks associated with these professional services such as paying back high interest
and forfeiting ownership.

Bank Loans
Bank loans from many commercial banks would require you to go into debt. What this entails is that, as an
entrepreneur of your own company, you will be forced to pay back more than what you will borrow in the form of
interest. While this may be the most conventional method, it does require you to return more than what you borrow.
Similar to equity financing, the less mature your company, the higher the interest rate on your loan. While this method
eliminates the risk of losing ownership, it does present the risks of having to borrow against your home, insurance
policies, retirement funds, and other personal assets.

Picking the right method for capital when you first start your business is vital toward any successful business. The more
time and research you put in when your business is still developing will help build the foundation toward future capital
and a successful business.

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 Start Up Tips for Entrepreneurs
By Christine Liu
Staff Writer

Starting a small business may be a daunting task, especially for those right out of college with little business
experience. It requires a great amount of time, money, and effort. Often times for many people, the risks of investing
in a startup business outweigh the return (or unfortunately, sometimes the lack of return). It is particularly
frustrating for the younger generation of entrepreneurs who have a lot of ambition, energy, and vision for the future,
but just don’t know where to start. So what should entrepreneurs do in order to maximize their success? Here are
some start-up tips for entrepreneurs.

Financing

For younger entrepreneurs, obtaining funding can be a big hurdle to

overcome. In order to get a bank loan, good credit history and sometimes
an equity investment is required. But since many young entrepreneurs have
a few tarnishes in their credit report from late college payments and many
do not own a house for home equity credit, bank loans are not an option.
Many entrepreneurs then opt for bank financing in the form of credit card
debt, which is an unpredictable and risky path to take in the startup stage.
Instead, getting a debit card for the first few months of business until
earnings are more solid and payments can be made on time may be the
best road to take. Also expand your circle of investors from only family and
friends to all the different people you know. For example, the founder of Atlantic Records acquired a loan from his
family dentist, and Walmart and Subway were funded from people outside of the inner family and friends circle.
Another achievable source of financing is a private investor. Some private investors do like to invest smaller amounts
to younger entrepreneurs who have solid ideas and business plans. Since it will be harder to land a large investment
from any one private investor, get several investors who will invest smaller amounts.

Focus on acquiring customers

In order to keep generating revenue, focus on increasing your customer base. Be active in reaching out to customers,
not with impersonal and distant brochures or flyers, but with personal, one-on-one communication, which is
definitely much more memorable for the customers. Spend a good chunk of each week just focused on customer
solicitation and get on the phone and pursue referrals! It may start off as a slow and arduous task, but you’ll find that
an increase in customer solicitation equals customer activity growth.

Management

To many entrepreneurs, their business is their “baby”, and so they want to be involved
in every aspect of running their business. However, there will come a point when you
will have too much work to do. But don’t let this be a signal for you to hire costly staff
for customer service work, which can be a big drain on funds. Instead, delegate the time
-consuming work of bill paying, invoicing, market research, etc. to lower-paid employees
and free yourself up to focus more on customers and cash flow.

Have Accountability

While many entrepreneurs want to start their own business because they want to be their own boss, it is important
to have someone who can help keep you accountable, especially since it is so easy to get caught up in the daily
whirlwind of starting up a business. Instead of having a mentor to tell you what to do, have a coach (a friend or a
retired business colleague) who can meet with you at least once quarter to help keep you accountable.

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By Jaeman Kim
Staff Writer

Baby-boomers are getting older and the entire population is aging. Electronic information and
communication have already established themselves as an integral part of our lives every day. More and more jobs
are being outsourced to other countries. To some, this may seem insignificant, but these trends will present all sorts
of new business opportunities in the coming years. When looking for new
markets for goods and services to develop, it is important for entrepreneurs
to understand what types of industries will allow for business growth. The
following list describes several industries that will start to emerge or
continue to grow at a faster rate and may be helpful when considering an
entrepreneurial path to pursue.

Internet Services, Data Processing, and other Information Services

The Internet is becoming increasingly popular globally due to falling PC prices

and increasing connection speeds. Today, the Internet is used to buy
consumer products, upgrade software, store data, conduct research, and
information gather information of countless types and forms. According to
the Bureau of Labor Statistics (BLS), output by the Internet Service industry is
projected to grow by 10.3% annually. Also, 850 million computers exist
worldwide today. By 2010, that number is expected to be 1.4 billion. Considering the growth of this sector, a startup
in Internet, data, and information services may become very profitable.

Software

Software use among homes, small businesses, and large

corporations has been pretty much entrenched in the U.S.
and in many other countries around the world. Due to such
high reliance on software, it is expected that available
software publishing jobs will increase by nearly 70% within
the next decade.

Software is unique in that the creation of one piece of

software can lead to the creation of another. For example,
the fruition of eBay led to the establishment of PayPal. With
more and more software being developed, the need for
complementary products will increase.

Management, Science and Technical Consulting

The economy and the nature of business is more complex now than ever before, and the demand for consultants will
only increase. Business consultants are expected to do well based on the fact that the businesses continues to grow,
both in numbers and complexity. They will need help drafting business plans, budgets, and strategies. There will also
be a high demand for marketing consultants. They will play an important role in many businesses, including
restaurants and retailers, who will need to differentiate not only their companies, but also the products they sell in
an increasingly competitive market.

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 Home Health Care

Currently, the number of people in older age groups is growing faster than the total population due to the post-War
baby boom. Also, advancements in medical technologies continues to extend the lives of both the ill and the elderly.
This means that the number of people needing home health care will expand at an increasing rate in the coming years.
Employment in specialized home health care is expected to increase by 54.5% by 2012.

Personal Financial Advisory

Similar to healthcare, the number of people who will need help managing their money is going to increase. Currently,
the financial advisory services demanded is projected to grow by 45.7% person. However, given the possibility that
Social Security may eventually become privatized, this estimate may be significantly larger. Those who are in the tax
industry is expected to be in a particularly advantageous position to begin a financial advisory business. The reason for
this is that doing taxes for clients also create opportunities to offer financial advice.

Another route that one can take is to work for a financial advisory firm, such as Ameriprise Financial. Although you will
not have complete control over your own business, in this position, your can expand your practice and knowledge by
obtaining more clients.

Childcare services

When women began to enter the workforce a few decades ago, a new industry was created: childcare. Due to the
increasing number of women working, this industry is only expected to get larger. Another contributing factor is that
the number of hours that parents are working is continuing to increase. For these reasons, the number of people
working in the childcare industry is expected to increase by 43% by 2012.

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 Location, Location, Location: America’s Top Entrepreneurial Cities
By Dmitry Shuster
Staff Writer

One very important factor in entrepreneurship is location. When starting out, one has to consider which markets are
more favorable than others and which location provides the most favorable business climate. It is obvious that some
areas are developing faster than others and thus provide incentives and advantages to entrepreneurs. Other cities
have elements (such as product or service demand, policies and laws, start-up costs), which are also attractive to
entrepreneurs and allow them to generate more business and larger growth during the first few years.

Taking all of this into consideration, it is very important to carefully and thoroughly consider location as a critical
component of entrepreneurship. The National Policy Research Council developed the Entrepreneurial Activity Index
to measure places which are best for the development and growth of new companies and businesses.

The index does this by calculating the percentage of businesses (with five or more employees) that were formed from
four to 14 years ago. With respect to growth, the index measures which of those businesses demonstrated rapid
growth during the past four years. Therefore, a specific location must have not only a large number of new
businesses, but also an ability to support the growth and development of those entrepreneurial businesses.

Top 10 Best Cities for Entrepreneurs Nationwide

10. San Antonio, Texas
• Population: 1,590,000
• Hot Industries: aerospace, biosciences, information technology, telecommunications,
logistics, and manufacturing
• Significant Startups: 4,399

9. Norfolk, Virginia
• Population: 1,570,000
• Hot Industries: military and maritime
• Significant Startups: 3,860

8. Nashville, Tennessee
• Population: 1,230,000
• Hot Industries: automotive manufacturing, technology distribution, warehousing, health
care, call centers
• Significant Startups: 4,441

7. Memphis, Tennessee
• Population: 1,140,000
• Hot Industries: logistics, biomedical research, information technology, tourism,
manufacturing, food processing, hospitality
• Significant Startups: 3,407

6. Washington, District of Columbia

• Population: 7,610,000
• Hot Industries: government contract, technical, tourism
• Significant Startups: 27,464

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5. Austin, Texas
• Population: 1,250,000
• Hot Industries: technology, business services
• Significant Startups: 5,469

4. Las Vegas, Nevada

• Population: 1,560,000
• Hot Industries: hotel and resort, tourism, gaming, construction, retail
• Significant Startups: 6,853

3. Raleigh-Durham, North Carolina

• Population: 1,190,000
• Hot Industries: life sciences, information technology, software development
• Significant Startups: 4,899

2. Charlotte, North Carolina

• Population: 1,500,000
• Hot Industries: finance, food manufacturing, textile, machinery, computers and electronics, printing,
chemicals, plastics and rubber
• Significant Startups: 5,686

1. Phoenix, Arizona
• Population: 3,250,000
• Hot Industries: service, construction, high tech, aerospace
 Significant Startups: 12,388

Rankings by Region

In the past, the West was a very appealing place for

West entrepreneurs as the favorable climate and influx of technology
significantly favored startup businesses. California’s real estate
1. Phoenix-Mesa, AZ was booming and as the economy grew, so did the number of
startups. However, in the past five years, the trend has been a
2. Las Vegas, NV movement from the West to the South for entrepreneurs. Many
entrepreneurs actually moved to Arizona (Phoenix ranks #1 in
3. Denver-Boulder-Greeley, CO entrepreneurial cities) from California, which averaged a 1.5%
growth in startups compared to Arizona’s 5%. Entrepreneurs are
4. San Diego, CA attracted by Arizona’s large quantities of available land and
relatively inexpensive home prices. Nevertheless, California is still
5. Los Angeles-Riverside-Orange focused on improving the business climate and the state is home
County, CA to technology heavy regions such as San Francisco and San Jose,
which have been growing since the dot-com boom.

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The Midwest has several hot spots for businesses, such as Chicago,
Madison, and the Kansas City area. Interstate trade during times of a Midwest
booming economy increases the lucrative nature of these areas.
However, at present, Detroit’s struggling motor industry has had a 1. Kansas City, MO
ripple effect throughout the region. This has influenced many cities,
such as Chicago, to provide a more favorable business climate in an 2. Chicago-Gary-Kenosha, IL
attempt to attract more entrepreneurs. Hoping to create more
business startups and more jobs, the cities develop new institutions to 3. Columbus, OH
support growing businesses. Furthermore, Chicago, which has a central
geographic region, has low business costs relative to other major cities. 4. Cincinnati-Hamilton, OH
All in all, the region had been gaining momentum since the beginning
of the decade, although growth has slowed down in recent years. 5. Indianapolis, IN

South Low housing prices and cheap labor are two of the many
attractions of the South. However, it is important to note that
1. Charlotte-Gastonia-Rock Hill, NC the region as a whole is only attracting entrepreneurs to certain
“hot spots,” and is not as diversified as some would hope.
2. Raleigh-Durham-Chapel Hill, NC Charlotte, for instance, has had an influx of young educated
workers. Coupled with a business-friendly banking industry, the
3. Austin-San Marcos, TX city is sure to attract many new entrepreneurs. The region as a
whole has seen output grow at a rate slower than the national
4. Memphis, TN rate of 12.2%. Some exceptions are Virginia and Tennessee,
which experienced output growth of 24.9% and 35.3% faster
5. Nashville, TN than the national average, respectively.

Northeast
New Jersey is the highest-ranked northeast state, although it
dropped in ranking from second to fourth place. The region’s 1. Washington, DC-Baltimore, MD
strength is access to the large number of consumers in the New
York, Philadelphia, and Washington, D.C. areas. Major airports,
2. Boston-Worcester-Lawrence, MA
seaports, and high levels of economic activity are also certainly
contributing factors. One downside of the area is that 3. New York City-New Jersey-Long
manufacturing plants are moving toward the southern region or Island, NY
even overseas. Furthermore, New England’s employment rate
was still 2% below its peak in 2006, a number which has certainly 4. Providence-Fall River, Warwick, RI
decreased due to the economic crisis as of late. The region also
has much less affordable and available land, especially in
5. Rochester, NY
comparison to the other regions. Despite these downsides, the
area is host to a number of startups that were attracted by
densely populated areas and large startup potential.

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 Top 10 Entrepreneurial States

1. Arizona
2. Virginia
3. Alabama
4. New Jersey
5. South Carolina
6. Delaware
7. North Carolina
8. Tennessee
9. Maryland
10. Nevada

Top 10 Mid-Size Entrepreneurial Cities

1. Mobile, Alabama
2. Charleston, South Carolina
3. Birmingham, Alabama
4. El Paso, Texas
5. Tucson, Arizona
6. Madison, Wisconsin
7. Mission, Texas
8. Columbia, South Carolina
9. Knoxville, Tennessee
10. Omaha, Nebraska

Top 10 Small Entrepreneurial Cities

1. Auburn, Alabama
2. Greenbay, Wisconsin
3. Yuma, Arizona
4. Laredo, Texas
5. Hunstville, Alabama
6. Casper, Wyoming
7. Las Cruces, New Mexico
8. Missoula, Montana
9. Dothan, Alabama
10. Lincoln, Nebraska

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 Qualities of an Entrepreneur

By Sunny Wong
Staff Writer

Starting a business may seem like a daunting endeavor considering

the large amounts of risk and work involved. However, for some,
the potential reward is high. The prospect of being able to earn
large sums of money along with the independence of being one’s
own boss never ceases to attract people down the entrepreneur
path. But there is also a great probability of failure, with 90% of
startups failing within just five years.

Before jumping into entrepreneurship, one must understand that

there are certain personal qualities that are absolutely necessary
for an entrepreneur to become successful. Some of these qualities
are inherent and some are developed over the course one’s life.
Knowing these qualities, identifying your weaknesses and working on strengthening them will help you become a
more successful entrepreneur. Here are some qualities and attributes that successful entrepreneurs have in
common.

Knowledge of Business and Industry

Without adequate knowledge in this area, the other qualities become rather inconsequential. It is often easier to
create a business with prior knowledge of the field you would like to pursue. For instance, approximately half of the
start-ups based from home are started by people who decide to utilize their prior knowledge of a specialized niche or
industry. Philip Green, a billionaire specializing in rag trade, claims that his success can be attributed to his deep
knowledge about garments. By merely rubbing a fabric between his fingers, he can automatically determine its price.

Aside from specialized knowledge, you must be proficient in various areas of your business, from marketing and
administration to accounting and production. Accounting, for instance, is especially important because it details the
numerous transactions the business makes. Although you do not necessarily need to be an absolute expert in these
fields, it would give you an upper hand if you do.

Leadership and Management Skills

A successful entrepreneur must be a strong leader in order to provide guidance and inspiration to his or her team.
Using a variety of motivational, planning, and coaching strategies, they are able to effectively manage their team to
produce favorable results. A successful entrepreneur is highly energetic, motivational, and charismatic, someone who
is able to rally his team even during downturns. Some people are fortunate enough to be born with this quality, but
for many, they must work hard to acquire it. If you belong to the latter, the best way to build up these skills right now
at UCLA is to participate in various organizations around campus and try to become more involved.

Hard-Work and Perseverance

Entrepreneurs are almost always hard workers. A common misconception is that getting started is the most difficult
part of the process when, in reality, implementing the business plan is the most arduous. Even after this,

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entrepreneurs still face the difficult task of managing the entire scale of the business, from the grunt work to the
broader administrative tasks. This takes enormous amounts of time and energy, but the sense of accomplishment after
achieving one’s own goals matches no other. There will also be numerous downturns and setbacks during the course of
the operation. Successful entrepreneurs are tenacious and persevere during these rough times. They do not allow
failure to hold them back, thus allowing them to stay the course and achieve success.

Nonconformity

Successful entrepreneurs are self-reliant, confident, and “thick-skinned.”

Once they envision their goal, they will go all out to achieve it, brushing
aside outside criticism. They also like to take full responsibility for their
own actions and are not afraid to go the extra mile to complete the task.
Perhaps the most profound example of this is the typical entrepreneur
who drops out of college. Bill Gates, among many others, for instance,
dropped out of Harvard to build his computer software empire.

Passion

This is almost a required quality that any entrepreneur should have. Because successful
entrepreneurs love what they do, you see the results from their work. It doesn’t
necessarily mean you have to create your business revolving around something you love
but you must have a strong desire to succeed and grow the business. For instance,
Howard Schultz, the CEO of Starbucks, is more passionate about treating his employees
well than his coffee. This is because he grew up seeing his father being treated poorly at
work..

Organization and Time Management

Because most entrepreneurs work alone or in small teams, being organized is essential. Successful entrepreneurs reach
their full potential by maximizing time and resources. One of the most effective and simple strategies entrepreneurs
use to be organized is by making lists. By doing so, they can prioritize their tasks, helping them maximize their time and
energy. Another strategy successful entrepreneurs use to save time is to simply make use of their little bits of time here
and there. For instance, while waiting in line for coffee, some entrepreneurs may pull out their mobile phones and
reply to some pertinent emails.

Creativity

A successful entrepreneur comes up with creative problem-

solving techniques to counter various challenges that may
arise during the startup phase. Such creativity is needed in
all areas of the business, from creating more cost-efficient
procedures to spotting new opportunities in the market.
Sometimes, it takes only one great idea to drastically
increase company revenues. For instance, Apple’s iPod not
only greatly increased company profits and visibility, but
also created a lasting cultural impact around the world.

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 Pitfalls to Avoid for Potential Entrepreneurs
By Joanne Hou
Senior Staff Writer

Being an entrepreneur can be an extremely exciting venture for many able individuals. It allows you to be your own
boss and run a business the way you would like to, not the way someone else has dictated. You get to develop your
own products and services and take full ownership of your ingenuity and creativity. However, like anything with a
tremendous upside, being an entrepreneur also has its risks
and pitfalls that has led to the failure of an overwhelming
number of entrepreneurial projects. While each of these
pitfalls do not guarantee failure and may even lead to
successful, thinking about these issues ahead of time may save Summary of Things to Think About
you from going down dead ends when you start your business.
Before Starting:
Product Is Everything

While the basis of a new business is usually a great product or Why am I in business? What’s my
idea, having that alone is not a sure sign of success. That is the main goal?
core of why you are in business, but that product needs to be
surrounded with a well-run company of talented people and/
or system to truly take off. Having innovation in your mind or
Start from scratch or buy a
in a model gives you a reason to start business, but not all
good ideas translate to something marketable and profitable. undervalued company?
It may be great to create a home-use robot to help with
everyday chores, but it does not mean that you will create a
robot empire on this idea alone. Building such robots in large How to delegate my time as
quantities takes great capital, human resource, production
system, and a customer base large enough and wealthy
entrepreneur on a daily basis?
enough to keep demand up for a long period of time. You may
not get enough people who are able to afford this product,
and thus your business fails. Without lots of capital and a great
How to get the best people so I can
team, this home-use robot, however great an idea, may never build the best and most sustainable
end up as the basis of a successful business.
company?
Doing It for Making Money Alone

Starting a business does not generally lead to quick money or

large profits. There is a period of perhaps a few years when the
business may be slow or barely survive, and may even have negative net income. For those who are thinking of
becoming entrepreneurs simply as a way to make money, entrepreneurship is probably not the way to go. Most new
businesses face enormous uncertainty and a majority end up failing. Thus, it is important to be in business to follow a
passion or an idea instead of money. Pursuing some innovation and using a start up company to realize that
advancement is a much better motivation than simply finding a way to take in profits. In fact, your cash flow can
easily run in the other direction and thus defeat the whole purpose of being in business. So, you would be happier
and more fulfilled if you pursued entrepreneurship to realize a passion or idea, rather than make creating profits as
your main reason for being in business.

Spending Too Much Time Running the Business

When you start your own business, there is a tremendous sense of ownership in the startup you have just created.
You have a tendency of wanting to do the daily operations to make sure everything goes according to plan. This day
to day operation management can easily take your entire working day and even weekends, but this is not the

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work that you, the entrepreneur, should be doing. Instead, you should be working on developing your business such as
planning out growth strategies, improving the efficiency of your current operating process, or recruiting highly talented
individuals to join your cause. It is important to be able to delegate the day to day running of the company to your
employees while you spend more of your time looking at the big picture, the long term picture. What you are good at,
as evidenced by your ability to create your own business, is having great ideas that actually work. Thus, you are better
served by focusing on your area of strength, which is innovating, strategizing, and creating new value. Leave the day to
day work to others.

Starting the Company from Scratch

Many entrepreneurs may have in their minds that being an entrepreneur means starting your own business. While that
is probably the most common idea associated with the word entrepreneur, that is not actually the case.
Entrepreneurship also involves buying an undervalued company to either guide it to greater heights as it currently
stands or by modifying the company to get it to where you envision it to be. Now, buying an existing company comes
with its definite benefits. Companies that exist already have some capital, human resources, funding, and systems of
operations. Having these crucial elements already in place to some degree, even if you plan to modify it, can still save
you money, energy, and perhaps most importantly, time. Starting from scratch takes a lot of resources because
everything needs to be built from scratch. Buying a company can eliminate some of the work that a company starting
from scratch cannot avoid.

Cutting Costs Where You Should Not: Salaries

Because cash is often scarce when you start a business, there may be a tendency to underpay your staff until your
business grows bigger. Bad idea. Again, ideas and products alone do not make a business, even if they are great ones.
However, having a great group of employees will make the chances of your business succeeding much greater than if
you just have a great idea. People ultimately bring value to your company, so having highly skilled managers, financial
officers, marketing officers, etc. increase the chances that your company is going to make good decisions that will lead
to growth down the line. This means that in order for good people to work for you, they most likely would demand
decent compensation for their toils. Do not underpay them or you will not get the best people possible for your
company. There are some costs that just should not be saved: reasonable salaries for employees.

Some More Pitfalls:

Do a business you do not know

well

Wait until everything is ready be-

fore you start selling your prod-
uct

Focus solely on the price of the

product

Not doing enough testing and re-

search of your product, strategy,
and market

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 Profiles of Successful and Unsuccessful Entrepreneurs
By Shannon Kung
Senior Staff Writer

Running a new start-up takes nerves of steel, especially with the circulating rumor that nine out of 10 startups fail in
their first year. However, both companies profiled here, Webvan and Google, Inc., made it past their first year. They
started around the same time near the end of the dot com era; however, their two paths diverged dramatically as one
collapsed within a few years and the other is now one of the most powerful institutions in the world.

Unsuccessful Entrepreneur: Webvan (1999-2001)

Webvan was an online grocery service that was labeled by CNET as the greatest dot com disaster in history.
Customers would place an online order and the company would deliver their groceries in their trademark trucks.
Initially Webvan started out strong and it received over $400 million in funding from investors that included giants such
as Goldman Sachs and CBS. However, its initial success, culminating to a value of
$1.2 billion at its peak, also led to its subsequent collapse.
Webvan’s problem never had anything to do with the quality of its service,
as it was a leader in the online grocery industry, even ranking number one in a
survey done by Gomez Advisors in 2000 of internet grocery stores. Instead, it was
the lack of customers needed to support its business. Heady with its promising
start, the company expanded quickly to eight other major U.S. cities and put in
orders for astronomical purchases, including one billion going to new warehouses.
Webvan even had plans to increase its influence to 26 cities. It was too optimistic
about the public’s willingness to forgo conventional grocery stores for its new,
online services.
Webvan was a classic case of not having enough monetary revenue to support its spending habits; it tried to
become too big, too fast. It was never able to attract enough customers to justify such an aggressive expansionary plan,
and Webvan closed operations in 2001, filing for Chapter 11 bankruptcy, and subsequently put around 2,000 people
out of work.

Successful Entrepreneur: Google (1998- Present)

Google, on the other hand, has continued to enjoy great success, even becoming a cultural icon. People no
longer search for things on the web, they “Google” it. Founded by two Stanford students, now billionaires Larry Page
and Sergey Brin, the Google search engine was able to show a better ranking of sites due to advanced algorithms and in
a quick and efficient manner. Aside from its innovative technology that revolutionized the industry at the time, Google
also benefited from having an original business model.
Although it originally was funded by angel investors and
venture capitalist firms, Google was already able to make a profit
within a few years of its founding. It has continued to grow by
mastering the art of targeted ads with Google AdSense and Google
AdWords, which have become Google’s main revenue generators.
The company also puts a lot of emphasis on the users, making sure
that the services it provides make the user experience simple and
effective. It has continued to be innovative and expand not only its
influence globally, but also to different ventures such as Gmail, an online e-mail system, and Google Earth, which
provides virtual maps of the earth with surprising clarity.
Its corporate culture is famously relaxed and stimulating, and Google’s slogan is “Don’t be evil.” The Google
headquarters, a 26-acre behemoth located in Mountain View, California, boasts amenities such as a gym, two
swimming pools, and eleven cafeterias for its employees. Google has developed a loyal following and continues to
grow, as seen by its founders, who are now tied as the fifth richest men in America.

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 Summer Entrepreneurship Institute
By Sonia Bhasin
Staff Writer

For undergraduate students looking to get exposure to the field of entrepreneurship, look no further. UCLA’s
Anderson School of Management offers a Summer Entrepreneurship Institute, which is an intensive, month long
program open to undergraduate students from any college or university and to anybody holding an undergraduate
degree. No business background is required for the program.

The institute’s main focus is on providing students with a multi-disciplinary approach regarding the development and
management of new business ventures. Topics covered in the course include venture: initiation; law, management,
and ethics; real estate investment and finance; accounting principles; marketing design and strategy; business
communications; and business negotiations. This program supplements a vigorous classroom environment with
outside learning experiences. These include field trips and guest speakers. This past summer, the institute included
field trips to places such as Staples Center and speakers such as Michael Morhaime, president and CEO of Blizzard
Entertainment, the company that produces the highly popular game World of Warcraft. The guest speaker program
helps students interact with and hear first-hand real world accounts from entrepreneurs. In addition, students
participate in many interactive classroom projects and group work throughout the program, creating a stimulating
and hands-on learning environment.

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Instructors for the program include award winning faculty from the Anderson School of Management, each of whom
serves as an expert in their respective fields. The faculty includes Professors George Abe, Gonzalo Freixes, Eric
Sussman, and David Ravetch, to name a few. In fact, the Harold Price Center for Entrepreneurial Studies at the
Anderson school is ranked number one in the world in the field of entrepreneurship. The institute also gives
undergraduate students a taste of the MBA program at UCLA, which is much more social and interactive than most
undergraduate classes would be. Participation, discussions, and group projects and presentations are very important.
Students from all over the world participate in this program, and it serves as a great networking opportunity.

Participants in the program receive credit for the course in the form of eight units and receive grades for two upper
division management classes. These include MGMT 180 and MGMT 128. These courses count toward the Business
Economics major at UCLA. The institute meets Monday through Friday from 9AM to 4PM for 4 weeks. The 2009
institute runs from July 7th to August 1st.

Students can apply for the Entrepreneurship Institute online. Participants are selected on a first-come, first-serve
basis; once the allotted amount of slots is full, the program is closed and additional applicants will be placed on the
waiting list. The cost of the program ranges from $3995 for UCLA undergraduates to $4495 for UCLA graduate
students and visiting students, but financial aid is available for those who qualify.

Don’t miss out on this incredible opportunity! For more information on the 2009 Summer Entrepreneurship Institute
and to apply, please visit:
http://www.summer.ucla.edu/institutes/Entrepreneurship/overview.htm

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 Management Development for Entrepreneurs
By Gloria Ho
Senior Staff Writer

If you are interested in learning the skills and strategic planning needed to become a successful entrepreneur
or executive after three or more years of experience out in the field, UCLA’s Anderson School of Management offers
an executive training program aimed at developing and improving just those skills. The Management Development
for Entrepreneurs (MDE) is a ten-day program over the course of three months offered every fall quarter on the
UCLA campus. Students meet once every month from Friday to Sunday with lectures extending throughout the day.
With a cost of $4,225, the program targets professionals with a minimum of three to five years of experience in
organizations with roughly $1,000,000 in annual revenues.

Applicants to the program are people with an entrepreneurial vision seeking to develop the skills necessary
to turn their vision into reality. The MDE strives to impart these skills to its students by offering different programs
for students to choose from. These programs are aimed at developing entrepreneurs’ management skills and
strengthening their ability to form and direct effective and profitable businesses. The program’s curriculum, taught
by award-winning faculty and researchers from the academic as well as the business community, is conducted in the
form of lectures, case studies, workshops, and business improvement consultations. Topics students can choose
include: strategy, growth & valuation, opportunity recognition, supply chain management, and the fundamentals of
marketing and customer service, just to name a few.

A special focus of the MDE program is the Business Improvement Project (BIP). As a requisite for graduation,
each participant is required to complete and submit a strategic initiative plan formulated to improve and add value
to the student’s enterprise under the direction of a MBA fellow. A MBA fellow is a MBA or Fully-Employed MBA
student (FEMBA) from Anderson who leads a group of four to five program participants in designing their plan from
the skills they have learned and developed throughout the three months. The plan, constructed in a BIP workbook
during BIP workshops, is submitted in the weeks after the end of the program. Students then graduate in January of
the following year. Classes range from 20-30 students.

So if the idea of starting your own business ever comes up, keep in mind this opportunity at Anderson. For
more information, email mde@anderson.ucla.edu or contact (310) 206-4169.

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