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Entrepreneurship: Successfully

Launching New Ventures 5th Edition


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CONTENTS vii

Savvy EntrEPrEnEurial Firm: Thriving in a Establish a Code of Conduct 223


Crowded industry by Creating Meaningful Value and Implement an Ethics Training Program 224
differentiation from Competitors 167 dealing Effectively with legal issues 225
Completing a Competitive Analysis Grid 168 Choosing an Attorney for a Firm 225
What WEnt Wrong? digg: A start-up That lost What WEnt Wrong? Fitbit Force recall:
its Way and its Place in its industry 170 did Fitbit react Quickly enough? 226
Chapter Summary 171 | Key Terms 172
Drafting a Founders’ Agreement 228
Review Questions 172 | Application Questions 173
You Be the VC 5.1 174 | You Be the VC 5.2 174 Avoiding Legal Disputes 228
CASE 5.1 175 | CASE 5.2 177 Savvy EntrEPrEnEurial Firm: Vesting
Endnotes 179 Ownership in Company stock: A sound strategy
for start-ups 229
ChaPter 6 Writing a Business PartnEring For SuCCESS: Patagonia and Build-A-
Plan 181 Bear Workshop: Picking Trustworthy Partners 232
Opening Profile—TeMPOruN: Proceeding on the obtaining Business licenses and Permits 233
strength of a Winning Business Plan 181 Federal Licenses and Permits 233
the Business Plan 183 State Licenses and Permits 233
Reasons for Writing a Business Plan 183 Local Licenses and Permits 234
Who reads the Business Plan—and What are they Choosing a Form of Business organization 235
looking for? 185 Sole Proprietorship 236
A Firm’s Employees 185 Partnerships 238
Investors and Other External Stakeholders 185 Corporations 239
guidelines for Writing a Business Plan 186 Limited Liability Company 242
Structure of the Business Plan 186 Chapter Summary 243 | Key Terms 244
Content of the Business Plan 187 Review Questions 244 | Application Questions 245
You Be the VC 7.1 247 | You Be the VC 7.2 247
outline of the Business Plan 189 CASE 7.1 248 | CASE 7.2 251
Exploring Each Section of the Plan 190 Appendix 7.1 254
Savvy EntrEPrEnEurial Firm: Know When to Endnotes 256
Hold Them, Know When to Fold Them 191
PartnEring For SuCCESS: Types of Partnerships
That Are Common in Business Plans 195 ChaPter 8 Assessing a New Venture’s
What WEnt Wrong? What eventVue learned the Financial Strength and Viability 259
Hard Way About Making Assumptions 202 Opening Profile—GyMFlOW: Managing Finances
Presenting the Business Plan to investors 203 Prudently 259
The Oral Presentation of a Business Plan 203 introduction to Financial management 261
Questions and Feedback to Expect from Investors 205 Financial objectives of a Firm 262
Chapter Summary 205 | Key Terms 206 the Process of Financial management 262
Review Questions 206 | Application Questions 207 PartnEring For SuCCESS: Organizing
You Be the VC 6.1 209 | You Be the VC 6.2 209 Buying Groups to Cut Costs and Maintain
CASE 6.1 210 | CASE 6.2 213 Competitiveness 263
Endnotes 216 Financial Statements 265
Historical Financial Statements 265
Part 3 Moving from an Idea to an Savvy EntrEPrEnEurial Firm: Know the Facts
Entrepreneurial Firm 217 Behind the Numbers 268
Forecasts 273
ChaPter 7 Preparing the Proper Sales Forecast 273
Ethical and Legal Foundation 219 Forecast of Costs of Sales and Other Items 275
Opening Profile—TeMPered MiNd: Proceeding on a Pro Forma Financial Statements 277
Firm legal Foundation 219 Pro Forma Income Statement 278
Establishing a Strong Ethical Culture for a What WEnt Wrong? Be Careful What you Wish
Firm 221 For: How Growing Too Quickly Overwhelmed One
Lead by Example 222 Company’s Cash Flow 279
viii CONTENTS

Pro Forma Balance Sheet 279 Friends and Family 332


Pro Forma Statement of Cash Flows 280 Bootstrapping 333
Ratio Analysis 283 Preparing to raise debt or Equity Financing 334
Chapter Summary 284 | Key Terms 285 Sources of Equity Funding 337
Review Questions 285 | Application Questions 286 Business Angels 337
You Be the VC 8.1 287 | You Be the VC 8.2 287
CASE 8.1 288 | CASE 8.2 290 Venture Capital 338

Endnotes 292 Initial Public Offering 340


What WEnt Wrong? How One start-up Caught
the Attention of VCs, Gained 25,000 daily users,
ChaPter 9 Building a New-Venture
and still Failed 341
Team 295
Sources of debt Financing 343
Opening Profile—NexT BiG sOuNd: Hitting the Ground
Commercial Banks 343
running 295
SBA Guaranteed Loans 344
liability of newness as a Challenge 297
Other Sources of Debt Financing 345
Creating a new-venture team 297
Creative Sources of Financing and Funding 345
PartnEring For SuCCESS: To Overcome the
liabilities of Newness, Consider Joining a start-up Crowdfunding 345
Accelerator 298 Leasing 346
The Founder or Founders 299 SBIR and STTR Grant Programs 347
What WEnt Wrong? devver: How Miscues in Other Grant Programs 348
regard to the Composition and Management of a Savvy EntrEPrEnEurial Firm: Working Together:
New-Venture Team Can Kill a start-up 302 How Biotech Firms and large drug Companies
The Management Team and Key Employees 303 Bring Pharmaceutical Products to Market 349
Savvy EntrEPrEnEurial Firm: Overcoming a Strategic Partners 349
lack of Business experience 304 Chapter Summary 350 | Key Terms 351
The Roles of the Board of Directors 307 Review Questions 351 | Application Questions 352
You Be the VC 10.1 354 | You Be the VC 10.2 354
rounding out the team: the role of Professional CASE 10.1 355 | CASE 10.2 358
advisers 310
Endnotes 361
Board of Advisors 310
Lenders and Investors 311
other Professionals 313
Part 4 Managing and Growing an
Consultants 313
Entrepreneurial Firm 363
Chapter Summary 314 | Key Terms 315
Review Questions 315 | Application Questions 315 ChaPter 11 Unique Marketing
You Be the VC 9.1 317 | You Be the VC 9.2 317 Issues 365
CASE 9.1 318 | CASE 9.2 321 Opening Profile—WiNK NATurAl COsMeTiCs:
Endnotes 324 Creating a New Brand in the Cosmetics industry 365
Selecting a market and Establishing a
ChaPter 10 Getting Financing or Position 367
Funding 327 Segmenting the Market 367
Opening Profile—rOOMiNATe: raising Money Selecting a Target Market 368
Carefully and deliberately 327 Crafting a Unique Market Position 369
the importance of getting Financing or Branding 370
Funding 329 the 4Ps of marketing for new ventures 373
Why most new ventures need Funding 329 Product 373
Cash Flow Challenges 329
PartnEring For SuCCESS: How Co-Branding is
Capital Investments 330 Combining the strengths of Two Already successful
Lengthy Product Development Cycles 330 Brands 374
PartnEring For SuCCESS: startup Weekend: A Price 376
Fertile Place to Meet Business Cofounders 331 Promotion 377
Sources of Personal Financing 332 What WEnt Wrong? What start-ups Can learn
Personal Funds 332 About Marketing from Missteps at JCPenney 378
CONTENTS ix

Savvy EntrEPrEnEurial Firm: How Airbnb used The Process of Conducting an Intellectual Property
Blogs as a stepping-stone to Generate substantial Audit 429
Buzz About its service 383 Chapter Summary 430 | Key Terms 432
Place (or Distribution) 386 Review Questions 432 | Application Questions 433
You Be the VC 12.1 434 | You Be the VC 12.2 434
Sales Process and related issues 387
CASE 12.1 435 | CASE 12.2 437
Chapter Summary 390 | Key Terms 391
Review Questions 391 | Application Questions 392 Endnotes 438
You Be the VC 11.1 393 | You Be the VC 11.2 393
CASE 11.1 394 | CASE 11.2 397 ChaPter 13 Preparing for and
Endnotes 400 Evaluating the Challenges
of Growth 441
ChaPter 12 The Importance of Opening Profile—BiG FisH PreseNTATiONs: Growing
in a Cautious, yet deliberate Manner 441
Intellectual Property 403
Preparing for growth 443
Opening Profile—driPCATCH: The Key role of
intellectual Property early in a Firm’s life and its Appreciating the Nature of Business Growth 443
Ongoing success 403 Staying Committed to a Core Strategy 445
the importance of intellectual Property 405 PartnEring For SuCCESS: How Threadless
Determining What Intellectual Property to Legally Averted Collapse by Bringing on a Partner with
Protect 407 Back-end Operational expertise 446
The Four Key Forms of Intellectual Property 407 Planning for Growth 447

Patents 408 reasons for growth 448


Types of Patents 410 Capturing Economies of Scale 449

Who Can Apply for a Patent? 411 Capturing Economies of Scope 449

The Process of Obtaining a Patent 412 Market Leadership 449

Patent Infringement 414 Influence, Power, and Survivability 449

trademarks 414 Need to Accommodate the Growth of Key


Customers 450
Savvy EntrEPrEnEurial Firm: Knowing
the ins and Outs of Filing a Provisional Patent Ability to Attract and Retain Talented Employees 450
Application 415 managing growth 450
The Four Types of Trademarks 416 Knowing and Managing the Stages of Growth 451
PartnEring For SuCCESS: individual inventors Savvy EntrEPrEnEurial Firm: safesforce.com
and large Firms: Partnering to Bring New Products Crosses the Chasm 454
to Market 417 Challenges of growth 455
What Is Protected Under Trademark Law? 418 Managerial Capacity 455
Exclusions from Trademark Protection 419 Day-to-Day Challenges of Growing a Firm 456
The Process of Obtaining a Trademark 419 What WEnt Wrong? How Trying to Build Out its
Copyrights 421 Own Capabilities in a Key Area Contributed to the
What Is Protected by a Copyright? 421 Failure of a Promising Firm 458
Chapter Summary 459 | Key Terms 460
Exclusions from Copyright Protection 422
Review Questions 461 | Application Questions 461
How to Obtain a Copyright 422 You Be the VC 13.1 463 | You Be the VC 13.2 463
Copyright Infringement 423 CASE 13.1 464 | CASE 13.2 467
Copyright and the Internet 424 Endnotes 470
What WEnt Wrong? GoldieBlox vs. Beastie Boys:
The Type of Fight That No start-up Wants to Be a ChaPter 14 Strategies for Firm
Part Of 425 Growth 473
trade Secrets 426 Opening Profile—sHAKe sMArT: Maintaining
What Qualifies for Trade Secret Protection? 427 Consistent strategies for Growth 473
Trade Secret Disputes 427 internal growth Strategies 475
Trade Secret Protection Methods 428 New Product Development 475
Conducting an intellectual Property audit 429 Savvy EntrEPrEnEurial Firm: switchFlops: How
Why Conduct an Intellectual Property Audit? 429 to Create Built-in Avenues for Future Growth 477
x CONTENTS

additional internal Product-growth Savvy EntrEPrEnEurial Firm: Wahoo’s Fish


Strategies 479 Taco: A Moderate-Growth yet Highly successful
Improving an Existing Product or Service 479 Franchise Organization 515
Increasing the Market Penetration of an Existing Product Selecting and Developing Effective Franchisees 517
or Service 479 advantages and disadvantages of Establishing a
Extending Product Lines 480 Franchise System 518
Geographic Expansion 480 Buying a Franchise 520
international Expansion 481 Is Franchising Right for You? 520
What WEnt Wrong? lessons for Growth-Minded What WEnt Wrong? Trouble at Curves
start-ups from Crumbs Bake shop’s Failure 482 international 521
Assessing a Firm’s Suitability for Growth Through The Cost of a Franchise 523
International Markets 483 Finding a Franchise 524
Foreign Market Entry Strategies 484 PartnEring For SuCCESS: using Co-Branding to
Selling Overseas 484 reduce Costs and Boost sales 525
External growth Strategies 485 Advantages and Disadvantages of Buying a
Franchise 526
Mergers and Acquisitions 485
Licensing 489
Steps in Purchasing a Franchise 528
Watch Out! Common Misconceptions About
Strategic Alliances and Joint Ventures 490
Franchising 529
PartnEring For SuCCESS: Three steps to Alliance
success 492 legal aspects of the Franchise relationship 530
Chapter Summary 494 | Key Terms 495 Federal Rules and Regulations 530
Review Questions 495 | Application Questions 496 State Rules and Regulations 531
You Be the VC 14.1 498 | You Be the VC 14.2 498 more about Franchising 533
CASE 14.1 499 | CASE 14.2 502
Franchise Ethics 533
Endnotes 504
International Franchising 534
The Future of Franchising 535
ChaPter 15 Franchising 507
Chapter Summary 536 | Key Terms 537
Opening Profile—uPTOWN CHeAPsKATe: Franchising
Review Questions 537 | Application Questions 538
as a Form of Business Ownership and Growth 507
You Be the VC 15.1 540 | You Be the VC 15.2 540
What is Franchising and how does CASE 15.1 541 | CASE 15.2 543
it Work? 510 Endnotes 546
What Is Franchising? 510
How Does Franchising Work? 510 Glossary 548
Establishing a Franchise System 513 Name Index 558
When to Franchise 514 Company Index 560
Steps to Franchising a Business 514 Subject Index 564
Preface
What Is New to This Edition?
This fifth edition is a thorough revision of our book. Each chapter was revised
to reflect examples of current entrepreneurial firms and the latest thinking
about entrepreneurship from academic journals and practitioner publications.
Specifically, the following is new to the fifth edition.

Opening Profile Each chapter begins with a profile of an entrepreneurial


firm that was started while the founders were in college. All 15 Opening Profiles
(one for each chapter) are new to this edition. Each profile is specific to the
chapter’s topic. The profiles are based on personal interviews with the student
entrepreneurs involved.

Updated Boxed Features The majority of the “What Went Wrong?”


“Savvy Entrepreneurial Firm,” and “Partnering for Success” features are new
to this edition. These features not only alert students and readers to contem-
porary issues facing entrepreneurial firms, but are meant to be helpful to them
in a practical sense as well. Select features focus on topics such as how to find
a mentor, how to select a business co-founder, and how to avoid the types of
mistakes that typify unsuccessful entrepreneurial ventures. The two “You Be
the VC” features at the end of each chapter have been a staple of the book
since its inception. A total of 29 of the 30 “You be the VC” features in the fifth
edition are new.

Barringer/Ireland Business Model Template One of the strongest


additions to the fifth edition is the inclusion and thorough explanation of
the Barringer/Ireland Business Model Template. We introduce this template
to you in Chapter 4. It provides a nicely designed way for students to think
through and articulate the business model for a proposed or existing firm. The
template, which is similar in its intent and usefulness to the popular Business
Model Canvas created by Alexander Osterwalder and Yves Pigneur, contains
four sections and 11 parts. Chapter 4 fully explains each section and part. An
enlarged version of the template is included in the Appendix to Chapter 4. It
can be photocopied and used to assist students in completing business models
for proposed or existing firms.

New and Updated Cases The majority of end-of-chapter cases are new
to this edition. Those that were retained have been completely updated. The
cases were carefully selected to illustrate the principles introduced in their re-
spective chapters. The questions included at the end of each case can be used
to stimulate classroom discussion or for quizzes or tests.

Updated References The amount of academic research examining en-


trepreneurship-related topics continues to grow. To provide the most recent
insights from academic journals, we draw upon recent research from jour-
nals such as Strategic Entrepreneurship Journal, Entrepreneurship Theory and
Practice, Journal of Business Venturing, and Academy of Management Journal.
Similarly, we relied on the most current articles appearing in business publica-
tions such as The Wall Street Journal and Entrepreneur among others, to pres-
ent you with examples of the actions being taken by today’s entrepreneurs as
they lead their ventures.

xi
xii PREFACE

Introduction to Entrepreneurship
There is tremendous interest in entrepreneurship on college campuses and
around the world. One indicator of this interest is the fact that of the approxi-
mately 2,000 colleges and universities in the United States, about two-thirds of
the total now offer a course in entrepreneurship. As a result, a growing number
of students are forgoing traditional careers and starting their own businesses.
Ordinary people across the world are equally interested in launching entrepre-
neurial careers. According to the 2013 Global Entrepreneurship Monitor, in the
United States a total of 12.7 percent of the adult population is starting a busi-
ness or has started a business in the past three-and-a-half years. There are
regions of the world where the percentage is even higher. In Brazil, for example,
17.3 percent of the adult population is starting or has started a business in the
past three-and-a-half years. The percentage is 24.3 percent in Chile.
The lure of entrepreneurship is the ability to create products and services
that enhance people’s lives. You’ll see this through the many examples of
entrepreneurial firms provided in the book. Particularly inspiring are the ex-
amples of businesses started while the founders were still in college. We begin
each chapter of this book with a profile of a business that was founded while
the founders were still in college. Several of the end-of-chapter cases are fo-
cused on student-founded businesses as well. The opening profile for Chapter
3, for example, focuses on LuminAid, a business started by Andrea Sreshta
and Anna Stork, two students at Columbia University. The three children
pictured on the front cover of the book are looking at what Sreshta and Stork
created—solar powered pillows that provide light for people in disaster relief
situations. What we hope to accomplish via the profiles and cases about busi-
nesses that were started while their founders were still in college is to inspire
the students who are using the book. Hopefully they’ll look at students like
Sreshta and Stork and realize that they aren’t too different from them, and
that they have the capacity to conceive a business idea and launch a success-
ful company too.
Many of the examples of student-inspired businesses provided in the
book are both instructive and heartwarming. For example, Case 3.2 fo-
cuses on a company named Embrace, which was started by four Stanford
University students. Embrace makes a product, called the Embrace Baby
Warmer, which literally saves the lives of premature babies born in remote
villages in developing countries. It looks like a small sleeping bag and con-
tains a warming element that when turned on emulates the heat provided
by a more sophisticated incubator in a hospital. No one can read the case
without being inspired and somewhat awed by what a motivated group of
college students, surrounded by a supportive university and dedicated fac-
ulty and mentors, were able to accomplish when they set their sights on
becoming entrepreneurs. A photo of the Embrace Baby Warmer is provided
in the case. We invite you to go to Case 3.2 now to glance at the Embrace
Baby Warmer.
There is one caveat to successful entrepreneurship, and it’s a big one.
People, regardless of age, need a process to follow to successfully navigate the
entrepreneurial journey. This is where our book offers unique value. The book
describes entrepreneurship as a four step process, beginning with the deci-
sion to become an entrepreneur and culminating with managing and growing
a successful firm. There is a lot in between, as you’ll see. Entrepreneurship
is not easy, which is a sentiment that we express throughout the book. But
it is doable, as evidenced by the many success stories provided. The process,
pictured nearby, provides a framework or roadmap of the entrepreneurial pro-
cess that many professors, students, and others that have used the book have
told us has been particularly helpful to them. In the book, we’re also careful
to talk about failures as well as successes. Each chapter includes a boxed
PREFACE xiii

feature titled “What Went Wrong?” The feature contains a real-life example
of something that went wrong with an entrepreneurial firm. Professors have
commented to us that they appreciate having failure stories as well as suc-
cess stories as teaching tools in their classrooms. At the other extreme, each
chapter also includes a boxed feature called “Savvy Entrepreneurial Firm.”
In these features, we describe actions entrepreneurial firms have taken that
contributed to their success. Complementing these features is a third one that
is presented in each chapter. Called “Partnering for Success,” these features
discuss relationships entrepreneurial firms form with various parties (such
as suppliers and distributors) in order to increase the likelihood of being
successful.
We sincerely hope that college and university students and their professors
as well as others who choose to read this book will find it thoughtful, instruc-
tive, helpful, and inspiring. Our goal is to place into your hands—our readers—
a book with the ability to both inspire and lead you through the steps in the
entrepreneurial process.

How Is This Book Organized?


As mentioned above, the book is organized around the entrepreneurial process.
The four parts of the entrepreneurial process are as follows:

Part 1: Decision to Become an Entrepreneur


Part 2: Developing Successful Business Ideas
Part 3: Moving from an Idea to an Entrepreneurial Firm
Part 4: Managing and Growing an Entrepreneurial Firm

The book mirrors this process. It is laid out in four parts and 15 chapters.
The nearby figure depicts the parts of the process and the chapters that are
included in each part.

What Are the Unique Aspects of the Book?


While using the book, we think you’ll find several unique features to be par-
ticularly helpful. The following table lays out the most unique features of the
book followed by an explanation.
xiv PREFACE

UniqUe FeatUre oF the Book explanation


Focus on opportunity The book opens with strong chapters on the front end
recognition, feasibility analysis, of the entrepreneurial process, including opportunity
and the developing of an effective recognition, feasibility analysis, and the development of
business model. an effective business model. These are activities that must
be completed early when investigating the merits of a
business idea.
First Screen (template for Chapter 3 (Appendix 3.1) provides a template for
completing feasibility analysis). completing a feasibility analysis. The template can be
copied and used to complete a feasibility analysis for a
business idea.
Internet Resource Table. Chapter 3 (Appendix 3.2) contains a table of Internet
resources that can be used in completing a feasibility
analysis and in other aspects of investigating the merits
of a business idea.
Barringer/Ireland Business The Barringer/Ireland Business Model Template is a nicely
Model Template. designed template for helping students think through and
articulate the business model for a proposed or existing
firm. Each section of the template is fully explained in
Chapter 4. The template can be easily copied and used by
those wishing to develop a business model for an entrepre-
neurial venture.
Opening Profiles. Each chapter starts with a profile of an entrepreneurial firm
started while the founder of founders were still in college.
Photos of the entrepreneurs and a Q&A format that allows
readers to get to know a little about each of the student en-
trepreneurs personally are included. All 15 opening profiles
are unique to the fifth edition.
What Went Wrong? Each chapter contains a boxed feature titled “What Went
Boxed Features. Wrong?” This feature has been a very popular aspect of
the book. The features explain the missteps of seemingly
promising entrepreneurial firms. The purpose is to pro-
vide students a healthy dose of stories about firms that
either failed or suffered setbacks rather than focus just on
success stories. The features are followed by discussion
questions that allows students to identify the causes of the
setbacks or failures.
Savvy Entrepreneurial Firm Each chapter contains a boxed feature titled “Savvy
Boxed Features. Entrepreneurial Firm.” These features illustrate the types
of business practices that facilitate the success of entrepre-
neurial ventures.
Partnering for Success Boxed Each chapter contains a boxed feature titled “Partnering for
Features. Success.” We present this feature in each chapter to highlight
the fact that the ability to partner effectively with other firms
is becoming an increasingly important attribute for successful
entrepreneurial ventures.
PREFACE xv

You Be the VC end of chapter Two features, titled “You be the VC,” are provided at the
features end of each chapter. These features present a “pitch” for
funding for an emerging entrepreneurial venture. The fea-
tures are designed to stimulate classroom discussion by
sparking debate on whether a particular venture should
or shouldn’t receive funding. All of the firms featured are
real-life entrepreneurial ventures.
End of chapter cases Two medium-length cases, written by the authors of the
book, are featured at the end of each chapter. The cases
are designed to stimulate classroom discussion and illus-
trate the issued discussed in the chapter.

Instructor Resources
At the Instructor Resource Center, www.pearsonhighered.com/irc, instructors
can easily register to gain access to a variety of instructor resources available
with this text in downloadable format. If assistance is needed, our dedicated
technical support team is ready to help with the media supplements that ac-
company this text. Visit http://247.pearsoned.com for answers to frequently
asked questions and toll-free user support phone numbers.
The following supplements are available with this text:
■ Instructor’s Resource Manual
■ Test Bank
■ TestGen® Computerized Test Bank
■ PowerPoint Presentation
■ Image Library

Student Resources
LivePlan—Through a partnership with Palo Alto Software, we’re able to pro-
vide 6-month access to LivePlan at a reduced rate with the purchase of a
textbook. LivePlan simplifies business planning, budgeting, forecasting, and
performance tracking for small businesses and start-ups. Set business goals,
compare performance to industry benchmarks, and see all your key numbers
in an easy-to-use dashboard so you know exactly what’s going on in your busi-
ness. To order LivePlan with the textbook, use package ISBN 0134113519.

Feedback
If you have questions related to this book about entrepreneurship, please con-
tact our customer service department online at http://247.pearsoned.com.
Acknowledgments
We are pleased to express our sincere appreciation to four groups of people for
helping bring both editions of our book to life.
Pearson Education Professionals A number of individuals at Pearson
Education have worked with us conscientiously and have fully supported our
efforts to create a book that will work for those both studying and teaching the
entrepreneurial process. From Pearson Education, we want to extend our sin-
cere appreciation to our Acquisitions Editor, Dan Tylman; our Senior Strategic
Marketing Manager, Erin Gardner; and our Editorial Program Manager, Claudia
Fernandes. Each individual provided us invaluable guidance and support, and
we are grateful for their contribution.
Student Entrepreneurs We want to extend a heartfelt “thank you” to the
student entrepreneurs who contributed to the opening features in our book.
Our conversations with these individuals were both informative and inspiring.
We enjoyed getting to know these bright young entrepreneurs, and wish them
nothing but total success as they continue to build their ventures.
Academic Reviewers We want to thank our colleagues who participated
in reviewing individual chapters of the book while they were being written. We
gained keen insight from these individuals (each of whom teaches courses in
entrepreneurship) and incorporated many of the suggestions of our reviewers
into the final version of the book.
Thank you to these professors who participated in reviews:

Dr. Richard Bartlett, Columbus State Christina Roeder, James Madison


Community College University
Greg Berezewski, Robert Morris College Aron S. Spencer, New Jersey Institute of
Jeff Brice, Jr., Texas Southern Technology
University Vincent Weaver, Greenville Technical College
Ralph Jagodka, Mt. San Antonio College Lisa Zidek, Florida Gulf Coast University

Academic Colleagues We thank this large group of professors whose


thoughts about entrepreneurial education have helped shape our book’s con-
tents and presentation structure:

David C. Adams, Manhattanville College James Bloodgood, Kansas State


Sol Ahiarah, SUNY—Buffalo State College University

Frederic Aiello, University of Southern Jenell Bramlage, University of


Maine Northwestern Ohio

James J. Alling Sr., Augusta Technical Michael Brizek, South Carolina State
College University

Jeffrey Alstete, Iona College Barb Brown, Southwestern Community


College
Jeffrey Alves, Wilkes University
James Burke, Loyola University—Chicago
Joe Aniello, Francis Marion
University Lowell Busenitz, University of Oklahoma
Mary Avery, Ripon College John Butler, University of Texas—Austin
Jay Azriel, Illinois State University Jane Byrd, University of Mobile
Richard Barker, Upper Iowa University Art Camburn, Buena Vista University
Jim Bell, Texas State University Carol Carter, Louisiana State University
Robert J. Berger, SUNY Potsdam Gaylen Chandler, Wichita State University
xvi
ACKNOWLEDGMENTS xvii

James Chrisman, Mississippi State Dennis Hoagland, LDS Business College


University Kathie Holland, University of Central Florida
Delena Clark, Plattsburgh State University Frank Hoy, Worcester Polytechnic Institute
Dee Cole, Middle Tennessee State Jeffrey Jackson, Manhattanville College
University
Grant Jacobsen, Northern Virginia
Roy Cook, Fort Lewis College Community College–Woodbridge
Andrew Corbett, Babson College Susan Jensen, University of
Simone Cummings, Washington Nebraska—Kearney
University School of Medicine Alec Johnson, University of St. Thomas
Suzanne D’Agnes, Queensborough James M. Jones, University of the
Community College Incarnate Word, ERAU, Del Mar College
Douglas Dayhoff, Indiana University Jane Jones, Mountain Empire Community
Frank Demmler, Carnegie Mellon University College
David Desplaces, University of Hartford/ Joy Jones, Ohio Valley College
Barney Tom Kaplan, Fairleigh Dickinson
Vern Disney, University of South University—Madison
Carolina—Sumter Elizabeth Kisenwether, Penn State
Dale Eesley, University of Toledo University
Alan Eisner, Pace University James Klingler, Villanova University
Susan Everett, Clark State Community Edward Kuljian, Saint Joseph’s University
College James Lang, Virginia Tech University
Henry Fernandez, North Carolina Central Allon Lefever, Eastern Mennonite
University University
Charles Fishel, San Jose State University Anita Leffel, University of Texas—
Dana Fladhammer, Phoenix College San Antonio
Brenda Flannery, Minnesota State Gary Levanti, Polytechnic University—
University LI Campus
John Friar, Northeastern University Benyamin Lichtenstein, University of
Barbara Fuller, Winthrop University Massachusetts, Boston

Barry Gilmore, University of Memphis Bruce Lynskey, Vanderbilt University

Caroline Glackin, Delaware State Janice Mabry, Mississippi Gulf Coast


University Community College

Cheryl Gracie, Washtenaw Community Jeffrey Martin, University of Alabama


College Greg McCann, Stetson University
Frederick Greene, Manhattan College Elizabeth McCrea, Pennsylvania State—
Lee Grubb, East Carolina University Great Valley

Brad Handy, Springfield Technical Brian McKenzie, California State


Community College University—Hayward

Carnella Hardin, Glendale College Chris McKinney, Vanderbilt University

Ashley Harmon, Southeastern Technical Dale Meyer, University of Colorado


College Steven C. Michael, University of Illinois
Steve Harper, University of North Carolina Urbana—Champaign
at Wilmington Angela Mitchell, Wilmington College
Alan Hauff, University of Missouri— Bryant Mitchell, University of Maryland—
St. Louis Eastern Shore
Gordon Haym, Lyndon State College Rob Mitchell, Western University—Canada
Andrea Hershatter, Emory University Patrick Murphy, DePaul University
Richard Hilliard, Nichols College Charlie Nagelschmidt, Champlain College
Jo Hinton, Copiah Lincoln Community William Naumes, University of New
College Hampshire
xviii ACKNOWLEDGMENTS

Connie Nichols, Odessa College William Scheela, Bemidji State University


Gary Nothnagle, Nazareth College Gerry Scheffelmaier, Middle Tennessee
Edward O’Brien, Scottsdale Community State University
College Gerald Segal, Florida Gulf Coast University
David Orozco, Florida State University Cynthia Sheridan, St. Edward’s University
Haesun Park, Louisiana State University Donald Shifter, Fontbonne University
John Pfaff, University of the Pacific C. L. J. Spencer, Kapi’olani Community
Joseph Picken, University of Texas at College
Dallas Joseph Stasio, Merrimack College
Emmeline de Pillis, University of Deborah Streeter, Cornell University
Hawaii—Hilo Dara Szyliowicz, University of Denver
Carol Reeves, University of Arkansas Clint B. Tankersley, Syracuse University
John Richards, Brigham Young University Craig Tunwall, Empire State College
Christo Roberts, University of Minnesota— Barry Van Hook, Arizona State University
Twin Cities
George Vozikis, California State
George Roorbach, Lyndon State College University—Fresno
Michael Rubach, University of Central David Wilemon, Syracuse University
Arkansas
Charlene Williams, Brewton Parker College
Janice Rustia, University of Nebraska
Medical Center Doug Wilson, University of Oregon
James Saya, The College of Santa Fe Diana Wong, Eastern Michigan University

Finally, we want to express our appreciation to our home institutions


(Oklahoma State University and Texas A&M University) for creating environ-
ments in which ideas are encouraged and supported.
We wish each of you—our readers—all the best in your study of the entre-
preneurial process. And, of course, we hope that each of you will be highly suc-
cessful entrepreneurs as you pursue the ideas you’ll develop at different points
in your careers.
About the Authors
Bruce R. Barringer Bruce R. Barringer holds the Johnny D. Pope
Entrepreneurship Chair in the Department of Entrepreneurship at Oklahoma
State University. He earned his PhD from the University of Missouri and his
MBA from Iowa State University. His research interests include feasibility
analysis, firm growth, corporate entrepreneurship, and the impact of inter-
organizational relationships on business organizations. Over the years, he
has worked with a number of technology-based incubators and student-led
entrepreneurship activities and clubs.
He serves on the editorial review board of Entrepreneurship Theory and
Practice and Journal of Small Business Management. His work has been published
in Strategic Management Journal, Journal of Management, Journal of Business
Venturing, Journal of Small Business Management, Journal of Developmental
Entrepreneurship, and Quality Management Journal.
Bruce’s outside interests include running, trail biking, and swimming.

R. Duane Ireland R. Duane Ireland is a University Distinguished Professor


and holds the Conn Chair in New Ventures Leadership in the Mays Business
School, Texas A&M University. Previously, he served on the faculties at
University of Richmond, Baylor University, and Oklahoma State University. His
research interests include strategic entrepreneurship, corporate entrepreneur-
ship, strategic alliances, and effectively managing organizational resources.
Duane’s research has been published in journals such as Academy of
Management Journal, Academy of Management Review, Academy of Management
Executive, Strategic Management Journal, Administrative Science Quarterly,
Journal of Management, Journal of Business Venturing, Entrepreneurship Theory
and Practice, and Strategic Entrepreneurship Journal among others. He is a co-
author of both scholarly books and textbooks, including best-selling strategic
management texts. Along with Dr. Mike Morris (University of Florida), Duane
serves as a co-editor for the Prentice Hall Entrepreneurship Series. These books
offer in-depth treatments of specific entrepreneurship topics, such as Business
Plans for Entrepreneurs (authored by Bruce Barringer).
Duane has served or is serving on the editorial review boards for a number
of journals, including AMJ, AMR, AME, JOM, JBV, and ETP. He just completed
a term as Editor for AMJ. He has completed terms as an associate editor for
AME and as a consulting editor for ETP and has served as a guest co-editor
for special issues of a number of journals including AMR, AME, and SMJ.
He is a Fellow of the Academy of Management and a Fellow of the Strategic
Management Society. He recently completed a term as the President of the
Academy of Management.
Duane’s outside interests include running, reading, listening to a variety of
music, and playing with his grandson.

xix
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part 1 Decision to
Become an
Entrepreneur

LuminAID Lab, LLC

Chapter 1 Introduction to Entrepreneurship 3

1
Getting
Personal with Pure Fix CyCles
Co-Founders
Zach Schau
BS in Economics,
University of Wisconsin, 2009

auStin StofferS
BS in Real Estate,
University of Wisconsin, 2011

jordan Schau
BS in Computer Science,
Columbia University, 2011

michael fiShman
BS in Real Estate,
University of Wisconsin, 2011

dialogue with
Zach Schau

BeSt advice i’ve received


Go with your passion. Makes it so
much easier! I love bikes, and it
makes my job infinitely easier.
my BiggeSt Worry
aS an entrepreneur
Sales
What i do When
i’m not Working
Play piano/guitar and sing
my favorite
Smartphone app
Uber or QuizUp
my firSt entrepeneurial
experience
Pure Fix Cycles
BeSt part of Being
a Student
Meeting Best Friends!
Chapter 1
Introduction to
Entrepreneurship
Opening prOFiLe

Pure Fix CyCles


the classic entrepreneurial Story
• Web: http://purefixcycles.com • Facebook: Pure Fix Cycles • Twitter: @PFCycles

I
t all began in 2010, when Zach Schau and some friends started shopping for a bike.
Zach was a senior at the University of Wisconsin. The University of Wisconsin is
located in Madison, Wisconsin, one of the most bike-friendly cities in the United
States. Schau, along with friends Austin Stoffers, Michael Fishman,
and Jordan Schau (younger brother), had been following the bicycling Learning ObjeCtives
craze in Europe, and in particular admired some of the Italian brands,
After studying this chapter you should be
such as Bianchi. Schau found several bikes he liked, but they were all ready to:
in the $1,000 range, which exceeded his budget. He wondered why
bikes were so expensive. After doing some research, he found that it 1. Describe entrepreneurship, corporate
entrepreneurship, and the characteristics
was because of the gears. Adding 8 to 30 gears to a bike is expensive. of entrepreneurial firms.
In the nearby photo, from left to right, the Pure Fix Cycle team includes 2. Discuss three main reasons people
Zach Schau, Austin Stoffers, Jordan Schau, and Michael Fishman. decide to become entrepreneurs.
This experience got Schau, Schau, Stoffers, and Fishman think- 3. Identify four main characteristics
ing there was a void in the market. What the market needed was an of successful entrepreneurs.
affordable bike that was stylish and durable enough to withstand a 4. Explain five common myths regarding
entrepreneurship.
daily commute. They knew that the only way this was possible was to
take some of the costs out of the making and selling of a traditional 5. Describe the three types of start-up
firms.
durable bike. The solution: build a fixed-gear, single-speed bike,
6. Discuss the changing demographics
or “fixie.” Fixies have been trendy among city riders for some time, of entrepreneurs in the United States.
but hadn’t yet popped up on college campuses. Instead of having a 7. Discuss the positive effects of entrepre-
multisprocket gear shifter mounted near the rear wheel, fixies have a neurship and entrepreneurial firms on
single gear, like most children’s bikes. Since the bikes have few highly economies and societies.
technical moving parts, there isn’t much that can go wrong. And while 8. Explain the entrepreneurial process.
they may take a little more effort to ride at times than a multigear bike,
they’re cheaper to build and more reliable.
The three friends, along with Schau’s brother, Jordan, who was a student at Columbia
University, mocked up a design for a fixed-gear bike, which was simple, affordable, and
“cool,” at least in their minds. Stoffers’s family, which was in the import-export business,
helped the four find an overseas manufacturer to build the bike. The four friends scraped
together enough money to fund their first order of 165 bikes, expecting them to sell over
the next year. They shipped the bikes to the Los Angeles area, where four of the friends
were from. Incredibly, the entire order of bikes sold over winter break.
This experience emboldened the four, and they created a company called Pure Fix
Cycles. The name was designed to convey how the founders felt about the experience
3
4 PART 1 | DECISIon To BECoME An EnTREPREnEUR

they were trying to create: cycling at its purist. Fishman and Stoffers headed back to
Wisconsin, and Jordan Schau made his way back to Columbia University. In 2011,
Stoffers and Fishman entered Pure Fix Cycles into a business plan competition at
the University of Wisconsin and won $7,000. This money enabled the team to place a
larger, second order. The second batch of bikes sold out in two weeks. That success
led to a series of successive orders and sales. “We kept doubling our order, and we’d
sell out even before we received the bikes,” Zach Schau said. “We had no grasp of the
demand, and never had enough bikes.”
After Fishman and Stoffers graduated from Wisconsin and Jordan Schau gradu-
ated from Columbia, the four co-founders of Pure Fix Cycles, Zach Schau, Jordan
Schau, Austin Stoffers, and Michael Fishman, settled in the Los Angeles area to work
on Pure Fix Cycles full time. The four continued to have the bikes manufactured in
China and sold them via the Internet and through bike shops across the United States.
From the outset, they found their bikes to be a fairly easy sell. Fixed-gear bikes are
mechanically more efficient than any other bike, with the most direct power transfer
from the rider to the wheels. The bikes were also simple and good looking and had
an attractive price point of around $325. The founders also introduced several innova-
tions that spurred the sales of their bikes. over time, they introduced four categories of
Pure Fix Cycles, including the original, Glow, FGFS, and their City line. Each category
includes several different styles of bikes, which have distinctive names and looks.
For example, the Victor, which is in the original category, has a Celeste-Green frame
with Ghost-White deep dish wheels. The Whiskey, which is in the same line, has a
Flat Dolphin-Gloss frame with ostrich-Blue deep dish wheels. The company’s Glow
line—you guessed it—glows in the dark. The frames of the bikes in the Glow line are
covered with a glow-in-the-dark paint that makes them visible after dark. Pure Fix
Cycle says that an hour of daytime sunlight will make the frame glow in the dark for an
hour or more if the moon is out. This feature makes the bike safer to ride and is fun too.
Pure Fix Cycles envisions a bright future; however, the founders also realize that
the firm is facing an increasingly competitive marketplace. Several other companies
are now selling fixed-gear bikes. To prepare for additional growth and competition, in
2012, Pure Fix Cycles accepted investor funding and hired Andy Abowitz, a former
senior executive at Priceline.com, as the company’s president. The founding team
remains passionate about biking and continues to innovate and build the Pure Fix
Cycles brand. Zach Schau recently remarked, “We have various product lines and piv-
oting is always a fun challenge. Launching new lines feels like launching new brands
and it’s exciting to see it through, from the design process to the product development
to the manufacturing and distribution.”1

I
n this first chapter of your book about the successful launching of an en-
trepreneurial venture or firm, we define entrepreneurship and discuss why
some people decide to become entrepreneurs. We then look at successful
entrepreneurs’ characteristics, the common myths surrounding entrepreneur-
ship, the different types of start-up firms, and the changing demographics of
entrepreneurs in the United States and in nations throughout the world. We
then examine entrepreneurship’s importance, including the economic and
social impact of new firms as well as the importance of entrepreneurial firms
to larger businesses. To close this chapter, we introduce you to the entrepre-
neurial process. This process, which we believe is the foundation for success-
fully launching a start-up firm, is the framework we use to present the book’s
materials to you.
Another random document with
no related content on Scribd:
too freely perhaps, considering the state of our stomachs, as, after
drinking about a quart each, we both felt very queer. Our heads
swam, and we were very dizzy and weak, the effect being similar to
that produced by alcohol.
At daybreak we secured a couple of Rendili youths as guides, and
proceeded through a belt of bush on our way to the Somalis’ camp,
near which I felt convinced we should find El Hakim.
This bush belt was quite a mile wide, and owed its existence to the
large proportion of earth that the desert sand had not yet thoroughly
covered, coupled with the close proximity of the Waso Nyiro. The
bushes grew in clumps, with smooth patches of ground between.
They were a beautiful vivid green, thickly covered with longish
narrow leaves and blue-black berries, and averaged eight feet to ten
feet in height. These berries greatly resembled black currants in
appearance. They contained a large, smooth spherical seed,
covered with a layer of glutinous pulp, which was hot to the palate,
and something similar to nasturtium seeds in flavour. The guinea-
fowl were particularly fond of these berries, and were in
consequence to be found in large numbers in the bush. Every few
yards little ground squirrels, like the American chipmunks, darted
across our path; while the tiny duiker—smallest of the antelopes—
now and again scurried hurriedly away to the shelter of a more
distant bush. Little naked sand-rats were very numerous, the tiny
conical heaps of excavated sand outside their burrows being
scattered everywhere. At intervals, clumps of acacias of large size
afforded a certain amount of shade from the vertical rays of the sun,
a fact fully taken advantage of by the Rendili, as we noticed that
where such a clump existed we were certain to find a village.
After tramping for about an hour through this charming and
refreshing scenery, we arrived at Ismail Robli’s boma. El Hakim’s
tent was pitched two or three hundred yards away from it on the left.
A moment later El Hakim himself appeared to welcome us. We did
not build a boma, but pitched our camp under the shade of the palms
some two hundred yards from the river.
During the morning George and I went down to bathe in the river.
Divesting ourselves of our clothing, we ventured into the shallow
water near the bank, keeping a sharp look-out for crocodiles
meanwhile. I had not advanced many steps before I uttered a yell,
and jumped wildly about, to the intense astonishment of George. He
was about to inquire the reason of my extraordinary conduct, but
when he opened his mouth, whatever he intended to say resolved
itself into a sudden sharp “Ouch!” and he commenced to dance
about as wildly as myself. Something (which I afterwards found to be
leeches) had attempted to bite our legs, and especially our toes,
causing anything but a pleasant sensation. Bathing, consequently,
was only indulged in under difficulties. We were compelled, for fear
of crocodiles, to bathe in but a foot of water, and even then our
ablutions were only rendered possible by keeping continuously in
motion, so that the leeches were unable to fasten on to our persons.
The instant we discontinued jumping and splashing, half a dozen
nibbles in as many places on those portions of our anatomy which
happened to be under water, would remind us of their presence, and
we would either make a dash for the bank or recommence jumping.
The spectacle of two white men endeavouring to bathe in water a
foot deep, and at the same time performing a species of Indian war-
dance, would doubtless have been extremely diverting to spectators
of our own race, had any been present; but the Rendili and
Burkeneji, who also came down to bathe, merely eyed us in
astonishment, probably considering our terpsichorean efforts to be a
part of some ceremonial observance peculiar to ourselves; or they
might have put it down to sunstroke. The Rendili and Burkeneji bathe
with frequency and regularity, seeming to derive great enjoyment
from the practice. This is another very marked characteristic which
distinguishes them from the other tribes we had met with—the
A’kikuyu and Masai, for instance. Parties of the young men would go
down to the river and run about, splashing and shouting in the
shallow water for an hour or two, with every manifestation of
pleasure.
When we returned to camp we found several of the Rendili elders
visiting El Hakim, chief of whom was an old man named Lubo, who
is, probably, at present the most influential as well as the most
wealthy man among the Rendili. There were also two other chiefs
named Lemoro and Lokomogo, who held positions second only to
Lubo.
In his account of Count Teleki’s expedition, Lieutenant Von Hohnel
gives a short description of the Rendili, which he compiled from
hearsay, which, as far as it goes, is remarkably correct. Von Hohnel
is a very exact and trustworthy observer; his maps, for instance,
being wonderfully accurate. I carried with me a map issued in 1898
by the Intelligence Department of the War Office, which contained
several inaccuracies and was therefore unreliable, and consequently
useless. Unfortunately, I did not at that time possess one of Von
Hohnel’s maps, or we should have been saved many a weary tramp.
In 1893 Mr. Chanler found the Rendili encamped at Kome, and
stayed with them two or three days. He appears to have found them
overbearing and intolerant of the presence of strangers, and inclined
to be actively hostile. He made an extremely liberal estimate of their
numbers, as he says that they cannot amount to less than two
hundred thousand, and that he had heard that if the Rendili were
camped in one long line, it would take six hours’ march to go down
the line from one end to the other. He considered, moreover, that a
large force was necessary if a prolonged visit was to be made to the
Rendili; but we found that our small party was quite sufficient for our
purpose. Since his visit the tribe had suffered severely from small-
pox, which may have curbed their exuberant spirits somewhat, as we
found them, apart from a few little peculiarities hereafter described,
an amiable and gentle people if treated justly; very suspicious, but
perfectly friendly once their confidence was gained.
We did nothing in the way of trade that morning, but spent most of
the time in satisfying our neglected appetites by regaling ourselves
upon boiled mutton, washed down by draughts of camel’s milk.
Afterwards we held a consultation to decide on the best way of
disposing of our goods. To our great disappointment we learnt that
ivory was out of the question, as we were informed a Swahili
caravan, which had accompanied a white man from Kismayu, had
been up some two months before, and had bought up all the
available ivory.[14] We decided, therefore, to invest in sheep, and
proceeded to open our bales of cloth, wire, and beads, in readiness
for the market. I returned to the village at which George and I had
camped with the safari on our arrival the preceding evening, taking
with me half a dozen men and some cloth, wire, etc. When I arrived
there everybody was away bringing in the flocks, so I was compelled
to wait for a while till they returned.
It was most interesting to watch the various flocks come in at
sundown. Till then the village is perfectly quiet, but soon a low
murmuring is heard some considerable distance away, which
gradually swells as the flocks draw nearer, till it becomes at last a
perfect babel of sound with the baaings and bleatings of sheep, and
the beat of their countless little hoofs. They presently arrive in flocks
numbering two or three thousand each, kicking and leaping, and
raising a vast cloud of dust. The women of the village, who have
been waiting, then come out with their milk-vessels, each with a kid
or a lamb in her arms, which she holds on high at the edge of the
flock. The little animals bleat loudly for their mothers. Those mothers,
far away in the body of the flock, in some marvellous manner each
recognize the cry of their own particular offspring among the
multitude of other and similar cries, and dash towards it, leaping over
the backs of the others in their eagerness to reach their little ones.
The woman restores the youngster to its mother, and it immediately
commences its evening meal, wagging its little tail with the utmost
enjoyment. The woman then goes to the other side of the mother,
and draws off into her milk-vessels as much of the milk as can be
spared.
The price of a good “soben” (ewe) was six makono of cloth, or
about one and a half yards; but the market was not very brisk, as
there was such a great amount of haggling to be gone through
before the bargain could be considered satisfactorily completed. A
man would bring round an old ram and demand a piece of cloth.
When I gently intimated that I required a “soben,” he would scowl
disgustedly and retire. In a few minutes he would be back again,
dragging by the hind leg a female goat, and demand the piece of
cloth once more. An animated discussion on the difference between
a sheep and a goat would follow; my prospective customer
maintaining that for all practical purposes a female goat and a
female sheep were identical, while I contended that if that was the
case he might as well bring me a sheep, as under those
circumstances it would make no difference to him, and I myself had
a, doubtless unreasonable, preference for sheep. Finally a very sick
and weedy-looking ewe would be brought, and again the same
discussion would go merrily on. I would not give the full price for a
bad specimen, and my customer would persist that it was, beyond a
doubt, the very best sheep that was ever bred—in fact, the flower of
his flock. “Soben kitock” (a very large sheep) he would observe
emphatically, with a semicircular wave of his arm round the horizon. I
would point out that in my humble opinion it was by no means a
“soben kitock” by shaking my head gravely, and observing that it was
“mate soben kitock.” Finally he would bring a slightly better animal,
and I would then hand over the full price, together with a pinch of
tobacco or a few beads as a luck-penny. I returned to camp the next
morning, having bought about a dozen sheep. In this manner we
spent some days buying sheep. It was very tiring work, but I varied
the monotony by building a large hut, heavily thatched with the fan-
shaped leaves of the Doum palm. It was open at both ends, and
served as a capital council chamber and market house.
There was a great demand for iron wire, and El Hakim and I
discussed the advisability of my journeying up the Waso Nyiro to a
spot two days’ march beyond the “Green Camp,” where El Hakim
had some twenty loads of iron wire buried. We eventually decided
that it was not worth while, and the matter dropped.
Some days after our arrival among the Rendili, Ismail Robli came
into our camp, bowed almost to the ground with grief. His tale was
truly pitiful in its awful brevity. I have mentioned the party of eighty of
his men whom we had met five days up the Waso Nyiro, and who
had lent us a guide to bring us to the Rendili. It appeared that after
they left us they lost their way somewhere on the northern borders of
Embe, and were three or four days without water. Eventually they
found some pools, at which they drank, and then, completely
exhausted, laid down to sleep. While they slept, the Wa’embe, who
had observed them from the hills, descended, and, taking them by
surprise, pounced upon them and literally cut them to pieces. Only
sixteen men, who had rifles, escaped; the rest, numbering sixty-four
in all, being ruthlessly massacred. We were horrified at the news;
and as for Ismail, he seemed completely prostrated.
As a result of the massacre, he had not nearly enough men
remaining to carry his loads, and he was therefore compelled to
considerably alter his plans. He now intended to buy camels from the
Rendili, and thus make up his transport department.
We were really grieved about the men, but felt no pity for Ismail,
because, as we took care to point to him, if he had only gone back to
Embe with us after our first reverse, we should have so punished the
Wa’embe as to have precluded the possibility of such a terrible
massacre. As it was, the unfortunate occurrence was the very worst
thing that could have happened for all of us, as such a signal
success would without a doubt set all North Kenia in a ferment,
which would probably culminate on our return in an organized attack
by all the tribes dwelling in the district. The surmise proved to be only
too well founded, and, as will be seen, it was only by the most
vigorous measures on our part on the return to M’thara that the
danger was averted.
As it was no use worrying ourselves at the moment over what
might happen in the future, we once more turned our attention to our
immediate concerns. El Hakim thought it possible that there might be
elephants down the river, and I agreed that it would be a better
speculation for me to go down-stream on the chance of meeting
them, leaving El Hakim to buy the rest of the sheep, than to occupy a
fortnight in journeying up the river after the twenty loads of iron wire,
which might possibly have been dug up by Wandorobbo in the mean
time.
On the following day Ismail Robli came to see us again, bringing
with him a present of a little tea, and a little, very little, salt. The
object of his visit was to get me to write a letter for him to his partner
in Nairobi. I insert it as I received it from his lips, as an object lesson
in the difficulties encountered even by native caravans in the search
for ivory.
“Waso Nyiro, August 26th, 1900.
“To Elmi Fahier, Nairobi.
“Greeting.
“Mokojori, the head-man, said when we started, that he knew
the road, and took us to Maranga. After we left Maranga he said that
he did not know the road, and took us to some place (of which) we do
not know the name. Our food was finished (meanwhile). We asked the
head-man if he knew where Limeru was, and he answered that he did
not. We packed up and followed the mountain (Kenia)—not knowing
the road—till reached Limeru, where we found Noor Adam, who had
reached there before us. He had been into Embe, and was beaten by
the Wa’embe. He came back and asked us to go into Embe with them.
We went, and Jamah was killed. In Limeru we did not get much food,
but the head-man said, ‘Never mind, I know the road, and I will take
you to the Wandorobbo, and in fifteen or sixteen days you will be able
to buy all the ivory you want.’ When we left Limeru to find the
Wandorobbo, the head-man took us eight days out of our road to the
north of the Waso Nyiro. On the eighth day we found some
Wandorobbo, who said they had no ivory. We waited and looked
about, and found what they said was true. We then asked the head-
man where the ivory was, and he said he did not know; so we came
back south to the Waso Nyiro, having to kill three cows on our way for
food. When we reached the Waso Nyiro we found the Rendili camped.
Then we asked the head-man where was the food and the ivory, and
he said, ‘You are like the Wasungu. You want to buy things cheaply
and then go away. When Swahili caravans come here, they stop a
year or more.... But I know where there is food. If you give me the
men and the donkeys I can get food in twelve days.’ We gave him
eighty men and seven donkeys, with six and a half loads of trade
goods, and they went away to get food. They followed the river for
three days, and then went across country southwards. There was no
water, and after going one day and one night without water, the head-
man halted them, and told them to wait where they were for a little
time while he went a little way to see if there was any water in a
certain place he knew of. He went away, and did not come back. The
other men then went on for three days without water, and on the
afternoon of the fourth day after leaving the river they found water.
They drank, and then laid down to sleep. While they slept the
Wa’embe attacked them, and killed nearly all of them, only six Somalis
and ten Wa’kamba coming back. The donkeys and trade goods and
seven guns were taken by the Wa’embe. Now all the Somalis are
together in one safari—except Jamah, who was killed—and are with
the Rendili trading for ivory. Salaam.
“(Signed) Ismail Robli,
“Faragh.”
1. Brindled Gnu.
2. Waterbuck.
3. Oryx Beisa.
4. Congoni.
5. Rhinoceros skull.

FOOTNOTES:
[14] We found afterwards that the caravan referred to was that
under Major Jenner, Governor of Kismayu. It is now a matter of
history how, in November, 1900, the caravan was attacked during
the night by Ogaden Somali raiders, and the camp rushed, Major
Jenner and most of his followers being murdered.
CHAPTER XIII.
THE RENDILI AND BURKENEJI.

The Burkeneji—Their quarrelsome disposition—The incident of the


spear—The Rendili—Their appearance—Clothing—Ornaments—
Weapons—Household utensils—Morals and manners.
This chapter contains a short account of the Rendili and Burkeneji,
compiled from a series of disconnected and incomplete notes taken
on the spot. They will, however, serve to give the reader some idea
of that peculiar people, the Rendili. Their utter dissimilarity from
those tribes hitherto encountered, such as the A’kikuyu, Wa’kamba,
and Masai, is very striking. Who and what they are is a problem the
solution of which I leave to abler and wiser heads than mine.
The Rendili and Burkeneji are two nomad tribes, the units of which
wander at will over the whole of Samburuland. They have,
nevertheless, several permanent settlements. Von Hohnel speaks of
Rendili inhabiting the largest of the three islands in the south end of
Lake Rudolph, the other two being occupied by Burkeneji and
Reshiat. He also speaks of settlements of mixed Rendili and
Burkeneji in the western portion of the Reshiat country, at the north
end of the lake, though very possibly the latter were only temporary
settlements. The Burkeneji also inhabit the higher portions of Mount
Nyiro, where they have taken refuge from the fierce attacks of the
Turkana. With the single exception of Marsabit, a crater lake situated
about sixty miles north of the Waso Nyiro which is always filled with
pure sweet water, there is no permanent water in Samburuland.
Elephants were at one time very numerous at Marsabit, but we learnt
from the Rendili that they had disappeared during the last few years.
The lake is the headquarters of the Rendili, from whence they move
south to the Waso Nyiro only when the pasturage, through the
scarcity of rain or other cause, becomes insufficient for the needs of
their vast flocks and herds.
At the time of our visit there had been no rain during the previous
three years, and in consequence the pasturage had almost entirely
disappeared. Even on the Waso Nyiro it was very scanty.
We found the Burkeneji a very sullen people. The young men
especially, very inclined to be pugnacious, and, not knowing our real
strength, were haughtily contemptuous in their dealings with us. The
majority were apparently unaware of the power of our rifles, though
one or two of the old men had seen shots fired at game. The
Burkeneji and the Rendili together had, some time before, fought
with the Ogaden Somalis, many of whom were armed with old
muzzle-loading guns, using very inferior powder and spherical
bullets. The Rendili declared that they were able to stop or turn the
bullets with their shields. The following incident shows the serio-
comic side of their belief in their own native weapons.
A party of Burkeneji warriors were in our camp one day when I
returned from an unsuccessful search for game. They noticed my
rifle, and one of the party put out his hand as if he wished to examine
it. I handed it to him, and he and his friends pawed it all over,
commenting on its weight; finally it was handed back to me with a
superior and contemptuous smile, while they balanced and fondled
their light spears with an air of superiority that was too ludicrous to
be offensive.
The Burkeneji are very like the Masai or the Wakwafi of Nyemps in
appearance, wearing their hair in a pigtail in the same manner, while
their clothing and ornaments are very similar. Owing probably to long
residence with the Rendili, however, they are gradually adopting the
dress and ornaments of the latter, a large majority of them having
already taken to cloth for everyday wear. They appeared to be very
fond of gaudily coloured “laissos,” quite unlike the Rendili, who will
wear nothing but white. The Burkeneji speak Masai, but most of
them understand the language of the Rendili.
They own large numbers of good cattle and grey donkeys, and
also large flocks of sheep and goats, the latter mainly looted from the
Rendili. This little failing accounts for the nickname “dthombon”
(robbers) given them by the latter. Their donkeys were beautiful
animals, in splendid condition, being sleek, glossy coated, and full of
fight. It was risky for strangers to approach them while they were
grazing. They seemed inclined to take the offensive on the one or
two occasions on which I endeavoured to get near enough to
examine them; and to have had to shoot one in self-defence would
probably have led to serious trouble with its owner. Besides which,
such a course seemed to me to savour too much of the ridiculous.
They were more than half wild, and many were wearing a particularly
diabolical twitch, otherwise I suppose even their owners would have
had some difficulty in handling them. This cruel instrument consisted
of a piece of flexible wood a foot in length thrust through the cartilage
of the nostrils, the ends being drawn together with cord, so that the
whole contrivance resembled a bow passed through the nose.
The Burkeneji were very unwilling to trade; in fact, they refused to
have anything to do with us. On one occasion this bad feeling led to
friction between some of our men and the young warriors of one of
their villages. We had sent a small party of five or six men to this
particular village with a supply of cloth, wire, and beads for the
purpose of buying sheep. Our men were from the first badly
received, and after a while the warriors commenced to hustle them.
They put up with it for some time, but presently a spear was thrown,
happily without fatal result, as the M’kamba at whom it was launched
received it on the butt of his Snider, where it made a deep cut in the
hard wood. Our men, with commendable prudence, refrained from
using their rifles, and returned to camp amid the jeers of their
assailants.
On their return El Hakim decided that it was absolutely necessary
that the matter should be stringently dealt with, and to that end
issued orders that on the following morning a party of our men were
to hold themselves in readiness to accompany us to the village for
the purpose of demanding a “shaurie.” These preparations, however,
proved superfluous, as at sunrise we were waited upon by a
deputation of elders from the village in question, who had come to try
to square matters. As a sign of our displeasure, we kept them
waiting for some time, and after the suspense had reduced them to a
sufficiently humble frame of mind, we condescended to appear and
listen to their explanation.
They prefaced their apology by a long rambling statement to the
effect that “the Burkeneji were the friends of the white man.” “It was
good to be friends,” said they, “and very bad not to be friends,” and
so on. After they had quite exhausted their limited powers of rhetoric,
we put in a few pointed questions.
“Do friends throw spears?” we asked.
“Oh, that!” said they, in tones of surprise that we should have
noticed such a trivial occurrence, and they forthwith plunged into a
maze of apologies and explanations to the effect that young men
would be young men. It was, of course, extremely regrettable that
such an unpleasant incident should have occurred to mar our
friendly relations, but they trusted we would take a lenient view of the
conduct of the foolish young man, the more so as he had already
been driven away from the village as a punishment for his offence.
“And,” they added, with a charming naïveté, “would we give them a
present and say no more about it?”
El Hakim declined to take such a lenient view of the case. To have
done so would have been construed into a confession of weakness,
and probably have led to more serious complications. He therefore
demanded that the young man should be delivered up to him for
punishment, or, failing that, a fine of ten sheep should be paid by his
father.
They answered solemnly that the white men had very hard hearts;
furthermore, the young man, having already been driven out of the
village, could not now be found, and they were in consequence quite
unable to give him up.
“Then,” said El Hakim, “his papa must pay the fine.”
They protested that the wicked young man had no papa, or,
indeed, any relatives whatsoever; in fact, that he was an outcast
whom, from charitable motives, they had allowed to stop in their
village. We declined to believe such a preposterous story, and
remained firm on the subject of the fine. After a time, finding
remonstrance useless, the elderly deputation sorrowfully withdrew,
after promising that the fine should be paid.
The next day six sheep were driven into our camp, and the old
gentleman in charge stated that they were all he could afford, and
would we consider the matter settled. We were inexorable, however,
so soon afterwards the balance of the fine was brought into camp
and handed over.
It was the old, old story, which can be paralleled in any town in the
civilized world. The story of a young man sowing his wild oats, who,
for some breach of the peace or other, comes within the grasp of the
law, when ensues the police court, and the fine paid by papa,
anxious to redeem his erring offspring.
We were truly sorry for the good old Burkeneji gentleman, who
paid the fine in order to keep the peace which his son had so
recklessly endangered; but our sympathy did not prevent our sense
of justice—in this case more than usually acute, as the safety of our
own persons was threatened—nor did it prevent us from exacting the
full penalty.
The Rendili we found to be of very different behaviour, though they
have a very bad character from Mr. Chanler. He describes them as
overbearing, quarrelsome, treacherous, and haughtily contemptuous
towards strangers. He met them at Kome in 1893, and stayed with
them two or three days. Since his visit, however, they have been, as
I have already remarked, terribly decimated by small-pox, and
possibly that has toned them down somewhat.
They are tall and well built, with slim and graceful figures and light,
clear skins. They have an appearance of cleanliness and
wholesomeness which was altogether wanting in the other natives
whom we had previously met. Their distinctly Semitic features bear
little resemblance to those of the typical negro, with his squat nose,
prognathous jaws, and everted lips. There were many members of
the tribe with good clean-cut features, well-shaped jaws and chins,
and pronounced aquiline noses. They somewhat resembled high-
bred Arabs in general appearance, and, if clothed in Arab dress,
they, with their fine, straight, close-cut jet black hair, could not be
easily distinguished from that aristocratic race.
At one time they wore a rough, coarsely woven garment of
sheep’s wool, but at the time I saw them they had entirely taken to
trade cloth to the exclusion of the home-made article. They then
wore large mantles of this cotton cloth, made by sewing together two
three-yard lengths of cloth, thus forming a large square piece. The
edges of this are then unravelled to form tassels, which are further
ornamented with small red and white beads. This they draped round
them somewhat in the manner of a Mexican “serape.” They and their
clothes were always scrupulously clean. Unlike the Burkeneji they
will never wear anything but white cloth. “Coloured cloths,” they
remarked contemptuously to us on one occasion, “were only fit for
women and Masai.” They prefer the English drill, called “Marduf” by
the Swahilis, to the lighter and commoner “Merikani” (American
sheeting).
They wear a good many beads as ornaments, which are carefully
worked into necklaces and armlets of artistic design, and not put on
haphazard, as is the custom of the surrounding tribes, and of those
south of the Waso Nyiro. The beads are usually strung on hair from
the tail of the giraffe, which is as stiff as thin wire. With this they
make broad collars and bands for the arms and ankles, the beads
being arranged in geometrical designs, such as squares and
triangles, of different colours, red and white being the favourites. The
demand for seninge (iron wire) was extraordinary, though serutia
(brass wire) ran it a close second. Copper wire, strange to say, they
would not look at.
They are circumcized in the Mohammedan manner, and, in
addition, they are mutilated in a most extraordinary fashion by having
their navels cut out, leaving a deep hole. They are the only tribe
mutilated in this manner with the exception of the Marle, who inhabit
the district north of “Basso Ebor” (Lake Stephanie), and who are
probably an offshoot of the Rendili.
The Rendili women are singularly graceful and good looking, with
arch, gentle manners and soft expressive eyes. They wear a good
many ornaments, principally bead necklaces and armlets of coloured
beadwork. Their hair is allowed to grow in short curls. One or two I
saw wore it cut very close, with the exception of a ridge of hair on the
top of the head, extending from the centre of the forehead
backwards over the crown to the nape of the neck, which was left
uncut. Whether they were Turkana women who had intermarried with
the Rendili or not, I am unable to say, it being the custom of the
Turkana women to dress their hair in that manner; though, on the
other hand, the fashion might have been merely copied from them by
the Rendili women.
The Rendili women also wear cloth. Their garments were of much
less generous proportions than those of their lords and masters; but
they wore more ornaments, the Venetian beads we carried being in
great demand for that purpose. They also wore armlets and leg
ornaments of brass and iron wire, the iron wire especially being
much sought after. They do not use skins for clothing, though they
cure them and use them for sleeping-mats, and also for trading with
the Reshiat and Wa’embe. The skins are cured by the women, who,
after the skin is sufficiently sun-dried, fasten it by the four corners to
a convenient bush, and scrape the hair from it with a broad chisel-
shaped iron tool, afterwards softening it by rubbing it between the
hands.
El Hakim bought several cornelian beads from the women,
evidently of native manufacture. They were roughly hexahedral in
shape, and were cleanly pierced, with no little skill, to admit of their
being strung on a thread. We could not discover from whence they
had obtained them. It is possible that they may have filtered through
from Zeila or Berbera on the Somali coast, where they had been
brought by Arab or Hindoo traders.
The Rendili women, unlike the Masai, are remarkably chaste, the
morals of the tribe as a whole being apparently of a comparatively
high standard. Polygamy is practised, but it is not very much en
évidence.
A point which struck me very much was their fondness for
children. For some reason, perhaps on account of the small-pox, the
birth-rate by no means equalled the deaths, and children were
consequently very scarce. What children they possessed they fairly
worshipped. Everything was done for their comfort and pleasure that
their adoring parents could devise. This love of children extended to
the offspring of other tribes, and they were perfectly willing to adopt
any child they could get hold of.
Both Lemoro and Lokomogo—two of the principal chiefs—asked
us on several occasions to sell them two or three of the boys who
acted as servants to our Swahilis, but we declined to do so, as it
was, to our minds, too much like slave dealing. We gave some of the
boys permission to stop with the Rendili if they felt so inclined, but
only two of them tried it; and they came back a few days later, saying
the life was too quiet for them.
Ismail Robli, we had good reason to believe, sold some boys to
Lemoro, and we were afterwards the means of rescuing one little
chap, who came into camp saying that Ismail had sold him to that
chief, though he did not want to stop with the Rendili. We protected
him during a somewhat stormy scene in our camp with old Lemoro,
who said he had given Ismail two camels for the boy. When we taxed
Ismail, he, of course, denied it, saying that the boy had deserted to
the Rendili, and that the two camels were only a present from
Lemoro. However, we kept the boy, who belonged to M’thara, and
had left there with Ismail’s safari as a servant to one of his porters,
and on our return to M’thara sent him to M’Dominuki with an account
of the affair, and he was ultimately restored to his home. After this
incident Ismail tried to do us what mischief he could by causing
friction between ourselves and the Rendili, but was happily
unsuccessful, though he nevertheless caused us some anxious
moments.
The Rendili have no definite religion so far as I could ascertain. Mr.
Chanler mentions a story current among them about a man and a
woman who settled somewhere in the north of Samburuland a very
long time ago, and from whom the Rendili are descended; very
similar to the Biblical story of Adam and Eve. They show traces of
contact with Mohammedans by their use of the word “Allah” as an
exclamation of astonishment, though seeming not to know its
meaning.
They have apparently no regard for the truth for its own sake, lying
appearing to them to be a most desirable form of amusement. It is
on this account rather difficult to obtain information about themselves
or of their country, as in answer to questions they will say only what
they think will please their questioner, whether it is right or not. When
one finds them out they do not betray the slightest embarrassment,
but regard the matter rather in the light of a good joke.
They will tell the most unblushing lies on all and every subject
under discussion, and if, as sometimes happened, circumstances
disproved their words to their very faces, they would smile an
amiable self-satisfied smile as of one who says, “See what a clever
fellow I am.”
On one occasion I inquired of the people of a certain village some
two hours’ march from our camp if they wished to sell any sheep. I
was informed that the inhabitants of the village in question were
simply yearning to sell their sheep. I came down to plain figures, and
inquired how many they would be likely to sell.
“Very many, quite as many as that,” said my informant, indicating a
passing flock of sheep that numbered some hundreds.
Knowing the vast numbers of sheep possessed by the people of
that particular village, I thought it not unlikely that I should be able to
buy at least a hundred. However, when I went to the village, joyfully
anticipating a good market, I found that they did not wish to sell any
sheep whatever, and, moreover, never had wished to. I was
eventually compelled to return disappointed—not having secured
more than two or three—and very much annoyed with the elderly
gentleman who had so deliberately misled me. He knew at the time
that the people of the village did not wish to sell any sheep, but being
unwilling to disappoint me by telling me so, he lied, with the laudable
but mistaken idea of sparing my feelings.
They are probably the richest natives in Africa, calculated per
head of population. Some of them own vast numbers of camels,
sheep, and goats, and since the small-pox has nearly exterminated
this once powerful and numerous tribe, it is not uncommon to find a
village of eight or ten families, numbering not more than thirty
persons all told, owning flocks of over 20,000 sheep and goats, and
large numbers of camels. Old Lubo, the doyen of the Rendili chiefs,
personally owned upwards of 16,000 camels, besides over 30,000
sheep and goats. The Rendili live almost entirely on the vast
quantities of milk they obtain from their flocks and herds, for they
milk their camels, goats, and sheep with equal impartiality. They do
not hunt as a rule, but sometimes the young men spear small
antelope. They are very unwilling to slaughter any of their animals for
food. They must do so occasionally, however, as I have once or
twice seen them eating meat. Furthermore, the old women of the
tribe used occasionally to bring a grilled bone, or a bladder of mutton
fat into camp, for sale to our men. Meat would seem to be quite a
luxury to them, as a bone to which a few scraps of meat were
adhering was offered for sale at an exorbitant price, with an air as of
conferring a special favour.
We ourselves lived almost entirely on milk during our six weeks’
stay among the Rendili, with the exception of the twelve days
occupied by our journey down the river in the search for Lorian. El
Hakim, George, and I drank nearly two gallons per day each. It
formed a pleasant and, from a dietetic point of view, a useful change
from the exclusively meat diet on which we subsisted, from the time
of our arrival at the “Green Camp” till our return to M’thara, a period
of over two months. The camel’s milk was very salt, which to some
extent compensated for the absence of that mineral in the ordinary
form. El Hakim informed me that a little to the east of Maisabit a
large extent of the country is under a layer of salt, two or three
inches in thickness. It required one day’s journey to cross it, which
represents a vast quantity of pure salt, and it was principally from
this that the animals of the Rendili obtained such salt as they
required.
The milk we required for our own use we bought with the Venetian
beads. We, of course, boiled every drop before using it, and
rendered it still more palatable by the addition of a tabloid or two of

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