Build your small business around a successful big business and your odds of success are high.
Not a week goes by when an entrepreneur pitching me to land venture capital funding tells me that they are going to be the next Google, Facebook and Apple. As a venture capitalist, I like and invest in ambitious plans.
But as I get ready to talk on stage with Steve Case, who was appointed by the White House to chair the Startup America Partnership, I thought it was worth recognizing some entrepreneurial successes that required less risk and offer insight that can lead to real job creation and wealth. The big theme:
Piggyback on a business that has created a platform upon which you can build your business.
Remember eBay? During the 1990's, Meg Whitman helped create the biggest and fastest wave of entrepreneurs -- all of whom built or grew their company around eBay. The most successful are called PowerSellers. A majority of them were -- and still are -- women and most started from their homes in their spare time. Today it is believed that a million people derive the majority of their personal income from selling on eBay.
Then there's Amazon. Jeff Bezos repeated the eBay entrepreneurial miracle in the 2000's. I do a lot of shopping on Amazon. Most people don't realize that the third-party sellers account for 40% of Amazon's revenue according to some estimates. We'll see where Amazon stands when it announces quarterly earnings in a few weeks.
Next, Apple. Apple introduced the first iPhone four years ago. Today almost 500,000 app developers contribute significantly to their household income by developing apps for the iPhone. And, thank goodness for Weatherbug and Stitcher.
Google followed. Android created a new marketplace for apps and new opportunities for app developers.
Now we're in the era of Facebook. At its F8 conference last month, Facebook announced that its platform created a $15 billion ecosystem, with up to 250,000 related jobs. Zynga built its business on Facebook and is sitting pretty right now.
So while a venture capitalist is unlikely to back an eBay PowerSeller, an Amazon Store or a Facebook app developer (there are exceptions of course!) this doesn't mean that real opportunity doesn't exist for entrepreneurs. They just do so by riding someone else's coat tail.
For those who want to attract VC funding and change the world, have an original idea that addresses a big market, real traction to prove you timed it right, a defensible approach and the DNA on the founding team to show you can take it across the finish line.
Follow John Backus on Twitter: www.twitter.com/jcbackus