The Boston Globe from Boston, Massachusetts • 68

E2 Business Money Boston Sunday Globe AUGUST 17, 2003 Perspectives Report: US hasn't lost its entrepreneurial spirit Letters Business buzz list Hot topics in strategy, management, marketing and business. Weeks on list Robert Weisman Business Intelligence A the US economy struggles to regain its footing, we can count on one underrated asset: a culture of entrepreneurship that has taken Perpetual entrepreneurship Even in the darkest days of the economic slump, just over one in 10 working Americans was starting a business or planning to start one, a rate of entrepreneurship unmatched among the world's developed nations. A new Babson College study found the percentage of actual and nascent US entrepreneurs higher last year than in 1998, fueling hopes that a new generation of businesses will create large numbers or jobs and reignite a listless economy. Hot zones Although it's been lavished with hype, WiFi is turning out to be a very difficult technology to price. And one local activist is about to make WiFi pricing strategies even more interesting.

Michael Oh, who blankets much of Newbury Street with free WiFi, is planning to promote his free model to other neighborhoods around the country, starting with a free WiFi "hot zone" in Davis Square, Somerville. Tech as commodity? Nicholas G. Carr instigated a debate in the information technology world with a Harvard Business Review article titled "IT Doesn't Matter," which argued technology has become a commodity no longer central to corporate strategy. Carr is now expanding his arguments in a book to be published in the spring by Harvard Business School Press. tential customers, and working on product prototypes.

Among its findings: Optimism in business opportunities held steady last year after just one year of decline. Informal investment in new businesses, often from famOies and friends, is holding up better than venture capital investment, which retreated for three consecutive years until the most recent quarter. The rate of high-growth start-ups tracks closely with the rate of education. And, a gender gap persists in the entrepreneurial ranks, even in the 18- to 24-year-old age bracket, where men are three times as likely as women to start businesses. Carl J.

Schramm, president of the Kauffman Foundation, which promotes research on entrepreneurship, said there's been a steady growth in business creation for the past two decades regardless of business cycles. While start-up activity peaked in 2000 and many entrepreneurs were spooked by the dot-com collapse and the Sept. 11, 2001, terror attacks, new businesses will fuel the coming economic recovery, as they've done in past recoveries, he predicted. "Sixty percent of new job growth is created in companies less than five years old," Schramm said. The United States continued to lead the pack in start-up activity among developed nations, the Babson study found, followed by Canada, Italy, the United Kingdom, Germany, France, and Japan.

Neck said the main factor behind the continuing high rate of entrepreneurship in the United States is culture. "Our culture is highly entrepreneurial, highly risk-taking," she said. "We teach entrepreneurship. We tolerate failure. You're not scorned if your business fails.

People get up and try again. It's often on the second try when entrepreneurs succeed." Social entrepreneurship Recently, the 24th annual Pan-Massachusetts Challenge snaked its way across the state, from Sturbridge to Provincetown. It's a fund-raising bike ride, to raise money for cancer research, but it's also an example of a growing movement that aims to marshal general management and entrepreneurial skills in the service of social causes. hold more strongly in America than in any other developed country. People sometimes assume that new businesses sprout sporadically, accompanying larger trends such as the boom in desktop computers or the spread of the World Wide Web.

But a new report from Babson College indicates that entrepreneurship is a perpetual condition for a surprisingly large share of the American population. More than one in 10 working Americans were creating or growing new businesses last year, according to Global Entrepreneurship Monitor, an annual study conducted by Babson in Wellesley and underwritten by the Kauffman Foundation of Kansas City. That was off only slightly from 2001 but still 50 percent higher than in 1998, at the height of Internet fever. Many of those behind the new startups are repeat entrepreneurs, said Heidi M. Neck, the study's author and an assistant professor of entrepreneurship at Babson.

"Entrepreneurship in the United States focuses on creating high-growth companies, and those companies are creating more jobs and more wealth," she said. The notion of entrepreneurship as a renewable resource is gaining wide currency. "Innovation never stops," observed Fred Wainwright, the executive director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business. "Regardless of the economic cycles, there will always be people who think of new ideas. That's always been the hallmark of America, find ing better ways to do things.

Practically every major public company can be traced back to a start-up." Wainwright, who also runs the Granite State Angels and the North Country Angels, groups that invest in New England start-ups, conceded that entrepreneurs face a tighter financing climate during an economic slowdown. But a slow economy can also work to their advantage, making it easier to rent offices and recruit employees, and imposing discipline. "Once the economy turns around, they can ride with the wind," he said. Microsoft Oracle and Cisco Systems Inc. are among the successful companies started during a slump, Wainwright noted.

Similarly important companies have been launched the last few years, he contended, though it's too soon to say which will rise to dominate. "I have no doubt that there are in university or corporate research labs out there new drugs, new software, and new business processes that will alter the competitive landscape," Wainwright said. Babson's report, released Wednesday, drew on national data and a survey of more than 7,000 households. It identified both the owners of companies less than 42 months old and "nascent" entrepreneurs, those recognizing opportunities, seeking out funding, talking to po Robert Weisman can be reached at weismanglobe.com. Lydia Villa-Komaroff, Whitehead Institute, on drug prices about $32 billion, way up from the 1980s.

What are the factors leading to such heavy spending? A. One of the components is that the cost of getting the drug to market includes not just the cost of that particular drug, but the whole infrastructure that is set up to develop all drugs. Something like 1 out of 50 prospective drugs make it to market. Black box a good idea Personally, I dont consider a black box that records a few seconds of information about a car accident to be an invasion of privacy recorders are changing the science of crash analysis," Aug. 3).

It could definitely reduce court costs as your article says and that would be a good thing. After all, isn't the court system there to find out the Without black boxes, you have to deduce conclusions based on length of skid marks or such, hire consultants, and waste a lot of everyone's time. And, I'd even say that the court system isnt there to determine the truth, but rather to pit district attorneys against trial lawyers in an effort to grandstand and sway the jury a total waste of time and money. Might as well simply have the real truth. But before we believe the black box offers the complete truth, consider that, as with any device made by man, it's only as good as the mechanical and software engineers who devised it, and cannot necessarily be completely relied upon.

Regarding the prosecution on charges of homicide by negligent operation and speeding although I dont know all the details, what would be more appropriate would be to recognize, as in England, that the driver making a maneuver is at fault in an accident The effect of making this clear to drivers in America would be wonderful. Just imagine if you didnt have to watch every second while you are driving for someone to cut you off! I can tell you from personal experience it was with some dismay that, while my daughter was learning to drive, I noticed drivers pulling out in front of her every few hundred feet while driving down Route 9 in Framingham. At the time I'd just returned from a business trip to England and realized I hadnt ever had to put my brakes on for another driver. Wayne Keseberg Sudbury No choice for jobless I have been reading the "Job Search Diary" in BostonWorks slows pace but doesnt dull anxiety," Aug. 10) in BostonWorks with a great deal of interest, having recently ended a two-year job search myself.

Though I do appreciate any article that provides a more human side to the recessiondownturn, I wish you had picked someone whose problems better represented the unemployed at large. Most of the people who were laid off in 2001 and 2002, do not or no longer have the resources Brian McGrath has. In essence, they do not have the option of turning down a decent job offer, no matter how inappropriate. For example, I had to take a 30 percent pay cut and, believe me, I was still grateful for the opportunity to work. My other alternative was to break up my home and move in with my parents at the age of 41 Why not focus on some of the truly long-term unemployed, people who have been out of work up to two years.

I think it would be interesting to know how they are getting by financially, finding temporary or contract work, dealing with stress, obtaining health care, and even filing for bankruptcy (something else I experienced). And maybe Brian and his career counselor will learn a lesson or two, such as there is such a thing as being too picky and too prideful. Personally, I think his career counselor is irresponsible. Brian could have taken the job and used it as a base to rebuild his finances while enabling him to look for something better. And who knows, he might have even liked it and it could have been the start of a new career.

Joshua Cohen SomerviOe The truth about Verizon I would like to thank you for your Downtown column regarding the Verizon executives In the diner," Aug. 6). The public needs to know what these people are trying to accomplish. I am a father of a little girl with twin boys on the way. If I were making $79,000 a year, I would be thrilled.

I currently hold two other jobs in order to make ends meet. My grandfather raised nine children on his phone company salary, and I am amazed how he did it Then again, the people who built this company, post-World War II, weren't seeing their executives greasing their pot with millions upon millions of dollars in bonuses and golden parachutes. The power and success of this company lie in those who climb up poles and climb down holes, who answer phones in call centers and provide customer service for those who rely on our products. The public needs to know how much this company makes and how much the top levels pull in before they judge the working manwoman at the bottom. Brad Douglas Dorchester It's hard for society to understand, but the development costs have to include the cost of the failures.

That's part of the business. Q. How much will financial demand for research grow for the United States to realize the promise of cutting-edge gene therapies? A. It's expensive research. Right now, a lot of it is going forward because of the generosity of private donors.

That's not enough. You need government-funded research because its undirected, basic inquiry. I worry about the pipeline. If industry is going to fund research, they want a fairly short turnaround time. We're talking about two-to-five-years' time horizon.

Those things that are 15 to 20 years down the road I think are not appropriately being supported at this point A great deal of what we see hitting the hospital beds now really came from work some time ago. Q. There has been criticism leveled at the drug industry that research into new areas is taking a back seat to pursuing highly lucrative markets in heartburn, depression, cholesterol and allergies, where there are already treatments available. Is that fair? A. There's two points of view.

I tend to wonder if there's too much attention to those "me-too" areas, but it can be argued that competition will bring prices down There's relatively recent information that says more people ought to be on anticholesterol statins sooner, that lowering cholesterol would have impact on morbidity and mortality. But the statins are not inexpensive. So how much do we save by people taking these? We need to consider how much less the system pays for adverse events if people do have drugs. If people dont get sick and dont miss work, the pharmaceutical companies dont get credit for that, but we all benefit. Governor Mitt Romney delivered a blunt message to pharmaceutical executives gathered at the Drug Discovery Technology 2003 conference in Boston last week: Drop retail prices or face more criticism from an angry public.

Among the conference participants was Lydia Villa-Komaroff, vice president for research and chief operating officer of the Whitehead Institute, a genetics research facility in Cambridge that recently received a donation of $100 million to study the next generation of gene-based cures. Villa-Komaroff talked with Globe business reporter Christopher Rowland about how tensions overpricing between government and industry might affect the future of drug research. Q. The costs of prescription drugs are at a record high, and consumers and Congress and employers are looking for ways to reduce costs. On the other side is industry demand for revenues, in part to pay for new drug study.

How would decreased industry revenue affect future drug discoveries? A. I think it would have a profound effect for the following reason: If you lower the margin for an industry, that much less money is available for research. This means the pipeline would be affected. Drug companies, like any other industry, think fairly short term, so it would be awfully hard for them to not reduce research budgets in such an event. In the past, we have had a component of government support for basic research, which was able to be fed into the pipeline.

That is being reduced now that the National Institute of Health budget is not going to be able to grow as rapidly as it has. Q. The pharmaceutical industry says it has dramatically increased spending on research and development to 1 GLOBE PHOTOMARK OSTOW Lydia Villa-Komaroff Book Review Life is unpredictable, age irrelevant in 'Cycles' able. Men, rather than women, sometimes stay home with the children. And blended families are the norm.

Work, too, has become increasingly cyclic. As life has become longer and the pace of change faster, career transitions have become more common. Many jobs are now offered on a contract basis. Boomers, says Dychtwald, will change jobs even careers more often than any generation in history. With cyclic careers more common, lifelong learning has become more of a necessity.

In addition, older people are flocking to lifelong learning to maintain their vitality. Dychtwald predicts that one day "mind spas" might do for mental acuity what health clubs have done for physical fitness. Far out? Perhaps, but intriguing nonetheless. Dychtwald, though, appears less prescient in her chapter on recreation. She argues that recreation under the old model of linear living was primarily a phase for children and retirees.

But, you might ask, what about all those middle-aged golfers? Perhaps recreation has more to do with socioeconomic class than with the new cyclic lifestyle, after all. However, for the most part, Dychtwald presents a thought provoking, well-reasoned argument Her book is packed with anecdotes, making for a lively read. By Joan Axelrod-Contrada GLOBE CORRESPONDENT Remember the book "Passages" by Gail Sheehy? Author Maddy Dychtwald thinks Sheehy's book is rapidly becoming obsolete. In "Cycles," Dychtwald argues that much has changed since Sheehy came out with her landmark book in 1976. No longer do people go through such predictable adult transitions.

Instead, Dychtwald says, people increasingly are leading lifestyles in which age has become irrelevant. If not unusual to see a 35-year-old or a 65-year-old starting a new career, a 20-year-old or a 70-year-old getting married, and a 45-year-old or a 25-year-old graduating from school. Dychtwald attributes this shift from the linear to the cyclic to three factors. First, people are living longer. Second, the youth market is steadily declining.

And, finally, baby boomers are revolutionizing how we age. As a result, people of the same age and socioeconomic class often choose different lifestyles. One 50-year-old man might choose early retirement and the traditional retiree lifestyle. Another man the same age might quit his job and become an entrepreneur. A third might marry a younger wom- an and start a new family.

These differences, says Dychtwald, present both challenges and opportunities for businesses. The 50-year-old retiree, for instance, might be in the market for new golf clubs, the new entrepreneur for a contractor to build his home office, and the midlife father-to-be for a minivan. Dychtwald, a consultant specializing in generational marketing, sees numerous opportunities for businesses willing to be creative. For instance, she points to kitchenware stores offering cooking classes in response to increasing interest in continuing education and a banking company that helps couples with financial issues. In her chapter on "love cycles," Dychtwald describes how maintaining one primary relationship throughout a lifetime was simpler when life was short and there were few alternatives.

Increasingly, she says, people are adopting a lifestyle of "cyclic monogamy" like that of anthropologist Margaret Mead years ago. Dychtwald quotes Mead, who was married three times, as saying, "The first time was for romance; the second was for family, and the third was for companionship." Indeed, lifestyle variations abound. Remaining single has become more accept 1 i Cycles: How We Will Live, Work, and Buy By Maddy Dychtwald, The Free Press, 288 $26.00 Letters for publication should include the writer's name, address, and daytime phone number. AU letters are subject to editing. E-mail letters to businessglobe.com; fax to 61 7-929-3183; or mail to Business Letters, The Boston Globe, P.O.

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