“Question 1
In the first three years of operation Idealab was recruiting entrepreneurs to its incubators. The entrepreneurs had business experience rather than internet experience. An incubator is a company that offers business programs designed to offer support in the successful development of entrepreneurial companies through office help accounting and legal assistance.In turn the incubator is compensated by receiving an ownership interest from the company. When the company grows to a point where it can venture and launch on its own it detaches itself from the incubator company and lists its share on the stock marketThe incubator company reinvests its money in another entrepreneurial company. Entrepreneurs benefit from this relationship through the help of business basics like setting networking activities and high speed internet access. Incubation is the first process to apply when developing the entrepreneurial company. Later the incubator company helps with marketing assistance and the entrepreneurial benefits in setting accounting and financial management services. Idealab providesentrepreneurial companiesby means of accessing bank loans and funds using the Idealab resources as collateral. Idealab linked the entrepreneurial companies to higher education resources where they learnt how to manage their business before launching into the stock market. These incubator services help entrepreneurs learn how to run their business with guidance from the incubator company through comprehensive business training programs. The training programs help to minimize most of the risk that new businesses encounter in their first year of incorporation. Therefore the new companies follow a guideline provided by the incubator company which has a lot of resources and experience. Entrepreneurial companies benefit from mentorshipprograms which incorporate advisory boards and a link to strategic partners who help to form management teams. They set up new technology commercialization assistance in the office space provided by the incubator company (Schneider 511).
Question 2.
Idealab through its founder Gross devised a new strategy that would surpass the company initial purpose as an incubator company. The strategy was to combine business with the existing incubator companies to compete with Amazon.com. What Idealab did was to create a strategic error led by fast venturing and it proved suicidal to the operation of the company. The management failed to plan well and this resulted in a worse execution of strategy. As a result the company raised enough funds for this exercise. A sudden change of strategy and purpose for the company needed venture sponsors who understood the market characteristics and had prior experience. What Idealab did was to venture in an already competitive market with key players like Amazon.com. This business move was a high risk one and Idealab got into it by targeting to compete with an already established company like Amazon.com. Idealab and its incubator company partners failed to raise enough fund and derive good business strategies that would help establish and grow. It failed to understand its competitor by undermining established Amazon.com. The comp [any almost collapsed and a big loss was realized in business coupled with a lot of capital constraints (Schneider 512).
Question 3.
In 2003 Gross decided to devote Idealab company resources to develop internally generated ideas as a focus for internal growth from its operations. This was a well thought strategy that would help Idealab to launch into the market after most of its capital sponsors withdrew their capital which almost led to the collapse of Idealab. The company withdrew its purpose to provide incubator service to new establishing companies but chose to remain with its initial number of online businesses. The move helped Idealab to focus most of its funds to internally generated ideas a smart move that has led to a resurgence of the capital value of the company to around $800 million. The company has succeeded in establishing itself better and stronger through internal growth with less outsourcing. This has reduced the expenses of the company significantly. The management established a growth plan that would see the company succeed in the second wave of electronic commerce as reflected by the company capital value of about $800 million. The growth strategy also resulted in firing more than two third of its employees a move that led to reduction in company expenses through wages and salary payments (Schneider 522).
“
