Xerox New Enterprise

Babson Professor John W. Altman, Case Director

Andrea Alyse, Case Writer

Arthur M. Blank Center for Entrepreneurship

© Babson College, 1999.

Abstract

Xerox Corporation, founded as a copier company in 1958, decides in the late 1980’s to take advantage of the products and technologies developed internally but not directly related to the company’s core product line. Creating a wholly owned venture capital (VC) organization, Xerox begins investing in internally generated ideas with plans to eventually spinout these companies as IPO’s. The chief managers at the VC company do well for the first two years with a portfolio of ten companies that are mostly software developers. They create an entrepreneurial environment in the new companies by offering employees highly leveraged equity plans with the payoff coming at IPO. However, they begin to have doubts about their ability to keep the venture capital company profitable. They wonder weather there are better models available to improve the performance of these wholly owned entities.

Location of the company: New York

Years spanned by the case: 1989 through 2000

Industry segments: Corporate Entrepreneurship

Stage of the company: Growth

Age of the entrepreneurs: Mid 50’s

Key Words: Corporate Entrepreneurship, IPO’s, Venture Capital, Spinouts, Business Model, Corporate Culture

DVD

There is a 60 minute DVD available for this case. Please place orders through ecch.

Teaching Notes

A case teaching package, written by John Altman, is available for this case. The teaching package includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.