How do you think Karen should resolve these problems with starting her new business?
Karen Young earned her mechanical engineering degree at BYU. After graduation, she was hired to design two-wheeled hoverboards for NewMotion Industries, based in Kansas City. The job was good, and it paid well, but Karen was bored after a year. The hoverboard craze had peaked, and she was running out of ways to redesign the same basic product. Mostly, though, Karen wanted to start her own company. She had saved about $50,000 for a start-up business, and she had taken a couple entrepreneurship courses in the BYU Marriott School. Being in her mid-20s and needing to support only herself and her dog, she thought now was the right time to strike off on her own. Recently, the student chapter of the Society of Women Engineers at the University of Kansas asked her to talk about her career. Afterward, she had dinner with students at Papa Keno’s. As they were walking to the restaurant, one of the engineering students, Sara Blevins, rode up on motorized longboard that had thinfilm solar cells covering the deck. Karen had never seen one like it, so she said, “That’s a cool board. Where’d you get it?” Sara smiled, “I made it.” Over pizza, Karen and Sara talked about the board. Its thin-film solar cells meant the batteries could be charged while the board sat outside. Sara had used a nickel metal hydride battery (NiMH) that didn’t hold as much charge as a lithium ion battery but the solar cell meant the batteries didn’t need as much charge. The NiMH battery was also more durable and didn’t risk catching on fire. Sara had also added a locking mechanism that made it easy to secure the board to a bike rack. Karen knew almost immediately that this kind of solarpowered longboard was exactly the kind of product on which she could build a company. This student, Sara, had solved several of the problems with the existing hoverboards. Moreover, Karen knew that motorized skateboards probably had more staying power than hoverboards, which was beginning to look like a fad. Skateboards are more useful and safer than hoverboards, which is why they never go away, especially on college campuses. In her basement, she designed a longboard that was quite a bit better than Sara’s. She used a more efficient motor based on some of NewMotion’s best engines. She also added the latest generation thin-film solar cells, which meant the NiMH batteries charged much faster than Sara’s. Within a month Karen built the prototype, and it worked great. Karen even found an angel investor, who was interested in staking her company. He said, “Get me a business proposal by next week, and we can figure out where things go from there.” As she was writing the business proposal, though, Karen felt a bit guilty. Her design and prototype were significantly different from Sara’s, but she was sort of stealing the idea. Meanwhile, Karen’s current employer, NewMotion, was sure to react negatively if one of their engineers left to start a business with a product that competed with theirs, even though Karen did not have a non-compete clause in her contract. But this was her big chance. She wouldn’t be the first entrepreneur to take someone’s idea and run with it. Moreover, people leave companies all the time to start businesses in the same industry. How do you think Karen should resolve these problems with starting her new business?
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