Have you come across any MBA programs that are doing a good job of teaching entrepreneurial leadership?
In most business schools, there’s the group that focuses on Several business schools are expected to use the book in their courseworkentrepreneurship and then there’s the group that focuses on leadership. That’s true at Stanford, Harvard, and the like. So you’ve got the people who teach leadership, and the people who teach entrepreneurship. There are, however, a handful of schools outside of the top-ranked ones that literally focus on entrepreneurial leadership. Then, there are schools that focus specifically on entrepreneurship; they always have classes on how you grow a company, the basics of an enterprise and how it matures, and that’s good to know. But there are all the leadership skills you have to fit in at the right stages, and I haven’t seen anyone putting those pieces together. That’s the reason I wrote the book. When I was putting together my class, I couldn’t find the material anywhere.
What’s often taught in business schools you cannot apply wholesale to a startup. The reason is that most of these things assume a company already exists, that you have all the pieces on the chessboard. Yet, when you’re creating a startup, much of the time you’re creating the next piece; all the pieces aren’t there yet, and that limits your options. You actually have to be very constrained and focused in what you choose to do.
What is the No. 1 thing an MBA should do before starting a company?
Before you look to your resume, you have to look inside yourself, and you have to say, “Why is it that I want to be an entrepreneur?” Of the hundreds of entrepreneurs I’ve worked with or coached, it’s the single biggest determinant of success–far more than whether they got an MBA or even whether they have an undergraduate degree. Is their motivation lined up with what they will have to do?
Many people find out that entrepreneurship isn’t exactly what they thought it would be, and absolutely every entrepreneur finds out that it’s a struggle. You’ve got to do things that are hard–the hardest being changing yourself. There’s not a successful entrepreneur on the planet who hasn’t found that they had to change themselves, and very often people choose to let their startups fail rather than changing themselves.
You advocate a more deliberative startup methodology as opposed to the go-big-or-go-home Silicon Valley approach. Could you elaborate on this?
In the U.S., there are 700,000 startups a year. Venture capital supports about 700 of those, so about 1 in a 1000, and it’s really important for those 700. But it’s not the story of entrepreneurship in America; that story is the 699,000 other companies. Maybe they’re just not as sexy as a Facebook, Dropbox, or Snapchat.
The Silicon Valley model, which really applies to one in 1,000 companies, is to shoot big, fail fast, and use other people’s money. If you’re going to create a business that is going to live or die based on network effects or huge economies of scale and is in a race to achieve those, then venture capital is what you need, and it does create businesses faster.
However, that doesn’t mean it creates business that are more likely to be successful; it doesn’t develop businesses that create more economic value. For example, the clothing chain Forever 21 has created more jobs than Facebook and has made the owners almost as wealthy as Mark Zuckerberg. You can find other super success stories that came about from a more classic model of entrepreneurship that focuses on slow and steady growth as well as dedication and focus on the part of the owners, who were probably good at listening to other people or getting mentors to help them – that’s a more classic way of learning your skills and your trade.
What is the biggest misconception that students have about starting a business?
There are a couple. One is the misconception that a great idea always makes a great business. The truth of the matter is great ideas are a dime a dozen or maybe a dollar a bushel. It’s not the idea, it’s the hard work and the morphing of the idea into something that people actually want and care about that’s the hard part. Most students whether they’re business school students or undergraduates hate that realization: “No, no, it’s my idea. Don’t destroy my dream.” That’s the overwhelmingly big misconception.
They also underestimate the need for people to help. “I can do it. I don’t need anybody else. I’ll just hire people to do exactly what I say.” That could get you a little way there, but it isn’t going to get you all the way there.
Do you think entrepreneurship is an innate quality or is it something that’s acquired?
Successful entrepreneurs have specific types of motivations. But there are a lot of people who become entrepreneurs who didn’t have the appropriate motivations for success starting off. Some people say my innermost motivations will never change: “I am who I am.” If that’s true, then you’re born to be an entrepreneur or you’re not born to be an entrepreneur.
But there are some people who feel that they can and have changed their motivations, who realized what their true motivations were later on and made appropriate changes in what they were doing. I happen to be in the latter camp. I think you can change motivations. It’s about finding them first and understanding what they are and figuring out whether you’re comfortable with that or having something else that drives your actions.