MARKETING,ENTREPRENEURSHIP-Entrepreneurship Myths: Why You Likely Won’t Be Rich and Famous & more

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MARKETING & more

Entrepreneurship Myths: Why You Likely Won’t Be Rich and Famous

Aug 29, 2018

Author Morra Aarons-Mele discusses myths surrounding entrepreneurship, including notions about success rates, compensation and the hustle needed to succeed.
There’s a common narrative that to be successful in business or as an entrepreneur, you need to be out there. You need to be ambitious. You need to be hustling 24 hours a day, at the expense of all the rest of the things in your life. While the struggle is real, that’s not the entire story. Morra Aarons-Mele, founder of the digital agency Women Online and host of a podcast titled “Hiding in the Bathroom,” has written a book by the same name, Hiding in the Bathroom: An Introvert’s Roadmap to Getting Out There (When You’d Rather Stay Home) that examines some of the myths around entrepreneurship. A self-proclaimed hermit, she wants to help other introverts find success while staying true to themselves. Aarons-Mele joined the Knowledge@Wharton radio show, which airs on Wharton Business Radio on SiriusXM, to talk about her book and what she calls “entrepreneurship porn,” which captures some of the misguided ideas that many young Americans have about what being an entrepreneur really means.

An edited transcript of the conversation follows.

Knowledge@Wharton: Let’s start with this term “entrepreneurship porn.” How did you come up with that?

Morra Aarons-Mele: I never in my life thought that I would coin a term that’s a bit risqué. My mother doesn’t like when I talk about it. But I just had done the circuit up in Boston, where I live, of startup nights and incubator talks, and conferences for budding entrepreneurs and social entrepreneurs. Those are people who are more socially minded and might normally work in nonprofit or at NGOs but want to start a new venture in that space. I have the great fortune of being able to mentor a lot of really smart young people because I live and work near Harvard.
I just kept sitting there thinking, “Is this real? Are we selling them all a bill of goods?” My husband, who’s a professor, and I would talk about how all of the really motivated young people in business school and graduate school want to go start ventures. They want to be the next big entrepreneur. It felt kind of sad to us because the statistics are not that great. We know that most businesses fail. Most small-business owners or entrepreneurs make about $44,000 a year. If you have a Harvard Business School degree, that is not going to be your starting salary if you go work at a large institution. I just felt there was a need to pull back the curtain and be a little more honest.

Knowledge@Wharton: There’s a common statistic that 80% of startups fail, and sometimes it takes multiple attempts before entrepreneurs see any kind of success.

Aarons-Mele: And let’s not forget all the societal factors that allow those startup successes and those guys — because they usually are guys — to keep going. Who pays the bills while your startups keep failing? We have bills to pay. I think that the media and business schools have created this very glossy sense that life as an entrepreneur is somehow better. This is why I call it porn.

Knowledge@Wharton: How has that glamorization influenced entrepreneurial culture and the employment market in general? It does seem that a lot of college graduates would rather go the entrepreneurial route than work for a traditional company for a few years and then strike out on their own.

Aarons-Mele: That’s right, and you hear that from recruiters all the time. I think you just hit on something that’s really important. I always tell this to young people, and they can take my advice or leave it. I’ve had a small business for 11 years. I love it. But I think that there is true value in having institutional knowledge, working in a large organization, and having a boss that we really shouldn’t downplay. Whatever you do in your career, if you are dying to start a business at some point, that’s wonderful. But it doesn’t have to be the first thing you do.
Also, you don’t need to create a unicorn. I think a lot of [the hype] is around the idea of scale. A small business is great, but the first word in it is “small.” And in America, we don’t like small things. We don’t think they’re sexy. There’s this huge focus on scale, which I think can also be dangerous.

Knowledge@Wharton: Are you optimistic or pessimistic about where we are headed with entrepreneurship because of these issues you point out?

Aarons-Mele: I’ve got to tell you, I’m a little pessimistic right now. I see a bubble in terms of venture capital funding and money going in one direction to a lot of privileged white men, and I don’t think that’s great. But the other thing is that I think that we’re not investing in our futures. No one tells you that when you start a business, you’re probably not going to fund your retirement for at least 10 years. The statistics on entrepreneurs and small-business owners and retirement savings are dire. If we don’t take care of ourselves as leaders, no one else is.
I think it’s time for a conversation about financial well-being for small-business owners, and for thinking holistically about what this bubble in entrepreneurship is doing to our culture and the ability to buy a house, start a family and live out that version of the dream.

Knowledge@Wharton: The entrepreneurial mindset is one of hustling and networking and going 900 mph all the time. In your book, you talk about how you’re not really that type of person. You’re more of an introvert.

Aarons-Mele: I’m not just an introvert, I’m an extreme introvert and a hermit. Right now, I’m talking to you from my lovely little suburban home office, which I really don’t like to leave that much. The internet is how I maintain a window on the world, keep my networks going, do business development while I’m hiding out in my home office. One of the reasons why I wrote my book is I wanted to give people like me tools to be successful small-business owners or entrepreneurs while carving out the alone time that we need.
“Introvert” doesn’t mean that we are unable to schmooze and be on and chat or be present. We absolutely are, especially if we practice. But we need to have better control and be thoughtful about what our day looks like, about what the cadence of our year looks like, about the pace at which we work.
I wanted to bring that into the conversation. I’ve actually cross-interviewed some radio hosts who say, “This is a great job for an introvert. When I’m on, I’m on. But then I can be down.” So, I think we also need to think differently about the workday.

Knowledge@Wharton: What most people call work/life balance, you call work/life fit. Explain the difference for us.

Aarons-Mele: The term was coined by a mentor of mine, Cali Yost, [CEO and founder of Flex Strategy Group]. I love it because, first of all, work/life balance is a lie. Anyone can tell you that. I don’t like work/life balance for two other reasons. The first is that I think it’s become totally twinned with parenthood and being a working mom, and that is not good for anyone. There are a lot of people who don’t have kids at home and who really crave a life. Let’s be honest: It’s not about having kids.
The other thing is that we want to work in a way that suits us, like we just talked about. You’re on, and then you’re off for a little while. That’s your work-life fit. I have friends, clients, my husband, who love to work all the time. I don’t judge them. That’s their work-life fit. I really love my work, but I need to work in a space that I can control.
I am no good at showing up at an office for 10 hours a day and sitting in an open-plan cubicle. That’s not my thing. I’m bad at it. But give me control over my time and space, and I’m amazing. I think fit is about what works for you, with compromise at the edges, and becoming the best person you can be in your career. It’s so much healthier than balance.

Knowledge@Wharton: Do you think that’s why many companies are flexible about employee time, allowing them to work from home or set different hours?

Aarons-Mele: Cal Newport would call that your “deep work” time, the time that you can really think and be generative and do what you love to do. That’s your work/life fit. That’s what’s so awesome about it. I have a colleague at my company who’s a total nine-to-fiver. She’s amazing during those hours, she’s like a machine. But then she wants to be done. I don’t mind if my clients email me late at night. I’ve made that agreement with them as long as I have more flexibility during the day.
Gallup did a great study that I always cite. They found that 86% of working Americans said they don’t mind being reachable on their smartphone as long as they have more flexibility on how they manage their workday. That means, “I’ve got to leave for a kid’s soccer game. Please don’t give me you-know-what for it.” Or, “I might want to come in a little later to avoid traffic…. but I’m going to be reachable for you at odd hours.”
I do think work is shifting. Some really smart companies have core days, so they let employees work at home or work how they like on, maybe, Monday and Friday. But Tuesday, Wednesday, Thursday are in-office days where people can see each other and do that collaboration. With technology, work is shifting and things are changing.

Knowledge@Wharton: You also touch on branding. How does an introvert use the digital culture to their benefit while also not wanting to be the kind of person who is always out there?

Aarons-Mele: I do think that the idea of the personal brand is very much in line with the culture of entrepreneurship porn. Like, if only we have enough followers on social media, we might be famous, too. We buy into this mythology. But we all know now that social media companies use us, and we should use them.
I’m a fan of being really, really strategic about how you use social media and online content to further your professional brand. I don’t say that you have to Instagram your breakfast or curate perfect shots of your perfect life. But what you should be doing is thinking about the digital channels you can use to show off how smart you are. Show off your expertise. Use social media to cultivate this sense that you are a leader, you’re a boss, you know what you’re doing and people should seek you out, especially if you’re a small-business owner or if you’re in the job market.
If you publish, if you write, if you make yourself seem an expert in your field by publishing smart content … you actually minimize the time you need to spend networking in person. It’s like an annuity. It’s working while you sleep.

Knowledge@Wharton: How has this book changed your professional and your personal life?

Aarons-Mele: It’s been incredibly wonderful just to talk to hundreds of people. I’ve talked to people at events and on call-in radio shows, and I hear how frustrated they are and how much they just want to be heard, in terms of people who are introverts but feel like they can’t perform to their fullest because they’re in the wrong environment. I want people to be heard, and I want people to stand up and ask for what they need in order to be awesome.
But I have also learned that for me, being on my book tour was the hardest thing. I hated it. I loved talking to people and learning, but it was a lot for me. I truly am a hermit, and now I am really careful to guard my time as much as possible.
I also realize that I would give things up in order to be able to maintain control over my schedule. This is what’s really important. You’re not going to be rich and famous, probably, if you need to protect your time and work in your little home office.













INNOVATION

Never Give Up: What an Entrepreneur Learned from Failure

May 25, 2018

Author Ethan Senturia discusses his new book about launching a startup that ultimately did not succeed.
Ethan Senturia thought he had it all. He graduated with honors, landed a job at Lehman Brothers, then struck out on his own when that Wall Street powerhouse shut down during the Great Recession. But Senturia quickly learned that becoming a successful entrepreneur takes much more than a great resume. Dealstruck, the online lending platform he founded, ceased operation in 2016. That experience led Senturia to rethink his long-held ideas about success. He has shared his personal journey in a new book titled, Unwound: Real-Time Reflections from a Stumbling Entrepreneur. Senturia talked about his experiences during a recent segment on the Knowledge@Wharton show on Wharton Business Radio, SiriusXM channel 111.

An edited transcript of the conversation follows.

Knowledge@Wharton: Tell us about how you started your company.

Ethan Senturia: I grew up the son of an entrepreneur and somehow made my way to Wharton thinking that the startup world and the broader world of business and finance were sort of the same thing. I learned that those were quite different. Ultimately, I went on to Wall Street and my first job was at Lehman Brothers in 2008. I was at this big institution, and they went through bankruptcy. I found that there’s not really this ideal stability out there that maybe I thought there was. I ended up going down the entrepreneurial path, following some of the things my father did. My first journey into entrepreneurship was prior to Dealstruck with a few Wharton alums. I decided to take the financial knowledge and training that I had received at school and in my first foray into the professional world and try my hand at something in the startup world….

Knowledge@Wharton: You had a lot of expectations that it was going to be a successful venture, but things turned out a little bit differently. What happened?

Senturia: Some people have their vision of success and it goes perfectly. But more often than not, even if your outcome ends up being a success, along the way you have a lot of ups and downs. Even if you know intellectually that this journey is going to be hard — there are going to be highs and lows — when you actually run up against them you realize that maybe it’s not a matter of intellect to get you through some of the hardest parts. It’s more a matter of emotional quotient and self-awareness and those sorts of things. But I think even the greatest successes have plenty of war stories. Unfortunately for me, we got down to our last dollar and then we didn’t make it.

Knowledge@Wharton: What have you learned about being an entrepreneur?

Senturia: Patience. When you’re starting your own company, you have this big vision…. You want to raise the money. You want to build the product. You want to get to market. You want to scale. Everything in the startup world is about scaling. You feel this inordinate pressure, sometimes from your investors, but sometimes just from yourself, to be the next Facebook or the next Google or to try to hit that home run. And you fail to realize that maybe these things take a long time. Solid, good companies don’t get built overnight. For every single story of a company that became a $1 billion success in two or three years, the vast majority of the success stories out there took 10-plus years. You have to slow yourself down and focus on one step at a time. If you make all the small decisions right, then those add up to the big picture. Being more patient for that success to come was a big lesson for me.
On a more personal level, we tend to associate ourselves a lot with what we do. When you run a business and you start something, it’s even more so. People have this idea that your business is your baby. As things go up and down, it’s very easy to identify yourself, your value, how successful you are based on whether your company’s going well or not, whether your job’s going well or not. The toll that takes on you and the people around you is an unhealthy side effect of entrepreneurship. I’ve tried to learn that business can go well, business can not go well, careers can go well, they can not go well, and it doesn’t necessarily mean that you are fluctuating the same as a person.
I think that’s where it can be really valuable to have strong partners or strong advisers, people around you who have been through it. People who venture out into starting their own companies, whether they’re big high-tech startups or just a bakery on the corner in the local neighborhood, tend to be people who are ambitious, who have been successful, who have intellect, and they’re not used to failure. I was pretty smart, got into a good school, got a job on Wall Street. I had a good outcome in the first startup that I was an employee at. I think a lot of people who take on the challenge of entrepreneurship have that sort of track record, and then you run into something where it’s not enough to just be smart and work hard. You need luck. You need people around you. You need the competitive landscape to cooperate. That’s a big challenge because you’re running 100 mph and hit a brick wall, and that can be a setback.

Knowledge@Wharton: How do you handle employees when things aren’t going well for your startup?

Senturia: That’s one of the hardest parts because there’s this need to be transparent with the people who work for you. You’re the entrepreneur. You started this company. You have employees. They’re working really hard to help you build your dream. They’re participating in making that dream, internalizing it on their own. As things start to get really challenging, there’s this delicate balancing act of maintaining transparency but also not distracting them to the point where they get so concerned that they can’t do the things needed to turn the business around or get it through a tough period. But it’s definitely the most challenging thing when you see people who have left stable jobs, who have all different types of economic situations at their home and in their families. You just have to try to treat them well, even as things go sideways or wind down. You have to try to help them through financially as best you can. The other ways to do it are to give back in kind and make sure that they get onto the next [step].

Knowledge@Wharton: I’m guessing a lot of the employees at Lehman didn’t get that kind of support at the end?

Senturia: No. That was a pretty interesting scene. I remember freaking out, thinking, “Oh my God, this is my first job. My career is over.” People just packed up their boxes and walked out, and there were rows of media outside the office.
There wasn’t a lot of empathy in that situation. I think that’s a missing factor oftentimes in business, where a little bit of empathy, a little bit of caring, a little bit of extra generosity, even when you’re suffering, even when you’re having a difficult time, just extending that little bit extra to your colleagues, your employees, makes a huge difference to them. It’s a small give if you can just get yourself to do it.

Knowledge@Wharton: Are leaders able to fully understand when things are going awry and a company is starting to take on water? Or does it hit you blind?

Senturia: I think it’s a little of both. There’s an illusion that I had as a first-time entrepreneur, that got debunked pretty quickly, that you have complete control. The reality is that there is no such thing as complete control. There are situations or things that come up where, despite your best efforts, you get blindsided and have to react. You can try to make the right decisions and figure out the right strategies, but that doesn’t mean that if you execute them flawlessly you’ll have complete control over the outcomes.
But there are also situations where it’s like playing whack-a-mole. Something pops up, you hit it, and then the next thing pops up and you hit it. You get into this spiral of not being able to look at anything other than your feet or your toes, and that can be a self-fulfilling prophecy or positive-feedback loop because you’re starting to look at things so close to you that you lose sight of the bigger picture and then really can’t turn things around. That is one of the challenges of being in distress.

Knowledge@Wharton: Was writing this book a bit cathartic for you?

Senturia: Absolutely. As I was going through this difficult period with the company and in my personal life as they were interconnected, people were saying, “Oh, in 20 years this is going to be the best thing that ever happened to you. Everyone fails their first time.” But I sort of said, “Gee, I’m not sure that success is going to come. I don’t know what’s going to happen in my future.” No one knows, right? But I felt that the way that I could try to make this failure feed forward into success is to study it and to look at it honestly, to take accountability for it, to try to understand what happened, what didn’t.
When we go through hard times, we tend to want to turn the page quickly, put it in the past and get onto the next. We don’t want to dig through the pain and unearth all the little thorny things hidden there.
But I felt like that was a really important exercise. I think there’s a lot to learn from it, and the book was my way of doing that. I wanted to share it with other entrepreneurs just as an example of hopefully empowering them and saying, “Don’t be afraid to fail. Don’t be afraid to try again. And don’t be afraid to look at it and study it and own it.”

Knowledge@Wharton: Do you look back at your time with Dealstruck and think of things you could have done differently?

Senturia: I guess one thing is raise more money. That’s a double-edged sword, but we had opportunities to raise more money earlier and we didn’t. I think if you have a chance to raise money and you’re an entrepreneur, take the money. Until you get that exit, you’re always fundraising. The other thing I would have done differently is probably more around the details of the product that we were originating. I think there was some product market fit that we didn’t have perfectly honed.

Knowledge@Wharton: Would you agree that small business is a critical part of the American economy and an area where there’s still a lot of growth?

Senturia: Yes. The most enjoyable part of being an entrepreneur at Dealstruck was being able to be a small part of the success of a couple thousand other entrepreneurs whom we financed. That was a big piece of our mission and a big piece of what drove me to start the company.
I would say that today the small business world is still underserved. There’s still a need for financial innovation, both from a product standpoint and a technology standpoint. There’s still a lot of great entrepreneurs tackling it. And I do think that it’s an unbelievably critical segment of the economy, of job creation. I hope that I can continue to play a role in trying to bolster it, and I know that there are a lot of other great entrepreneurs doing the same.





INNOVATION

Why Creating a Business Plan Is a ‘Waste of Time’

May 24, 2018

Economist and author Carl Schramm discusses his new book, 'Burn the Business Plan.'
A finely crafted, tightly defined, highly detailed business plan seems like a perfectly rational tool for getting your entrepreneurial ideas off the ground. But Carl Schramm thinks you should burn it. Schramm, an economist, Syracuse University professor and former president of the Ewing Marion Kauffman Foundation — a non-profit that encourages entrepreneurship — says that crafting a business plan is one of the biggest misconceptions about how to start a company on the right footing. His new book, Burn the Business Plan: What Great Entrepreneurs Really Do, says the true blueprint for success requires innovative ideas, real-world experience and keen judgment. Schramm joined the Knowledge@Wharton show, which airs on SiriusXM channel 111, to explain why inventors and entrepreneurs should light a few matches and get on with it. (Listen to the full podcast using the player at the top of this page.)

The following is an edited transcript of the conversation.

Knowledge@Wharton: Why is a business plan unnecessary?

Carl Schramm: It’s the basis of much of the teaching about how to start a business, and so much of what’s taught is basically conjecture. My book is developed off 10 years of research that we did at the Kauffman Foundation. If you look at all our older major corporations — U.S. Steel, General Electric, IBM, American Airlines — and then you look at our newer companies like Amazon, Apple, Facebook, Microsoft, none of these companies ever had a business plan before they got started. Empirically, it appears as if you don’t need a business plan.
Second, the business planning process is largely generated as a preview for venture capital. As I show in my book, from empirical studies, much less than 1% of all new startups ever see a venture capitalist.
Much less than 1% of all new companies every year have venture backing of any kind. So, I largely view the creation of a business plan as something of a waste of time.The third problem is that it seems to make starting a business somewhat like a cookbook. If you do this, and then you do this, and then you do this, the cake will come out okay. And that’s really not how it happens.

Knowledge@Wharton: Let’s talk about age because many entrepreneurs are in their late 30s or 40s. These are people who made a shift in their career paths.

Schramm: Precisely. It goes to this question of, “What are we doing when we’re trying to teach high school kids?” Even grammar school children get courses and exposure to entrepreneurship. At the university level, it’s now a major in probably 3,000 colleges and universities. And the whole schema, including the notion of a business plan as the formal way to teach how to start a business in a college classroom, is geared to 20-year-olds.
Much of our mythology is that unicorn companies are started by people, like Mark Zuckerberg, who are in their 20s. But the reality is, the vast majority of people who start businesses are middle-career people who have been surprised by the fact that they actually had an idea, and their idea was good enough to build a business around.Another thing wrong with how we write about entrepreneurship, how it’s taught, is that somehow people set out to be entrepreneurs as if they set out to be a dentist or an accountant. The vast majority of entrepreneurs were really amazed to find out that they became an entrepreneur. In my case, I was a professor at Johns Hopkins for 15 years, and then one day my research sort of slapped me in the face. I said, “Holy smokes, if I want to really make this work and actually change the world, I can’t do it by writing an academic paper. I have to start a business.”

Knowledge@Wharton: How should we teach our kids about entrepreneurship?

Schramm: I don’t think [the current curriculum] can be tweaked. I think it should be abandoned. I think it should be overthrown. Because if you look empirically at where entrepreneurs come from, if they have formal training, it’s not in entrepreneurship. It’s in engineering or the STEM subjects, the technical subjects.
Many, many more entrepreneurs come out of MIT because it’s an engineering and a technical school.
Same thing for Caltech. Caltech doesn’t even teach entrepreneurship. At MIT, there’s one professor in the business program there who teaches entrepreneurship. But it doesn’t matter because if they didn’t teach it at all, these schools would be producing many, many new businesses all the time.

Knowledge@Wharton: You said not much funding comes from venture capitalists or angel investors. How are entrepreneurs getting the money they need to execute their ideas?

Schramm: One reason people can become entrepreneurs at midlife is they turn to their own savings, their own assets, to friends and families for loans. By the time you’re 40, which is the average age at which people start businesses, you’ve settled your student debt. You’ve got a house. You’re likely to have a spouse who has a job, which is a huge protection if you start a new company because she or he has health insurance and other benefits. So, most companies are self-funded.

Knowledge@Wharton: In the book, you also talk about the incubator. But you think the incubator isn’t having the desired effect that a lot of people are hoping for. Can you explain?

Schramm: Again, empirically, very few companies come out of these incubators. I was trained as a labor economist. I’m in the middle of writing an essay about incubators, and the premise is that as we turn towards 3% and 4% GDP, and much lower rates of unemployment and much higher demand for well-trained people, no one is going to want to spend time in an incubator. They can get a job. And that’s a really important part of the drama of becoming an entrepreneur.
In the book, I make the case that the most effective place to learn how to be entrepreneurial is to go into a big company. That’s where you see innovation happen. More innovation happens in big companies than, for example, university laboratories. It’s also where you learn all the skills that make a business work, where you’re exposed to what scale looks like in a business. This is critical and this is experiential knowledge. You can’t teach scale in a classroom. It has to be felt. You have to see it, to experience it.

Knowledge@Wharton: You give real-world examples in the book, including the story about vacuum cleaning company Dyson.

Schramm: Yes, Dyson is a fantastic story. James Dyson was an industrial designer by background, and he came to the view that vacuum cleaners had been a technology that hadn’t moved very far. He was using a vacuum cleaner and noticed that the more you used it, and the dirtier the dustbin got, the less power it had. This became the question that triggered his search.
Dyson built over 1,000 prototypes. He quit his job. His wife was a teacher, and he lived off a much more modest income. His wife did all the money-earning in the family. When he began to push his product out, no companies in the United States or England wanted any part of it. They resisted it because they were making a lot of money on selling paper bags for conventional, old-fashioned vacuum cleaners. He had to take it to Japan. When it became successful in Japan, American and British companies tried to steal his design. He successfully defended against that.
The best part of Dyson’s story is he never had outside investors. [Dyson] never wanted to be a public company. It’s a huge company now. He’s like most entrepreneurs. If your idea clicks and you can make it work, and you haven’t taken your company public — that is, you still control it — you’re going to work there for the rest of your life. They become places where your own creativity works, and you can keep at it. You can keep designing. Really, it becomes your life.
It’s an important point, particularly for people who are in higher education. Students in universities are programmed to think that somehow people who work in the government or in nonprofit or NGOs are somehow more creative. They’re like the people who take art and art history and design in college, or people who write music. They’re a different breed, and they’re really geniuses.
The reality is that 95% of kids graduating from college this year are going to work in companies. They’re not not creative. Look at our huge economy. That all happens because of people who are creative and gifted in business and the invention of things that help other people. And [taking] these things to market [requires] very, very creative skills.

Knowledge@Wharton: Would you say that passion and determination are two of the great qualities that a lot of entrepreneurs have?

Schramm: Yes, it’s true. Students in college are told to follow your passion and start a company. But a lot of times, the passion doesn’t make any sense. I’ve seen students who are passionate about having a web app for frying pans. I sort of make fun of it in the book. I’ve judged business plan competitions at the college level and seen the same idea come up five times. Invent a sensor for a frying pan, and it tells you on your phone when your eggs are cooked. Kids are passionate about that, but it’s not an idea that’s ever going to work. They’re making the simplicity of cooking an egg into a complex technical project.
Passion really clicks when you’ve got an idea and it starts to have market feedback. The thrill of it is when other people are saying, “What you came up with is valuable.” What they’re telling you is, “You created something out of your head that makes my life easier, and I value it. So, I’ll give my money to you for your idea.”

Knowledge@Wharton: Is Yeti one of those great ideas?

Schramm: Yeti is a fabulous story. It’s one of those things where those guys didn’t expect to be entrepreneurs. The idea snuck up on then. They love to go fishing, and they fell through regular Igloo boxes because they’re not all that well made. One of the two brothers said, “You know, what we ought to do is make a cooler that’s so sturdy, you could stand on it.” Yeti cooler came out of something just that simple.

Knowledge@Wharton: What are 20-somethings missing to be able to build that great company?

Schramm: They’re missing experience. If you really want to be an entrepreneur and you don’t have a really great idea when you’re 21, getting out of school, don’t fret. Just wait. What shall you do while you wait? Go learn stuff. The stuff you should learn is easiest learned in big businesses because you’ll go out there and watch the innovation process work.
I consult at several companies, and what I’m watching all time is these companies constantly trying to renew themselves with new, better products. They spend a lot of money on research and development. Anybody who’s working in one of these companies can see the constant iterative change that’s taking place.
You actually get innovation into your normal daily routine. I think that’s one of the greatest things that you can learn.The book points to the fact that many new companies come out of old companies. The entrepreneurs see stuff, and two routes are the way this happens. The companies decide that they’re going to stick to their core competency and reject a brand new idea. They often say to people, “if you love this idea so much, go do it with our blessing. You can have the intellectual property.” In some cases, like IBM, they actually finance the startups. That was the case with Cerner, the health care data company.The other thing is a much more difficult problem. That is, people who go to management and say, “This is the better way to do it,” or “Here’s a new application or a new market, and we have all the technology. If we configure it differently, we can own and capture this market.” MBA-type managers often say, “no, we’re going to stick to our core competency. We don’t know how to do that. It’s not our karma, it’s not our destiny.” And frustrated employees walk out. I interview people like that in the book. They say again and again, “I could have made all this money for my old employer, but they just wouldn’t listen to me.”

Knowledge@Wharton: Are companies wasting their human capital?

Schramm: It’s happening in every single company. You’ve got creative people in there. They might be running a machine. They might be on the production line. They could be any place in your company. They could be at the loading dock. They see things, and they could do things differently.
One of my favorite examples that’s not in the book is container boxes. It’s one of the great logistics revolutions that permits all of our prices for consumer goods to be much, much lower than they would have been. The boxes on the back of a trailer that come off the trailer, go right on a ship.
That was developed by a truck driver in Newark, N.J., In the old days, when trailer trucks were inflexible, they were fixed. Every time you went into a yard or a loading dock, people had to go on the dock, take the stuff off and reload it. He said, “You know, it’s a big steel box. Why don’t you just take the whole box, the whole back end of the truck, and put it on a ship?” This is a truck driver who saw that. He gave us the container revolution that made a world revolution in logistics.

Knowledge@Wharton: There are some very well-known companies like Microsoft and Apple and Facebook that didn’t have a plan at the outset. But now they are working through a variety of plans.

Schramm: That’s right. They went and tried it. We have this drive in our society. I think it’s in human nature. We don’t think that important things happen by chaotic means. If you look around, there are academics and experts who are struggling constantly to make the process of starting a business somehow logical, planned, orderly. These are sort of cookbook approaches.
You don’t have the right answer at the beginning. You never have the right answer. The market changes, technology changes. Your customers’ tastes are changing. Price points change. Your competitors change. You’ve got to be at this all the time. And a lot of times, that’s a hidden assumption in all the advice that’s given to entrepreneurs. If you crack it once, you can go right to the bank. You buy a jet. You’re over with. You do a public offering, and you’re rich and out by 30.
That’s not the case at all. You start a business, that’s only the beginning. And it’s the beginning of trying to make it big because growth is what’s important. Scale is the critical issue. The only way you can get there is constantly reacting to the market and all the signals it’s sending as to what it needs.




Source:http://kwhs.wharton.upenn.edu