Myths About Entrepreneurship

4/18/2018 Myths About Entrepreneurship
RISK MANAGEMENT
Myths About Entrepreneurship
Linda Rottenberg, author of Crazy Is a Compliment, on what it really takes to start a business.
19:12
SARAH GREEN: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green. I’m
talking today with Linda Rottenberg, co-founder and CEO of Endeavor and author of Crazy is a
Compliment, the Power of Zigging When Everyone Else Zags.
Linda, thanks so much for coming in today.
LINDA ROTTENBERG: Great to be here.
SARAH GREEN: So you argue in the book– at the beginning of the book– that everyone needs to act
like an entrepreneur today. And I’m just wondering, this is sort of a refrain that I’ve heard bubbling
up, and do you feel like it’s overstated at all? I mean, does absolutely everyone need to act like an
entrepreneur today?
LINDA ROTTENBERG: So I have worked with over a thousand entrepreneurs in 20 countries around
the world, and here’s the thing. I started getting these strange calls a few years ago from managers
inside Fortune 500 companies, from parents at my daughter’s school drop off, from young kids in
https://hbr.org/2014/10/myths-about-entrepreneurship 1/11
small town colleges, and everyone said, can you help me get the skills to be an entrepreneur? But I
don’t have tech idea. I don’t have an engineering degree. I don’t live in Silicon Valley. Is
entrepreneurship for me?
And my refrain was you don’t need a hoodie to be an entrepreneur. And it’s true that in fact, the
fastest growing segments of starting new businesses are actually women and baby boomers over 55.
But the reason I actually wrote Crazy is a Complement is I do believe that we all need to take some
risk or risk being left behind.
And today, we have this choice that we can either hope that our jobs and our companies are safe
when we know that that’s actually a risky proposition, or we can take some risk. And Michael Dell
told me, today, there are the quick, and there are the dead.
So in fact, I do believe that everyone now can get the skill set and this mindset of an entrepreneur,
even if they don’t aspire to start a new company.
SARAH GREEN: So I’m glad you mentioned risk, because one of the things I think is interesting is
that I think a lot of the book seems to be about the tension, right, between being crazy and dreaming
big, but then also managing risk. How do you advise people looking to locate themselves somewhere
on that continuum?
LINDA ROTTENBERG: What became a theme of the book is that what we think about
entrepreneurship regarding risk is wrong. It is this tension you talk about. And that most
entrepreneurs I’ve worked with are not risk maximizers, they’re risk minimizers.
So three myths that I sort of debunk. One is that you need to have a lot of money to get going. Half
the Inc. 500– half the fastest growing companies– started with under $5000. And with
crowdfunding, that’s even easier.
The second myth is that you have to go all-in initially. And stories I found, like Sara Blakely of Spanx
sold fax machines for two years while her idea was taking off. What surprised me even more is that
Phil Knight of Nike, the “just do it” guy, spent almost a decade doing other people’s taxes. And so
you really can start with one foot in as things get going and mitigate risk.
And then back to your earlier question, what if you’re inside a company? What I found looking at
people in Clorox and Pfizer and AT&T, traditional companies, is that the people who are starting to
make change in those companies did not run to the boss, did not rush to create a PowerPoint or a
business plan.
They went stealth. They started testing products in their kitchen or testing an idea on the side. They
gathered a few colleagues. They got proof points. And then they went and told the boss. They
stopped planning, started doing.
And what I’ve come to realize is that entrepreneurship is really a fancy word for saying you’re a doer.
So that’s my advice to people. Stop planning, start doing.
SARAH GREEN: I want to just pick up a little bit on the second myth you talked about, and the way
that some people– like Sara Blakely, for instance– kept their current gig while they were sort of
working on their dream. When you’re doing that, how do you know when is the right time to jump in
with both feet and finally cut the cord?
LINDA ROTTENBERG: At some point, you do. And I look at entrepreneurship as an arc. Get going, go
big, go home. And for the get going phase, the really biggest barriers are psychological. They are
giving yourself permission to be contrarian, to see the world differently, to zig when everyone else
zags, and yes, to be called crazy.
That’s what holds people back, is people don’t give themselves that permission. So that’s what’s
important for getting going. And I think that you want little wins. I think you do get feedback from
the marketplace. And Sara Blakely obviously stopped when Oprah put on her favorite things list
Spanx. OK, that’s an obvious example. There are other factors that you can know.
But I meet people at the go big phase for Endeavor, my organization. And at that point, when people
want to scale up– when they decide this is not a lifestyle business, it’s not a project, I really want to
go big– at that point I say, close doors.
And what happens is often after they’re making enough money to stop– you’d think it would be
financial reasons holding them back. Again, it’s psychological. So people who are making money on
their entrepreneurial venture often hold onto that job to cling to their past life. And it’s about doing
what’s safe and expected versus doing what’s unsafe and unknown.
So there is a point when you have to cut the cord. But early on, when you’re just getting going, don’t
worry about it.
SARAH GREEN: OK. So I want to ask you some of the other tensions in entrepreneurship and sort of
how to mitigate them a little bit. One that has couple up a little bit on the fringes of our conversation
already today is about kind of experimenting and pivoting and refining your offering. And it seems
like there’s a fine line between pivoting and experimenting and refining your offering and then kind
of losing focus of what you’re really about.
LINDA ROTTENBERG: Exactly.
SARAH GREEN: How do people manage that kind of tension?
LINDA ROTTENBERG: You have to be open to change, but not too open. And in fact, studies have
shown– there was a group called Blackbox that actually studied this what’s the right amount to pivot
question. And what they found mirrors what Endeavor’s experience has been with 1,000
entrepreneurs, which is that if you don’t pivot at all, if you are just stubborn and you’re not open to
any change, you bump into walls. You’re not going to probably get very far.
But the right amount of pivot tends to be one or two times. Those firms that pivot once or twice end
up experiencing a lot more growth. They end up getting more capital. When people start over-
pivoting, that’s where the focus problem happens. That’s when people start deluding themselves.
And oftentimes, there are certain entrepreneurs that get so excited about the new, new thing, they
really just cannot complete anything.
When Steve Jobs famously returned to Apple, the first thing he did was slashed all their product
offerings and said we could only do four things beautifully. So be open to change, but not too open.
SARAH GREEN: So that’s interesting because it makes me wonder, if you think that sort of access to
lots and lots of venture capital might make it easier for firms to lose focus and keep pivoting because
they still have money to play with?
LINDA ROTTENBERG: I do. I work in markets– mainly in the emerging markets. Endeavor’s in 20
countries plus the US, but we started in the emerging markets where there really wasn’t venture
capital and private equity. And now there’s limited amounts.
People bootstrap, and what they do is get real customers. They have real profits. They actually–
wow, they have cash. And I think that’s really important, because they don’t just have all of this
money and all of those expectations and just run as far and fast and start throwing spaghetti on the
wall.
And I think it’s, again, let’s go back to what I call the skunks. I call people inside companies skunks
based on Lockheed’s Skunk Works program. I don’t like the term “intrapreneur,” but companies
these days need to breed skunks.
And I think when you start talking to managers, they really fear that they’re going to lose their jobs
or their budgets if they try anything new. So what I found is the most successful skunks– the
entrepreneurs inside companies– start with very limited budgets. They start with about 10% or 20%
percent time. And in fact, the ones that had too big a budget to play with, again, psyched themselves
out. If they didn’t lose focus, then they just were so concerned that a failure was going to be a
disaster.
Richard Branson, someone we think of as this maverick, talks about contained disasters. Taking
small steps. Using just a little bit of money and putting a little bit of risk on the line, but then really
finding out the market will bear. That’s when you start eating the elephant one bite at a time and
getting towards your main goal.
SARAH GREEN: So I have to ask you a little bit now about that the crazy title. Because what we’ve
been talking about so far sounds very, very practical. So how does the crazy piece fit into it?
LINDA ROTTENBERG: Well, entrepreneurs don’t think they’re crazy. Other people think they’re
crazy.
SARAH GREEN: OK.
LINDA ROTTENBERG: I was called la chica loca for a decade suggesting there were entrepreneurs in
places like Brazil and Turkey and South Africa and Saudi Arabia. Shockingly, there are. It wasn’t so
crazy after all.
But here’s the thing. Every entrepreneur at one point has been called crazy, whether it’s Henry Ford.
Whether it’s Jack Ma, who just took Alibaba public at a $230 billion dollar valuation. He was known
as Crazy Jack. Or whether you’re trying something new inside a company. The team at Microsoft that
built Xbox was laughed at by colleagues and said they were building coffin box.
So the point is back to psychology. You are going to called nuts because being an entrepreneur is
about seeing the world differently. It’s about being contrarian. And people who are benefiting from
the status quo or look at the status quo are going to not understand what is you’re doing. So you
can’t rock the boat without being called, you’re off your rocker.
But at the end of the day, as I said, entrepreneurs– the best entrepreneurs– are risk minimizers. They
take smart risks. They’re just crazy enough without going overboard.
SARAH GREEN: So I guess I want to ask– press a little bit more on that. Because I think for every Sara
Blakely and Jack Ma, right, there’s someone in his basement trying to invent a perpetual motion
machine or something like that. How do you know if you’re Sara Blakely or you’re the guy in the
basement doing the thing that’s never going to work out?
LINDA ROTTENBERG: I mean, there are some ideas that are really just too out there. Or they’re
ahead of their time, right? If you talked about driverless cars 30 years ago, people would have said,
you’re completely insane. Elon Musk and the Google boys are talking about this daily, and we say,
oh, yeah. Probably.
So I think that at the end of the day, if you’re an entrepreneur– whether you’re inside a company,
whether you’re a mom and pop, whether you’re aiming for something big– you ultimately have to
get customers. You ultimately have to get feedback.
Now, you can use what I call the dark arts of entrepreneurship and stalk people gently at first, as one
of my favorite entrepreneurs Estee Lauder did. Estee Lauder was a known stalker of suppliers and
the Saks and of customers. So you can use novel methods to get your ideas out there, especially
when you’re unknown. But ultimately, you get feedback.
And if people just are not buying what you have to offer, whether it’s an idea or a product or a
mission, then it’s probably time to say, OK, go home.
SARAH GREEN: And you mentioned going home as sort of the third part of your entrepreneurship
arc, but in a successful context, that probably means something very different.
LINDA ROTTENBERG: Yes, in a way. Instead of go big or go home, it’s go big and go home. Yeah, I
think so many books on entrepreneurship are just about pursuing the business idea and assuming
that there are these workaholics who are going to spend every waking hour on their idea. And yet
most people have dreams because of the people they love.
And so I’m a mom. I run an organization with 350 employees and work with 1,000 entrepreneurs.
My girls told me that I could be an entrepreneur for a short time, but I am a mommy forever. And
what was stressing me out was this idea of balance that I hate. I hate the word “balance.” And I
thought, how do you talk about integrating your life? Because every entrepreneur I know has to
bring their family somehow into what they’re doing.
And what I realized is even people whose lives are not always in balance– and no one gets it perfectly
right– but if their ideals, if they’re passionate about what they’re doing, if they believe they’re
making an impact, and their families understand that they are a part of that dream, that’s when I
think things are aligned.
Then today, particularly millennials are looking for that values alignment. They’re looking to make
an impact in their jobs. And I think that companies today that offer that are the ones that are going
to attract the most talent.
SARAH GREEN: It is funny that you mention millennials, because when I talk with college seniors
and college students today and I ask them, what do you think you want to do? They do often
mention starting their own company, sort of the way that maybe 20 years ago they would have said,
oh, I might do some time in the Peace Corps.
You know, it really seems like for this generation, it’s almost a right of passage that they all expect to
go through. Do you think that’s sort of true, or?
LINDA ROTTENBERG: I do. I think that millennials want autonomy. They want impact. They want to
make a difference. They also would like to do well for themselves. And I think entrepreneurship
seems to offer all of the above.
I think people also feel like they need this skill set to continually reinvent themselves. So I think
some– when I talk to millennials, they assume that their career is going to take an arc where they
may work inside a for profit, then inside of non-profit, then go start their own thing. I don’t think
they think of one linear path that we used to.
But I think for employers– and this is important, because even in down economies, if we are not
giving what I call psychic equity, if we’re not giving people that sense of meaning and purpose and
flexibility, I think the young people will walk. They assume that someone else will offer them that,
or they’ll go create it themselves.
SARAH GREEN: OK. So last question here, just because I know we’re running out of time, but I am
interested in the sort of global aspects of this. Because I think in America, we’ve sort of made a
religion out of entrepreneurship almost. We valorize it. We believe in it. We obsess over it.
Is this an American weird obsessions, or do you see this around the world playing out in different
ways?
LINDA ROTTENBERG: One of the reasons I started saying you don’t need a hoodie to be an
entrepreneur was that I was meeting taxi drivers with engineering degrees. I was meeting young
women who– I met a woman in Saudi Arabia who’s mother made terrible coffee and she did not
want to slave over the stove for 40 minutes. She came up with the Nespresso of Arabic coffee, and
it’s a $10 million business in a matter of less than a year.
So I met people with ideas. I met people with talent and passion. And they did not think they could
be entrepreneurs. In many countries where Endeavor first set in, there wasn’t initially a word for
entrepreneur. So I think that what I believe in is the role model effect. If he can do it, if she can do it,
I can, too.
And I’ve always felt that anywhere in the world, people have these dreams, and they have these
ideas. What they didn’t have was the sense that it was culturally possible to take some risk, to fail, to
even succeed. So once you show a few examples– take Jack Ma, who I mentioned, in China– I think
every young 15-year-old is going to say, if he can do it, I can to.
And that’s really what Endeavor has tried to do is to select talented dreamers who have gotten an
idea off the ground. They’re at not the start up phase, but the scale up phase. Give them access to
management talent, to capital, to confidence, and then when they succeed, encourage them to pay it
forward, tell their stories, and inspire the next generation.
So we have 1,000 entrepreneurs in Endeavor. They’ve generated 400,000 jobs, $7 billion annually,
but what I think is the bigger impact is what you’re going to see 10 years down the line. When kids
growing up in all these countries don’t only have to model themselves after Steve Jobs or Oprah
Winfrey. They can look to homegrown examples and say, they’re just like me. I have an idea. I have a
dream. It can happen.
SARAH GREEN: OK, I lied. There’s one more thing I want to ask you. In all this discussion and hype
around entrepreneurship today, do you think there’s a risk of glamorizing it to the point where it’s
almost too rosy a picture?
LINDA ROTTENBERG: I think there’s a danger in only showing the boys with hoodies. I think this is a
problem. Not only does it exclude old people and girls and women, which we know are actually
starting companies though their stories are not told, but I think that to see entrepreneurship as a get
rich quick scheme is what’s the problem.
I actually think if you go back to what I’ve been saying and why I wrote Crazy is a Compliment is it’s
a skill set and a mindset that we all need to solve problems, to see the world differently, and to
reinvent ourselves. I think this is just what we need to survive. The world is not stable anymore.
We’re in period right now of market volatility.
And I think that stability favors the status quo, chaos favors those who think and act like
entrepreneurs. My favorite story in the book actually involves a young widow in Northeastern
France who inherits a family winery and is put in charge of a business she knows nothing about. She
ends up revolutionizing it, and she turns the bottles upside down and gets the excess yeast off, and
she creates the crisp, sparkling wine we drink today.
Her 1811 vintage is known as the first modern champagne. Her name is Barbe-Nicole Ponsardin.
And the Russians then invade. And every experienced wine owner shutters their doors. Barbe-
Nicole spots a marketing opportunity, and she resolves to get the Russian army drunk.
This succeeds, and she takes one more smart risk, and she runs the blockades right before the peace
treaty is signed. Her bottles ship to Saint Petersburg, Moscow, and Czar Alexander declares he will
drink only the widow. Veuve is the French word for widow. Barbe-Nicole’s late husband was
Francois Clicquot. It’s the story of Veuve Clicquot.
So entrepreneurship is not a new phenomenon, it’s not only happening in Silicon Valley, and it’s
certainly not going to guarantee everyone an IPO exit. But I believe– back to our choice today– we all
have a choice. We can do nothing and hope that our jobs are safe, or we can try something new, give
our selves permission to take a little bit of risk, and to me, the riskier strategy is to do nothing.
SARAH GREEN: Well, Linda, I could obviously talk to you all day, but thank you for giving us some of
your time. Thank you.
LINDA ROTTENBERG: Wonderful to be here. Thanks.
SARAH GREEN: That was Linda Rottenberg and her book is Crazy is a Compliment. For more on
entrepreneurship, visit hbr.org.
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sashasundrique 3 years ago

Good podcast but i have a comment about different thing that was mentioned in the podcast about "The russians
than invade" ….excuse me, but Napoleon invaded Russia rst and reached Moscow, this comment just paints a
picture of Russia as an aggressor, and personally i don't appreciate it!France was the aggressor in the Napoleonic
wars, Russians just drove them back to where they had started.
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4/18/2018 Myths About Entrepreneurship

Myths About Entrepreneurship

Linda, thanks so much for coming in today.

LINDA ROTTENBERG: Great to be here.

LINDA ROTTENBERG: Exactly.

SARAH GREEN: How do people manage that kind of tension?

SARAH GREEN: OK.

This article is about RISK MANAGEMENT

Related Topics: ENTREPRENEURSHIP

sashasundrique 3 years ago

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