Closing Lecture on the “Entrepreneurial Path” from Irv Grousbeck at Stanford GSB
A good friend of mine, Kevin, just embarked on a new venture which reminded me of the anxiety/apprehension and general fear that jumping off the cliff of starting a new venture creates. Reminiscing of when Andrew and I first launched our own start-up, I remember constantly re-reading the transcription of Irv Grousbeck’s last lecture in S353 (Entrepreneurial Ventures – ironically a course we now lecture in) that firmed my conviction and motivated me each time I re-read it.
Kevin, and friends, hope it does the same for you…
S353 Closing Remarks
Professor Irv Grousbeck — speech given at the end of class, Stanford Business School, December 2001.
It has been a privilege for me to have been a small part of your lives this quarter; each of you is indeed enormously talented and resourceful.
I would like to offer two quotes, the first from Lao-tzu, a Sixth-century B.C. Chinese philosopher.
‘A leader is best
when people barely know he exists. Not so good
when people obey and acclaim him. Worse when they despise him. But of a good leader
who talks little, when the work is done, his aim fulfilled, they will say:
“We did it ourselves.”’
The second quote is from W. H. Murray, who led the Scottish Himalayan Expedition.
Until one is committed
There is hesitancy, the chance to draw back,
Concerning all acts of initiative (and creation),
There is one elementary truth
The ignorance of which kills countless ideas
And splendid plans:
That the moment one commits oneself,
Then providence moves too.
All sorts of things occur to help one that would never otherwise have occurred.
A whole stream of events issues from the decision,
Raising in one’s favor all manner
Of unforeseen incidents and meetings
And material assistance
Which no man could have dreamt
Would have come his way.
I have learned a deep respect for one of Goethe’s couplets:
“Whatever you can do, or dream you can, begin it;
Boldness has genius, power and magic in it.”
Following are my views offered for your consideration; it is not a sermon, there is no spirit of “you should” or “you must”, and it comes together with my biases. If some of these thoughts fit into the fabric of your lives, that’s fine, and if not, that’s all right too. The course has accomplished a lot if you accept entrepreneurship as a reasonable career alternative. Not for all, but for any who might choose it. You don’t need to be impulsive, head strong, bombastic or flamboyant. You need no operating experience, though it helps, you don’t need a business idea and you don’t need money. To be an entrepreneur there are no external barriers, only those we internally impose. Thus a principal issue for you in charting your career path is, “will I be in someone else’s company or companies, or in my own?”
Let’s examine the risks of employment–you know we’re always examining in this course the risks of entrepreneurship. While the company that employs you will hopefully challenge you, will promote you, will pay you well, will flatter you and will give you buttons to push and increasing numbers of people to manage, it may also, if you’re lucky, acclimate you to its culture, envelop you and consume your entrepreneurial energies, perspective and risk capacity.
Most larger company executives are anything but free. How many would love to leave but don’t know how to, where to go, can’t afford it and in many cases don’t dare to. I’ve rarely met an unhappy successful entrepreneur but I’ve met many unhappy successful executives of large companies and partners of consulting and banking firms. Your career should not only be fun, it should serve your life.
In effect we’ve just described some of the risks of not following the entrepreneurial path. Tilling their soil in their many locations, creating further value for their stockholders, and when asked, you move or move on. You run the very real risk of being owned.
Indeed, someone else’s company vs. your own is more than a matter of how you will spend your work days; it will reverberate to every facet of your life. And yet the decision to become an entrepreneur is made even more difficult because each of you must labor under the burden of all the high expectations of close friends and of family and of yourselves. And with each success in your career there are more chips on the table. With each victory come even greater expectations, and in order not to disappoint others or oneself, a safer, more acceptable, lower risk career course is often charted.
But now we see that there is no absolute safety, that risk cannot be avoided. Or, as Clint Eastwood said in The Rookie, “You want a guarantee? Buy a toaster!”
That there is no “right” career choice, as there has been in the past. Most of us realize this fact intellectually but do not accept it emotionally. We’re like the Dachshund in the following poem:
“There was a Dachshund once, so long
He hadn’t any notion
How long it took to notify
His tail of his emotion;
And so it happened, while his eyes
Were filled with woe and sadness,
His little tail went wagging on
Because of previous gladness.”
Certain risks in fact must be assumed, consciously or not, and thus the operable question becomes “what set of risks can I best control?” I embrace the premise that one of our goals in life is to die young as late as possible. Therefore, what are some of the important questions to be asking oneself if the door to an entrepreneurial career is to be left open?
1. How would I define my ideal work environment? In terms of partners, ambiguity, risks, peers, status, power, smaller vs. larger work environment, structured vs. unstructured, the importance of money.
2. What skills need supplementing?
And 2(a), do I think of supplementing these skills by recruiting a partner or by making myself more ready to go it alone?
3. Regarding the jobs now offered or potentially available to me, let’s take a look at the daily routine I would follow, the avenues of advancement, the availability of a mentor, and two very important things: what doors are opened or closed in my career path by assuming this job? In other words, what are the natural transitions out of this job and what are the awkward transitions?
And the second question that is particularly critical is: how do I keep my perspective? How difficult will it be for me to pursue my entrepreneurial dream in this job? I’ve learned that the easier a change is to make, the less it usually matters, and that the older we get the harder it is to choose change, which makes it even more necessary to do so from time to time. Change is one form of hope. To risk change is to believe in tomorrow. Hope is a gift we need. So it behooves us to set a course whereby each job change we make, however difficult, moves us closer to our career goal. But the path must be visualized in advance.
The hardest question for an MBA is “if I want to be an entrepreneur, how could I get from here to there?” Well the most difficult part of any task, as Plato once said, “is the beginning of the work,” and that means beginning the search and sustaining the search for one’s entrepreneurial venture, be it a start-up or a buyout. And maintaining a search is like maintaining religious beliefs. They die if they’re not nurtured. If you don’t freshen that search mentality by reading and by staying in touch with other entrepreneurs and other searchers, atrophy will set in, and the quest for one’s venture will be abandoned as “that naive idea I had back when I was at the GSB.”
How does one prepare for an entrepreneurial career? Well there are alternative approaches:
1. Industry specific experience, if you have a clear idea what industry you want to go into, which is rare.
2. General management experience, operating experience or line experience is desirable and I feel that such supervisory experience is broadly transferable. (Managing others is the key here.)
3. Assuming a sentry position where one can see the world of deal opportunities going by. That is, being at the intersection of opportunities, capital and management.
Some examples of sentry positions would be small business consulting, bank workout departments, working for a small regional investment bank, a Venture Capital or LBO firm, even a CPA firm whose clients are small businesses. The above approaches are not necessarily mutually exclusive.
One of the really important things is: don’t spend five years getting two years’ experience.
Though you’re eager to leave Stanford now to get going, you’ll never again have a comparable chance to reflect and to set goals, working goals. Don’t allow the urgent to pre-empt the important in your daily lives. Use those goals, move toward them daily and methodically, modify them as needed, compare your progress from time to time, and remember: choose carefully, because with the talent you each have, whatever you really want you’ll probably get.
The next few years are key. You require alternatives to be in a strong position to make good decisions, and you need to look at a lot of opportunities in order to refine your judgment. I’ve put on the board these 5 entrepreneurial qualities, these 5 qualities normally associated with entrepreneurship–creativity, integrity, energy, intelligence and judgment. The only sine qua non in the list is judgment. There are plenty of entrepreneurs who are not creative, who don’t have integrity, who aren’t particularly energetic or intelligent, but somehow they’ve made a series of excellent choices. They’ve developed the ability to exercise good judgment.
What are the risks of the entrepreneurial path? Failure? Perhaps. But in the event of failure do you lose your reputation? No. Do you lose your own money? No. Do you lose other people’s money? Probably, but they are risk investors. A company won’t hire you after a failure? Wrong. The biggest risk is that you may become constitutionally unemployable. You may decide that you can’t work for anyone else, yet you failed in your own venture so you’ll have to go back and reestablish your credentials and try again.
When are you ready for your own venture? Well, Maxwell Maltz in his book Psychocybernetics said you’re ready to do something when you can visualize yourself doing it.” But there’s a relatively short time window, it’s somewhere between your age now and your mid 30’s–it’s sooner rather than later. In percentage terms not many entrepreneurs start or buy their first ventures after the age of 40 and the vast majority are pre 35. Remember that entrepreneurs are just like you and me in ability. What they have that is distinctive is vision and conviction. Remember, too, that warm sense of everything going well may only be the body temperature at the center of the herd.
What are the rewards of the entrepreneurial path? At the top of my list would be freedom–to stretch my capabilities, to put my imprimatur on a company, to create something, to have an ethical impact on others and to have financial independence. There’s a big difference between being rich and being wealthy. Being rich is having money. Being wealthy is having money and time. Financial independence when you’re young enough to enjoy it may be something worth working for. It gives you an opportunity to have a second career and a third career and to be psychologically able to set out in a new direction. Thus, if you stay with a successful business you’ve created, you do it out of choice, not necessity. And while you are planning how to get in, don’t forget to consider your exit strategy. There are many living deaths where people are locked in, and where companies are identified solely with their owner-managers and therefore are virtually unsaleable.
It helps as a prospective entrepreneur to have the ability to read people and predict behavior. It’s important to cover the critical skills of the venture that you propose to enter, either alone or with a partner. However, a business idea is not needed, it can be found; and money is not needed, it will be supplied. If fact, money may hinder you because if you have some money you may tend to define the size of the business you would enter by the amount of that money. Nowhere is it written that the entrepreneur must provide the capital; those are separate functions, so forget about building your nest egg, build your skills, build your perspectives, build your judgment. It helps to have an experienced lawyer. It helps to maintain one’s reputation and high ethical standards, because, as you well know, it takes years to build a reputation but only a minute, only one act, to lose it. And once you tell a lie, everything else you ever say to that person is brought into question. It’s important to control your anger, to speak more softly as you get more upset. It is desirable to minimize your enemies, because burning bridges is only an indulgence.
There’s a confluence of the ethical and the practical in life, so take the high road–“I press on toward the mark for the prize of high calling.” And in your quest, pause now and then to ease the burdens of your fellow travelers, I beg of you. Any definition of a successful life must include service to others. We have all drunk from wells we did not dig. I reject the prevailing notion that the pursuit of selfishness has overtaken the possibility of compassion. I ask you to reject it as well. Not just by giving $500 to your local charity, not just by taking a titular position on a local hospital board, but by devoting your time and your skills to something worthwhile. To really pull on the oars and make a difference in areas where you are best qualified to do so.
And now on a more personal level, if that’s possible, irrespective of your career path, at this school we teach you lots of things we know you’ll soon forget, because we don’t know how to teach you things you’ll always need to know. Compassion, commitment, concern, involvement and love. As you grow, your capacity and desire to give should grow proportionately.
Hear this couplet from an old hymn:
“New occasions teach new duties, Time makes ancient good uncouth!”
I submit that the saddest phrase of middle age is “I wish I had.” How much better to be able to say:
“With open eyes I have dared, and cherish no regrets.” It’s undeniably tougher to create your own opportunity than to be part of someone else’s, but I’ve been down the entrepreneurial road and it offers unparalleled exhilaration. If you choose to take that road, ignore the naysayers, because very likely your only supporters will be other entrepreneurs and those with blind faith in you. So do it if you will. Don’t follow where the path leads, go where there is no path and leave a trail.
My confidence is in your minds and your imaginations. I believe that you will finish for yourselves the sentences that I cannot quite see the end of.
These words of Robert Frost:
I shall be telling this with a sigh, somewhere ages and ages hence: Two roads diverged in a wood, and I–I took the one less traveled by, and that has made all the difference.
I value greatly the time we’ve spent together this quarter. To each of you I wish:
-A soft heart to go with your tough mind
-Steadfastness of purpose
note: Thanks to Paul Kasper and someone in the 2001 class who recorded and transcribed this lecture. Thanks to Irv Grousbeck for inspiring so many generations of entrepreneurs, and then guiding them along the journey. I don’t have permission to use this, so if anyone ever wants me to take this down… just let me know.