These are the practical steps you can take to build a business.
Question: Can you teach people to be entrepreneurs?
Saras Sarasvathy: I use to get this question a lot in the beginning not so much anymore because I think pretty much, at least academically speaking, people are coming around to the idea that entrepreneurship is teachable. Now, the question of whether this logic is teachable, I think this logic is even more teachable in the sense that it doesn’t depend on any particular set of criteria. So I don’t have to give you some kind of psychological test and say, “Here are 3 things you need to change about yourself before you can be an entrepreneur.” So I tell my students, “It’s something like a voice and I’m teaching you to sing.” There are aspects to it. You have to want to do it. If you never ever want to start a venture, I am not going to go try to motivate you to start a venture. It’s not about that kind of thing. But given that you want to start a venture there are lots of things that are teachable. There are lots of basic techniques like cash flow that you can teach.
But I think I am very fortunate to have found something that is teachable also at the worldview level. So there are ways to teach people to think differently just like you can teach people to think scientifically. It doesn’t mean they are not going to refuse to walk under a ladder. It doesn’t mean that they all become some kind of super rationalist like Newton but everybody can pause and think, “But let me look at that scientifically”. Maybe I shouldn’t be superstitious and that’s teachable. I think in that sense entrepreneurial thinking or this logic of entrepreneurship is very much teachable. I can’t force people to actually get out and do something, but if they want to do something I think there are lots of things that we can teach them about how to do it better that is more likely to lead to novelties, more likely to lead to a more satisfying kind of entrepreneurship, if you will. So there are lots of thing that are teachable.
Question: What is the first step to becoming an entrepreneur?
Saras Sarasvathy: Assuming people actually want to learn how to start a venture, one of the first things I tell them is “Start it!” And so people look at me like, “What?” The thing I ask them is, “Okay so you want to start a venture, what venture do you want to start?” And people would say things like, “Oh, I want to start a venture but I don’t have an idea.” or “You know, I have an idea but I don’t have money.” So I try to go through that list and take away their reasons for not doing it and it’s very easy to do that because you can come up with examples of entrepreneurs over and over again who did things without having an idea, without having any resources and with four kids, after a divorce which didn’t give them any money. I mean, the examples of entrepreneurs who have done it every which way that you can imagine and almost all the time and people think there are three things that you need before you start a venture. Almost all of them are always falsified in most great entrepreneurial stories. So I have lots of stories if you would like me to go into one or two of them.
So one of the stories is Google. Now, we think it’s like the greatest idea in the whole universe but then Google came along it was just another search engine. I don’t remember how many exactly, well like 65 viable search engines on the market, something like that. It was yet another search engine. Maybe a couple of tech-savvy people in Silicon Valley knew that there was something special about it. But when their first investor actually gave them a check, they didn’t have a bank account, they hadn’t incorporated. They gave a check on Google Inc. and they had to open a bank account later. So even they did not really, you know, believe that this is going to be the greatest thing. In fact, there is a story that they try to sell the company for 1 million dollars and luckily I say for them, there were no takers so they couldn’t sell it. So, they had to per force become billionaires. That does not sound to me like somebody who had this great vision for a good idea.
Another example is Pierre Omidyar and he gave a convocation talk at Tufts where he describes this, that people always tell me that you must have known that eBay had to be self sustaining otherwise it couldn’t manage with 40 million users or whatever it was at that time. And he said, “No. I built a system that would be self-sustaining because I had a life then.” So that, you know, eBay was not my only thing, I had a day job, I had a girlfriend and we wanted to go mountain biking on the weekends and so I had to build something that would just capture feedback and do everything on its own while we were away having a life. And he goes on to say that if I had gotten a lot of money from a venture capitalists I might have done something more complicated and it wouldn’t have work the way eBay has worked out. So here’s another person, but it doesn’t mean that they have no ideas. They’re just doing things that they know how to do and they are trying to push it. He has a day job but he is trying to build something, build a venture on the side too. So you can talk about these things people having ideas, resources.
And I also show video clips in class, Robert Rice who founded R&R. They had, they sold Trivial Pursuit over millions, right? So he talks about it and he has a very good way. He says that it’s like playing Scrabble. A lot of people think that you have to have some kind of a blockbuster idea. I’m actually quoating him now by the way. But he says, “It’s like Scrabble, you know. Most ideas are mundane you add a letter to a word and then you get the credit for the whole word.” So I play that clip in class and I talk about that a little bit.
And there are a whole series of exercises that you can do and one of them is I ask students to think about who they are, what they know and whom they know and to come up with a couple of possible venture ideas that they can start the next day. And then if nothing else, I tell them do something everyday about it. It could be something as simple as coming up with a name and getting a card printed. So long as you actually do something, it becomes real somehow and then people start doing things and then I get them to call people and talk to them, get advice and then all kinds of advice starts pouring in - you should do this, you should not do that and you should make it bigger, it should be like this, maybe you should add this chip or you should look at this technology. And then they started getting all this feedback and a lot of people even start picking up the phone and calling other people to introduce them and very soon it becomes very, very real. So there’s absolutely no substitute, I think, to actually getting people to start a venture even if starting a venture might be something idiotic like coming up with a name and print a card. It could be the starting point, but then the pushing is where I think the real learning happens. So what do you do next? I think is the essence of entrepreneurial teaching. So the first thing is to get them to do something and then you start looking into this problem of what do you do next. So in a way, I almost think about entrepreneurship now in terms of content in teaching as the art of the next step, that entrepreneurs are always about the next step because a lot of people do, you know, come up with an idea and a name and the business card and then they stop. But entrepreneurs are very good at going out and talking to people and then responding to all the suggestions and sometimes even the criticisms that they get with always another action that is doable and worth doing in the small and then they push it, and then they push it.
Recorded on: May 19, 2009