M.E. Program Coursework

Posts in this section of my blog are relative to my Masters of Entrepreneurship coursework.

This section curates the program work to make it easier for classmates to find and review posts about the current course.
The work appears in reverse chronological order of all classes.

Click on the link below to read work from a specific class.

ENT600 - Entrepreneurial Planning

ENT601 - Entrepreneurial Innovation

ENT610 - Entrepreneurial Creation

ENT640 - Entrepreneurial Feasibility Analysis

ENT645 - Entrepreneurial Marketing

ENT650 - Advanced Entrepreneurial Finance

ENT670 - Advanced Entrepreneurial Strategy

The Founder’s Identity Crisis

October 2, 2018 ENT600 - Entrepreneurial Planning Comments (2) 56

There are just a few things you need to launch a business.

You need a vision (the ability to spot an opportunity or solve a previously unsolved problem), confidence, desire or passion, and a high tolerance for the probability of losing everything.

Fundamentally, this is all you need. These four things will get your business off the ground and, probably, help you land your first few customers. You don’t need much money to make this happen, and when it does, you’ll become a startup founder.

Growth, however, will bring new challenges.

Growth means you’ll probably need more employees, maybe a partner or two, a board of directors, and likely investors. You’ll need to learn new skills—what I call “adding tools to the toolbox”—so your business can scale and so you can become more effective as a founder. You’ll need to learn how to become flexible, how to be accountable to others, and become comfortable leading rather than dictating. You’ll need to improve your communications skills. You’ll need to define, develop, and maintain a culture, and figure out how you’ll deal with internal, and external conflicts (Eisenmann, Howe, & Altringer, 2017). These basic skills will carry you far, particularly if you are self-aware and introspective, and understand your shortcomings. With these “tools in your toolbox” you’re on your way to “Chief Executive Officer (CEO)-material,” but you’re not a CEO.

This point in your growth is where you get yourself into trouble as a founder. You want that CEO title because it gives some prestige and respect. While you may be the highest ranking individual in the company, overseeing the corporate decisions and managing operations, it’s disingenuous to claim the CEO title when you have only a few employees, and you’re flying by the seat of your pants, which is usually the case in a startup. You’re not fooling anyone with the title, let alone an investor.

When you take on investors, you must become a CEO; not just call yourself the CEO. The desire to have the CEO title without accumulating the skills necessary to be the CEO is the fastest way for you to lose your company as it grows. Many founders choose a voluntary succession approach when they see their investment or wealth tanking because it forces a founder to come face-to-face with the limits of their skillset (Wasserman, 2012). This decision to let go can help a founder preserve wealth and maintain involvement in the company.

Conversely, some founders are so ego-centric they never bother to learn the skills necessary to become an effective CEO and they are surprised when they’re forced out by their board (Wasserman, 2012). Steve Jobs is but one example. Although Jobs was not the CEO at the time he was fired, he was a founder who never bothered to learn those management and leadership skills necessary to serve in senior roles as the company became much larger (Siegel, 2011). The driving and demanding personality that served Jobs well as a founder did not serve the company well as it grew, and played a part in his firing. When he returned to Apple later, he had acquired the necessary skills to lead (Siegel). Unfortunately, it’s rare that a founder gets a chance to return to his or her company once fired.

The individual who can get a company off the ground is usually quite different than the individual who can run it well as it grows. The skills and abilities required of each are very different. A founder must take the time to learn new skills to transform from the role as a founder to the role true CEO if this is indeed the goal. Sometimes, though, it is not the goal. The key for entrepreneurs is to consider and develop an exit strategy from the very beginning to have a clear path toward the end goal, whatever it may be.

Remember this, though: It’s certainly fine to be the founder, but not the CEO. However, don’t claim to be the CEO until you have acquired the skills to lead and manage, and have a track record that supports your claim. Investors already know where you are on the founder-to-CEO spectrum, so all you’re doing by claiming a title without the requisite skills and experience is creating an identity crisis for yourself.

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References

Eisenmann, T., Howe, R., & Altringer, B. (2017, June 21). What Does an Aspiring Founder Need to Know? Retrieved from hbr.org: https://hbr.org/2017/06/what-does-an-aspiring-founder-need-to-know

Siegel, J. (2011, October 6). When Steve Jobs Got Fired By Apple. Retrieved October 1, 2018, from abcnews.com: https://abcnews.go.com/Technology/steve-jobs-fire-company/story?id=14683754

Wasserman, N. (2012). The Founders Dilemma. Princeton: Princeton University Press.

Photo by Ian Schneider on Unsplash

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Interview: Lynda Liner on Entrepreneurial Recruiting

October 1, 2018 ENT600 - Entrepreneurial Planning, Interviews Comments (0) 886

The following is an interview with Lynda Liner, Senior Executive Recruiter with Victoria James Executive Search, for my Entrepreneurial Planning graduate course. Lynda and I have known each other since 2015 when she recruited me for a position in a small business. We discuss entrepreneurial recruitment for A-Players.

Q. Please share with me a little about your background and experience recruiting.

A. Thank you, David, for the invitation to share insights into the recruiting industry.

My early introduction to recruiting was joining a well-known international retained executive search firm as Assistant to the Administrative group that allowed me to learn the industry literally from the bottom up and benefitting from support from mentors while advancing and working each layer of recruiting: research, strategy, candidate development, interviewing, client management – total experience and education in Best Practices and Values I continue to apply today. The CEO of the recruiting firm gave me advice I’ve never forgotten, “Always remember, recruiting is a contact sport.

Things happen when you engage with people.”  And has influenced my dedication to the best possible experience and service to our clients and our candidate professionals.

Q. Your areas of expertise, as I understand it, are in the sales and marketing disciplines. In your experience, how important is it that entrepreneurs find the right talent for roles in these disciplines in a startup? Why do you believe this to be true?

A. The “right” sales and marketing talent will ultimately be responsible for the forward success of an organization. A start-up would initially focus on sales and marketing as the backbone and frontline of an organization and primary management partnership to establish a solid foundation on which to build the organization’s mission, philosophy, culture and simultaneously developing a strategy and action plan for their product or service.

To confirm the importance of identifying the right talent for sales and marketing, in my experience, having placed numerous marketing professionals in middle to senior management roles, I’ve observed large and small companies, from start-up and established, realize positive outcomes, e.g., increased revenue, brand awareness, acquisition, other - as a result of successful key position placements.

Most recently, we placed a Vice President of Marketing with an online business service company that has enjoyed moderate success for ten years without any dedicated sales or marketing presence. We worked with the CEO/Founder in a consultative capacity to translate his thoughts and ideas into a position overview/job description incorporating long and short-term goals, objectives, expectations, experience/skills/attributes for their highly critical hire who will be responsible for tripling revenue, analyzing product, website and brand, budget, and every marketing touch point. After a select number of candidates, numerous one-on-one meetings, within three months we found their ideal Vice President. All parties are pleased and looking forward to an amazing future.

Q. What is your process for finding those A-Players that entrepreneurs need to build and grow their business?

A. Relentless, hard work! Not kidding.

Although in today’s technology environment, everything is possible and the information is immediately available. Staying current with resourcing tools, applications, and platforms is critical. We also manage a growing in-house community of marketing professionals. We have an open registry and approximately 20,000 profiles that are regularly updated so we are in constant communication with our sales/marketing population by email, blog, social media, website postings. In addition to internal resources, we use outside resources where applicable such as LinkedIn. Our firm specializes in all things under the marketing umbrella from traditional to digital and all things about to be new. When a client seeks our recruiting experience, it requires the knowledge of all aspects of marketing functions to better serve both client and candidate.

In general, recruiting relies on those skills at the core of experience: sourcing, relationships, influence, resilience. In an evolving world, recruiters must be social media savvy and technically proficient as the hiring process becomes more and more complex.

Q. What are the top things an entrepreneur or startup founder should look for when hiring a recruiter?

A. Trite but true, great recruiters have a passion for their craft.

They have a Consultant Approach. Great recruiters take a consultant and partner approach to supporting a client and filling an important position whether a manager or CEO. The more a recruiter asks for information and details the more they bond with a client and know the position, the better prepared he/she will be to represent your company to the target audience and act as your brand ambassador.

They are outstanding communicators. Working in the “human resource” business requires a recruiter to be a great communicator, no matter whether face to face, on the phone or via email.

Listening is a skill. A great recruiter is an excellent listener who is respectful, diplomatic, empathetic, professional. Listening for what isn’t communicated is also a skill and is acquired through experience.

Q. In your opinion, what are a few of the bigger mistakes entrepreneurs or startup founders make in recruiting?

A. In advance of hiring, failing to take quality time to thoroughly evaluate: company vision, company direction, company goals, and objectives.

Communicate exactly what is expected of the position and how the position will interact with the management team and or senior management.

Communicate the position’s authority and decision-making.

Communicate how the position interacts with the founder(s), if applicable.

Q. What’s the best advice would you give an entrepreneur about finding and hiring an A-Player for his or her business?

A. First employees are critical. Don’t rush the process.

Allow plenty of time to recruit the best possible talent that fulfills your requirements and expectations.

Avoid disorganized hiring practices. Establish a reliable process for sourcing, recruiting, hiring, and onboarding.

Look for previous startup experience or comparable business growth experience.

Identify marketing strengths depending on the position:
analytics, marketing automation, strategy, etc.

Measure previous career accomplishments. Do they align with
position expectations.

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Is your startup hiring?

September 28, 2018 ENT600 - Entrepreneurial Planning Comments (0) 63

If it is, you are likely asking yourself who it is you truly need to hire.

You often have many needs, but you also have a limited payroll budget. The temptation is always to hire the most technically skilled person for the job, for the least amount of payroll. Getting the biggest bang for your buck sounds logical, but is it?

If you have started your hiring search by developing job descriptions that incorporate both hard skills and soft skills, you’re off to a good start. When those resumes start coming in for review, there are other things to consider. For example, are you looking for generalists or specialists? Do you want individuals with a small company background or big company background? How about experienced versus inexperienced? It depends in part on your business needs.

If your business operation has formalized processes and procedures, you will likely want to hire a specialist because they are likely to be focused on maintaining efficiency in their areas of expertise. If your business is more flexible than formalized, you might find that a generalist is a better hire because they can tackle almost any task with some degree of efficiency and effectiveness (Wasserman, 2012). Generalists bring a broader skill set that may help you get your business off the ground, but as your business grows the job requirements will likely become more specific, and you may find the need more specialists to support your day-to-day operations.

Related to the consideration of a generalist versus a specialist is the place at which the applicant’s prior experience has occurred. While some argue that those with a lot of experience in a small company are a better fit for a startup because they have been in the trenches and likely understand the challenges (Wasserman, 2012). Conversely, those who have a big company background can bring a wealth of knowledge about operational processes that might be beneficial to a startup (Wasserman). The experience that comes from each background can add value to a startup founder, but the big company versus small company experience is just one part of the equation.

Perhaps the most challenging question is experience versus inexperience (or limited experience). Some suggest that those with inexperience bring a passion for the job and the founder or manager can teach the specifics of the job. This allows the founder to hire someone with the necessary hard skills for the position, without committing significant payroll dollars that would otherwise be offered to a more experienced individual. An experienced individual, others suggest, often brings more overall skills, contacts, credibility, and perhaps stability; however, the downside is a bigger paycheck for that individual and the inability for you, the founder, to shape the company culture as well because those with experience have different expectations of the company (Wasserman, 2012). Experienced versus inexperienced hires may be one of your most significant considerations because of what these hires may bring, or may not bring, to your business. The benefit of each type of hire is not always apparent.

So, who do you hire? I can’t tell you.

Who you hire will depend on you’re your individual business needs. I can tell you this, though: Start by framing what you need this new hire to do. Then, ask yourself if you need someone who can be flexible and tackle many things or someone who has specific skills to get the job done. Next, consider the value of their background and the location of that experience (big versus small company) and, finally, develop a job description incorporating both hard skills and soft skills based on your prior decisions. And don't hire someone like you.

I can also tell you that framing your hiring decision solely by available payroll capital is short-sighted. There are many ways to frame a compensation package, and it’s not always about that bi-weekly paycheck. Focus on the fit. Everything else will fall into place.

___________________________

Who would I hire? For startups or small businesses, I tend to hire people who are curious, flexible, self-disciplined and comfortable with decision-making, have the basic hard skills necessary for the job, and have a high degree of comfort with ambiguity. In most cases, these individuals are experienced, have one specialty area (or an area where they have several years of progressive experience and responsibility), and a mix of large and small company employment. In my experience, these attributes result in the best staff for me because of my style and how I lead and manage businesses in startup mode. Keep in mind these attributes may not work for you because you and I lead and manage differently.

___________________________

 

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References

Wasserman, N. (2012). The Founders Dilemma. Princeton: Princeton University Press.

Photo by rawpixel on Unsplash

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Thinking Hard and Soft

September 21, 2018 ENT600 - Entrepreneurial Planning Comments (2) 84

Skills are both quantitative and qualitative.

Quantitative, or hard skills, are measurable and can be, for the most part, expressed with numbers. These are skills that can be taught, defined and measured. Accounting, architecture, computer programming, and auto mechanics are among many hard skills. Hard skills are acquired in on-the-job training, formal education, and apprenticeships. And when you complete your training you are thought possess the skills for which you have been trained. You have a certificate or diploma that asserts in an objective manner that you have attained a certain level of proficiency with consistent results.

Qualitative, or soft skills, are also measurable, but not necessarily by quantifiable means. Most soft skills are considered personal attributes such as patience, tolerance for ambiguity, empathy, courtesy, flexibility, decision-making, reliability, or language proficiency (Ramsoomair & Howey, 2004). Of course, these skills can be taught, too. You might have learned them at home, on the playing field, or in a classroom. However, defining and measuring the impact of these skills is much more difficult. You might be able to take a course in soft skill, for example, but assessing your proficiency in that skill defies most testing. Because, whether you possess a soft skill and use it well is often subjective.

In the broadest sense, some might argue you can learn hard skills but have a more natural tendency toward certain soft skills based in part on your personality. For example, you might be well-educated and have a lot of experience in our field, but if you don’t work and play well with others finding and keeping a job might be a challenge.

You might worry less about finding and keeping a job as an entrepreneur, so you probably think less about soft skills. Yet soft skills are an essential component of your ability to launch a business.  Soft skills, for example, are necessary to both build and maintain social and business networks. Such skills also support your decision-making in day-to-day operations and guide your strategy development. It’s difficult to recognize your own soft skills, let alone those such skills in partners and prospective employees. But, soft skills are a critical component in building a high-performing team. The challenge when hiring is often how to discern those skills in the interview process.

Culling out soft skills in a partner or applicant is more challenging. While there are a number of tools and services that purport to help you assess those soft skills—behaviorial interviewing and the DiSC Assessment are my go-to’s—the tools only provide a guide. And of course, they are useless unless you know what soft skills these individuals will need (hint: most startups need people who have a high tolerance for ambiguity). Nonetheless, such tools remain subjective and should not be the sole determinate as to whether an individual you are considering for a partner or employee has those soft skills your company may need.

In the absence of tools that attempt to measure soft skills, you, like many other managers, might interview others by assessing their “ability to do the job.” In doing so, you are likely assessing only their hard skills. The "ability to do the job” is often determined by measuring the individual's hard skills and experience against the job description, which likely also specifies only hard skills (e.g., five-plus years in computer programming, six-sigma black belt, knowledge of scrum and agile methodologies). Rarely do you see a job description that includes, "Must work and play well with others." And if you do, how will that skill be assessed or measured?

So, when you have five candidates with equal hard skills, who do you choose? It often comes down to whether you like one candidate over the others. One candidate whose personality comes through—the one you like out of all the others—is often the one deemed a good fit for your organization and its culture. But, you don’t really know because you cannot effectively measure the fit—those soft skills—until the new hire is working and you can see for yourself how well he or she assimilates. Even then, it’s a somewhat subjective decision.

Soft skills bring more effective management and provide support to your organization’s strategic goals as a result of greater integration and understanding among those members on the team (Ramsoomair & Howey, 2004). All things being equal, soft skills are the things that should give your company a competitive advantage. Empathy, courtesy, language proficiency, the ability to “work and play well with others” are the things that bring cohesiveness to the organization. Still, you need both hard skills and soft skills to build a company.

Don’t be tempted to partner with or hire only those individuals who have demonstratable hard skills. People with soft skills, especially empathy, dedication, and courtesy, and the ability to make decisions, should always be highly valued. Consider this: A software programmer with killer skills and limited communication skills or no empathy might have a place in the company, but the software programmer with average skills and great communication skills and empathy might be better for the company. You can help teach new programming skills, but teaching communication and empathy is much, much harder.  Which of those programmers is a better fit? It depends on you and your entrepreneurial goals. Achieving the necessary balance for your company is the key.

Partners and employees who prove to be the greatest asset to a founder have a good mix of hard and soft skills, and they make a conscious effort to continually develop both skill sets. Of course, the same can be said for the most successful founders. As a founder, you need to know how to do the work your company does each day, but you should also have strong decision-making skills, empathy for your partners, employees, and customers, and the ability to communicate well, among other skills.

Which skillset—hard or soft—do you lean on most for your business and why? How well is it working for you?

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Interested in learning more? Check out these resources:

Learn more about DiSC Assessment here: Everything DiSC.

Take a free DiSC Assessment from the Tony Robbins organization here: Free DiSC Profile. Note: You have to sign up for the newsletter to take the assessment.

Interested in my DiSC Profile? I'm a very high D with a high i (Di). Read a summary about the style here.

100 behavioral interview questions to help you find the best candidates. A blog post from recruiting company, Top Echelon, provides some insights on behavioral interview questions.

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References

Ramsoomair, F., & Howey, R. (2004, April). The Hard Realities of Soft Skills. Problems and Perspectives in Management, 2(4), 231-238.

 

Photo by Louis Lo on Unsplash

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Hiring People Like You

September 15, 2018 ENT600 - Entrepreneurial Planning, Entrepreneurship Comments (2) 112

You will have the desire to hire people like you when you're an entrepreneur.

Leveraging social capital to build your founding team makes it easy to hire people like you. People with your values, your background, and a substantially similar knowledge base can be advantageous for you, the founder. You’ll have a common language, communication may be more comfortable, it will take less time to get those new hires up to speed, and you will have greater confidence in their ability to achieve your goals and objectives (Wasserman, 2012). Hiring people like you might seem to be a smart business choice.

When you hire, people like you are probably hiring them because you have had a good working relationship in the past. You hire people you like and people with whom you enjoy working. You hire them because your experience tells you they are good at what they do. You hire them because although they have different areas of expertise—sales, marketing, or finance—they are likely to have similar backgrounds, networks, and possibly industry knowledge. Arguably, this may give you an advantage at first. Surrounding yourself with people like you when you’re risking everything else to get your business off the ground will provide some comfort. On the surface this seems rational; homogeneous teams may make things a little easier in the beginning but are likely to be the cause of stress as your business grows.

Hiring people like you means you may be hiring people who have not just similar strengths, but also similar weaknesses. Hiring people like you may also mean few will challenge your view of market opportunities, customer targets, or product features and benefits. People like you will tend to see the world in much the same way as you. And this might mean you miss business opportunities because hiring people like you limit your ability to see much of anything different than you may see it. Hiring people too much like you may well restrict your long-term success in business.

Hire people who have different backgrounds, education, and experiences. Hire those with a different world view, a different attitude, and from a different place in the community and the world. Cultivate this diversity within your company because it is this diversity that will help you identify and exploit opportunities for business growth. Hire people whose strengths bolster your weaknesses. Hire people who do things differently than you, who challenge your thinking, who push your buttons, who make you question your decisions. And listen to them. Surprising as it may seem at times, you do not have all the answers. The input of others—people who are not like you—can make you a better in business, a stronger leader, and often, a better person.

When you surround yourself with people like you, you will get a company built in your image. And as enticing as this might sound, it will likely limit your ability to achieve those business goals to which you aspire. Don't give in to the desire to hire people like you.

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Reference

Wasserman, N. (2012). The Founder's Dilemma. Princeton: Princeton University Press.

 

Photo by Andrew Wulf on Unsplash

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Are you building the right kind of capital for your startup?

September 8, 2018 ENT600 - Entrepreneurial Planning Comments (2) 110

In its original use the word, “capital,” referred to the number of cattle a person might own. The headcount of cattle and total assets of the owner were often synonymous in ancient Greece and Rome, so capital took on the broader meaning of “wealth” until sometime in the thirteenth century when it evolved to mean money advanced to an entrepreneur to start a business (Hodgson, 2014). Wealth created through goods and stock—assets that could be turned into cash for investment—became the primary definition of the word capital for more than 500 years.

In the eighteenth century, industrialization changed the economic structure. Labor, as well as money, became a critical factor in the ability to create wealth. Economist Adam Smith recognized the importance of labor in the creation of new products and introduced the idea that “capital” applies to people as well as things (Smith, 1776). Karl Marx expanded on the Smith’s idea, arguing that “capital is not just things or people, but a social relationship between people, established by the instrumentality of things” (Hodgson).  And the concept of capital grew again—financial, human, and social.

In modern economics, capital is typically defined as an asset that you can use to produce something that is economically useful to a business or an individual.  The word, then, has different meaning depending upon its context (Goodwin, 2003). The most common types of capital are:

  • Financial – referring to an investment that produces something of value;
  • Natural – involving the supply of natural resources in any form that plays a productive process in economic gain;
  • Human – referring to individual education, skills, abilities, and labor used in some combination to produce assets for economic benefit;
  • Produced (Physical) – relating to those physical assets (products or objects) created for sale by applying Human Capital to Natural Capital for economic gain;
  • Social – referring to the goodwill, trust, shared values and social knowledge that, in combination, facilitates a financial benefit.

Even with these different meanings, you still might think capital is synonymous with money. And it would make sense since if you’re a founder, you are spending a lot of time raising and worrying about financial capital.

Indeed, financial capital is essential to get your business off the ground and keep it going. However, human capital is required to strengthen your weaknesses and often to produce a physical product, and your social capital is necessary to attract employees, customers, advisors, and investors (Wasserman, 2012). For those of you that manufacture a product, access to natural capital supports your ability to create produced capital which is the output that generates the revenue necessary for you and your company to thrive.

If you consider the different context in which the word capital can be used, you might begin to reconsider which type of capital should become your priority. Should you still concentrate on building financial capital first? Maybe.

Of all the capital types, it might be more critical for you to first invest in building your social capital. Some argue that social capital—the trust and goodwill you have created with others—might make it easier to raise financial capital, develop supply networks, entice customers, and find employees willing to help you accomplish your goals (Wasserman, 2012). Most successful entrepreneurs will tell you a robust network of support is critical to building sustainable ventures. Your social capital and your personal network is an essential part of your success.

Maybe the ancient Greeks and Romans were on to something when they considered capital to be synonymous with wealth. Perhaps they understood that wealth was rooted as much in the social connection as it was in financial assets. Wealth is measured in many ways, but social capital may well be a good predictor of financial wealth.

What do you think? Is social capital the key to building wealth and financial success?

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References

Goodwin, N. R. (2003, September). Five Kinds of Capital: Useful Concepts for Sustainable Development (Working Paper No. 03-07). Retrieved September 9, 2018, from Global Development and Environment Institute: http://www.ase.tufts.edu/gdae/publications/working_papers/03-07sustainabledevelopment.PDF

Hodgson, G. M. (2014, 4 April). What is capital? Economists and socialists have changed its meaning: Should it be changed back? Cambridge Journal of Economics, 1063-1086. doi:10.1093/cje/beu013

Smith, A. (1776). Wealth of Nations (Annotated edition, 2003 ed.). Bantam Classics.

Wasserman, N. (2012). The Founders Dilemma. Princeton: Princeton University Press.

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Photo by Arthur Poulin on Unsplash

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Choosing between wealth and control

August 30, 2018 ENT600 - Entrepreneurial Planning Comments (8) 146

You’re an entrepreneur. You identify a problem, come up with a solution, and then launch a business to deliver that solution to the marketplace. And as the company grows, you continue to exercise control over every aspect of it, because after all, it is your idea and your solution, so there is no one better to ensure the vision of the company than you, it’s creator.

Until you’re not.

Many startup founders desire to maintain control as the primary means to achieving their goals with their business. One of those goals, of course, is solving that problem on which the company is built. However, many of the other goals are much more personal. Things like personal pride and wealth, for example, come to mind. Thanks to men like Jobs, Gates, and Zuckerberg, almost every first-time entrepreneur has aspirations of building something big by controlling everything and then gaining fame and a fortune when the company goes public.

It rarely happens.

Pride and personal recognition have fanned the flames of more crashing businesses, than the successful companies those same goals have fueled. Control is the problem for founders who, like Yertle in Dr. Seuss’s Yertle the Turtle, desire “to be king of all they can see” (Geisel, 1958). A king might see the wealth in the distance, but eventually, somebody sneezes, the king loses control, and everything comes tumbling down.

Being a king and building wealth are not mutually inclusive. Some research suggests that if you focus on maintaining control of your business you may become king, but it is unlikely you will ever create significant wealth. And if you focus on building wealth, it is inevitable that you will give up control (Wasserman, 2012). It is rare for an entrepreneur to maintain control and achieve wealth.

Here’s why: Like it or not, your business will inevitably outpace your skills, abilities, and expertise. If you believe controlling all aspects of the company will ensure your success, it is unlikely you’ll recognize when your company has outgrown you. You might be the king, but you’re likely to have little else. Plus, investors don’t like kings all that much. Particularly once you’re out of the startup phase.

Whereas if you give up control, delegating to those individuals with expertise in their designated areas of your business, while you focus on building the financial value of the company, you will be more likely to create wealth. Investors like delegation. It allows you, and everyone else in the company, to focus on those individual strengths that build wealth. Even Jobs, Gates, and Zuckerberg eventually learned the only way to create real wealth was to give up control.

Which is more important to you, wealth or control? Now, that you know, how will you structure your business to achieve your goals?

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References

Geisel, T. (. (1958). Yertle The Turtle. New York: Random House.

Wasserman, N. (2012). The Founder’s Dilemma. Princeton: Princeton University Press.

Photo by Laurent Perren on Unsplash

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Interview: ClassB CEO Eric Hilferding on Entrepreneurship

March 8, 2018 ENT670 – Adv. Entrepreneurial Strategy, Graduate Program Coursework, Interviews Comments (0) 549

The following is an interview with Eric Hilferding, CEO of ClassB, a custom t-shirt manufacturer, and printer for my graduate coursework in entrepreneurship. Eric and I first met in 2005 when I was with the Boy Scouts of America. His company was one of the BSA's first licensees in the revamped licensing program. We became fast friends and I have long admired his attention to detail, his creativity, and his commitment to service.  

 

Eric Hilferding of ClassBQ. Tell me a little about ClassB and your role with the company.

A. ClassB is a provider of custom decorated goods including t-shirts, embroidery and promotional products to primarily nonprofit organizations. The company started in 1982. We currently have 38 full-time employees. We focus on having a great customer experience. The internal motto is we sell service not t-shirts. I am the CEO of ClassB and one of the two company founders back in 1982. I have been formally running the company since the mid 1990’s.

Q. Did you have any entrepreneurial experience or education before launching the company?

A. I have zero business or entrepreneurial education - I have a BA in History. Luckily, learning about running a business was always a part of my life. I started working at around age 8 at my grandfather's lumber yard. My parents often discussed business at the dinner table.

When my mother and I started ClassB, all immediate family members eventually were employed. I read profusely to fill gaps in my knowledge. I was very lucky to have my father with his extensive business knowledge available at all times. Without his experience, I would have failed many times over. Now I realize how right he was on everything.

Another key area is my Boy Scout experience. I learned so much by making lots of leadership mistakes in my Troop and working at Summer Camp. Having that sandbox to learn is one of the most valuable things I can imagine. If not for my parents and the Boy Scouts, my only business reference point would be work based sitcoms.

Q. What are you most passionate about and how does it tie to your work each day?

A. My main passion is that we treat customers right. It's probably some of the Boy Scout indoctrination. However, most of it is driven by a sense of perfection and trying to avoid the guilt of an unhappy customer. I obsess over a bad customer experience and have to process thru it to be able to move on. I get lots of satisfaction by improving things. I lose interest if things stagnate or a task becomes repetitive and no longer optimizable. The idea of constant iterative change and the occasional disruption suits me. I also enjoy the new things I have to figure out. On some days I’m a scientist, engineer, investigator, lawyer, judge or a plumber, etc. It’s never the same every day.

Q. Business owners have many responsibilities during the day. Some of those responsibilities are more challenging than others. What are a few of the things you find to be the hardest to do? What are some of the easiest? Moreover, why are these things easy or hard for you?

A. The hardest thing for me is finding uninterrupted time. Every day being different is great - having so much to do is a problem. I have lost weeks just trying to finish something in 30 min increments. Kind of related: the most challenging thing for me is finding good people - they make all the difference. I have learned to hire people that fill my weaknesses not people who are like me.

I can’t tell if someone is a good fit in an interview. I have to hire them and then decide in 2 weeks at most so I can circle back to my 2nd option. The destruction to customers, profitability, and other employees that a single person who is “not a good fit for the job” can bring is incredible. As long as I remember that, firing people is easy. If I forget, firing is a drawn out, expensive, painful to all parties process - especially me. The easy stuff is fixing systems and things - why because I’m a systems guy, not a people person.

Q. As an entrepreneur, there are all kinds of things that can affect the business. We could spend all day, every day, worrying about those things. What are some of the things that “keep you up at night?” And what do you do each day to mitigate those worries?

A. I worry a lot - to the point of being unhealthy. I have a terrible fear of not doing things correctly - still a Boy Scout in some ways. I always strive to go above and beyond. I always play things straight - I assume that everything will always be discovered at some point - so it should be done in a way that would be correct from the get-go.

My biggest fears are someone taking advantage of us. This comes in two forms - frivolous lawsuits and unfairly instituted/ enforced regulations. I have seen a few ridiculous claims - I have a good family lawyer to pass them off. I also worry that someday an employee here makes a small mistake that destroys the company, puts all my employees out of work, and puts me in bankruptcy.

Many regulations often require academic-like responses, seem punitive, or meant for an unspecified situation—they are a time and soul killer. My fear comes in because they often seem to be unfairly applied. Unfortunately, you never know for sure how to comply or if the rule is real. You have to wait time to have an idea. It’s the uncertainty that gets me. The personal interpretation of a regulation by a single inspector has been devastating in time and money.

I mitigate these two things by trying not to think of them. I do all I can to do the right thing anyway and just hope.

Q. How do you motivate yourself each day? What do you do to let off steam?

A. Motivating is easy for me - I’ve worked all my life, so has everyone in my family. I’m a workaholic for sure. When things become overwhelming as they often do, I just have to remember to ignore the 100 things going on and move one thing forward at a time. Eventually, I can work out of the mess. I wish I could say being a business owner is glamorous - clearly, I’m doing it wrong, but my 'letting off steam' is maybe two days a year where I get to go hiking in the desert with not a soul in sight for miles.

Q. What’s your favorite customer story from your business?

A. For owners and managers, you really only hear the problems. It’s great you ask this question because it's important not to lose sight of the daily things that go right. Ninety-eight percent of the time, things go good or perfect. The customer service people at ClassB get to hear all the good stories. I encourage them to share with everyone. We have the entire wall of the customer service area with photos and experiences that customers have shared with us.

I think my favorite situations are when we go out of our way big time to get the customer their shirts in time for an event that has special meaning for them. We have turned out shirts in a day and overnighted them because the customer made a mistake and we wanted to make it right for them. The best customer experiences come from looking for the customers best interests and ignoring the effect on any single transaction. Bake in some money to your price to be able to treat them the way you wish things worked.

Q. In your experience, what have you found works best to motivate employees?

A. Wow, have I worked the gamut on that! The one thing I have learned the hard way is don’t listen to what they say will motivate them. Money, benefits, and perks only work in certain market conditions or individual situations and are secondary or even a counter to the true motivator. The number one motivator is good managers. Those managers have to have people skills. They have to make the work environment-friendly, positive, professional, productive, fun and fair. They have to respect all the
employees by having their fellow employees have a purpose and contribute to the team.

All managers have to pull their weight and show appreciation for everyone's efforts. They also have to hold a high standard. If all that is in place - employees will be close to self-motivated and not look to leave. They are more productive, and guess what: Now those managers worth more, and they get more money. Try to work it backward, and it does not work at all. I personally am a horrible motivator - I am lucky that I have managers that are really good at that.

Q. Entrepreneurs are risk-takers. We know there’s a probably a more significant chance for failure than for success. Still, we move forward. As you think about your entrepreneurial plans, what is your worst-case scenario? What makes that the “worst” for you?

A. I always view the current situation as transitory. What is working today will not at some point. All I can do is keep moving and try my best to adjust.

I think my worst case scenario is that I get so caught up in the day to day issues of running my business that I lose the big view of where the market is going, and we fall behind. Know this always happening to an extent. I don’t want to fail my family or employees because of something I missed. I don’t want to look back after the failure and realize I spent too much time on ABC instead of XYZ.

There is a burden in having so many people and their families relying on you for their lively hood. I have maybe 60-100 people indirectly or directly relying on me. I do not want to fail them. If it was just me, failure is easy and guilt-free - plus the Boy Scouts taught me how to survive in the woods if need be.

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