Monday, March 29, 2010

Learning To Be An Entrepreneur


Seeing as I have all but abandoned BadskiBlog in pursuit of a better GMAT score the last month, I thought it was fitting to sneak in a blog post about MBA's. There is a steady debate within the business community on whether entrepreneurs are born or taught. My sense is that entrepreneurs are molded both by gifts at birth as well as their experiences and education. Fortune Magazine took a stab at this argument in a recent article in their small business blog by focusing less on the endless debate and more on the opportunities available to hone the entrepreneurial attributes you can control; your education.

Gregg Fairbrothers wasn't born to business. He grew up in an academic household. "I didn't know a debit from a credit," he admits. Fairbrothers studied earth sciences at Dartmouth in the '70s, got his master's at Rutgers, and eventually moved to Tulsa, where he joined Samson, a gas driller, and earned his chops at the right hand of the company's "hard-nosed founder." He picked up an MBA, but that was "just to get the toolkit," he says. "I learned my business on the job."

Today, as founding director of the Dartmouth Entrepreneurial Network, Fairbrothers teaches a wildly popular course on entrepreneurship at the Tuck School of Business.


The article lists a few interesting facts on teaching entrepreneurship and how it has really exploded in the past few decades.

Twenty years ago teaching people how to start their own businesses was a sideshow at B-schools, of scant interest to future consultants and Wall Streeters. Today entrepreneurship education is everywhere. More than two-thirds of U.S. colleges and universities -- well over 2,000, up from 200 in the 1970s -- are teaching it, and they offer it to all comers: social workers, farmers, and even musicians. The field is thriving, but have we figured out yet the best way to teach this stuff? If not, are we at least getting better at it? And can you even teach someone to be an entrepreneur?


Although Fairbrothers teaches entrepreneurship it seems as though he shares similar sentiments that I do, acknowledging that entrepreneurship is likely a combination of born attributes and learned skill. I have posted a few of his most enlightening comments below.

Fairbrothers has heard what critics say. To a point, he shares their doubts. He's not sure anybody has figured out yet how to define entrepreneurship, much less measure it.

According to a Kauffman Foundation study published early this year, the surge in entrepreneurial education during the past three decades has had "no appreciable impact on entrepreneurial activity in the United States." Even at Tuck, less than 2% of graduates immediately start their own businesses.

But maybe that's not the right way to look at it. Entrepreneurs are not defined by what they do, Fairbrothers argues, but by how they do it. He views entrepreneurship as a set of traits, identifiable and measurable, and dispersed along a classic bell curve. Here he sides with Howard Stevenson and David Gumpert, co-authors of a seminal study published 25 years ago in Harvard Business Review. Entrepreneurship is not "an all-or-none trait that some people or organizations possess and others don't," the authors wrote, but rather "a range of behavior."

"So the question is," says Fairbrothers, "can you take a point on that curve and move it? If 'entrepreneurial' is to the right, can you move it that way? I know I can move it that way. I've done it."

Monday, March 15, 2010

Humility & Hubris - Learning From A Punch In The Mouth


When I was 18 years old I was playing in the United States Hockey League, one of the premier junior A leagues in North America. It was my first year in the league and needless to say it was a challenging transition coming from minor hockey. Not only was the league leaps and bounds above any level I had played at previously, but there was a new dynamic in the form of fighting. The league played NHL rules and fighting typically resulted in a five minute time out, a pat on the back from your teammates, and a few new fans in the stands. I was hesitant to fight in my early days, however I got into a few and eventually found that I was pretty good at it. I never took on the role of the team’s go to fighter or anything, but I was less than hesitant to shy away for a scrap when warranted. Well over half way into my rookie year I had yet to “lose” a fight. That is not to say I won every fight either, just that I left each prior tilt feeling at least OK about it. A little cockiness, that was only revealed in hindsight, started to set in. One night up in Rochester, Minnesota I started a fight with the wrong kid and proceeded to get pumped for over a minute straight. I was, at the time, too cocky and proud to go down and end the fight so I stood there taking a beating convinced I could come back and get the best of him. Standing outside after the game with some buddies, my face throbbing in pain, in subzero temperatures, waiting for the bus to be fully loaded, I was dished a healthy dose of humility. This was not the first time and it would not be the last, it was merely an extremely memorable occasion for obvious reasons.

This last weekend, almost a decade after getting speed bagged, I suffered another proverbial ass kicking. Although this time around it wasn’t a southpaw opponent, it was at the hands of the Graduate Management Admission Test (GMAT). I wasn’t necessarily cocky heading into the test as I had my reservations, but I really thought that my two months of preparation were enough to reach my goal score. The score doesn’t lie. My preparation wasn’t enough, and it hit me like a punch in the face. I was lambasted with all the standard emotions; disbelief, anger, self doubt, etc. However, when all the dust began to settle I forced myself to look at my GMAT setback like any other.

Getting a healthy dose of humility is never fun, but always necessary. Necessary in that it prevents the inevitable creep of hubris which poisons the human psyche. So what lessons can learned from this punch in the mouth that can be paralleled to future trials and tribulations?

1. A dose of humility is a stake in the ground – these unpleasant events are clear and distinct points in time where character decisions are made. Where do you go from here? Do you let the situation control your decisions moving forward or do you accept reality and continue to persevere towards your goal?

2. Humility serves as a reality barometer – After my emotions settled down I looked at my situation and said ‘it is what it is.’ That statement although simplistic and clich├ęd serves a purpose. That purpose is to help you get a grasp on reality. Things are never as good as you think they are when you are up and never as bad as you think they are when you are down. Although a dose of humility often puts you in one of the down spells, it has the effect of smacking you back into concert with reality. After you have recovered from the shock of recent events you can use the adversity to gather a firm grasp on where you are at; you can then accurately devise of plan of where you are going.

3. When you get punched in the mouth punch back – With the GMAT, I could take my score and move on. I could go do something else or alter my goals so that they are achievable without doing anything else, but I won’t. I want to take another run at it. I want to do as well I know I can do. I want reach my original goal. With the GMAT or anything else, sometimes you just have to use some old fashioned perseverance. I see this partial failure as just a step in process of success. There is no guarantee I won’t do worse on the next try, but at least I will know that I took another swing. Like a fight in hockey, it isn't really that important whether you "win or lose" but that you showed up in the first place!

Friday, March 5, 2010

Buffett Bites


I have followed Warren Buffett since college when I took my first real investments class. He has been revered by many, but also accused by many as being old fashioned and past his prime. However, as the accusations keep coming the one constant is that his company Berkshire Hathaway has continued to outperform most other inhabitants of this earth. He has consistently outperformed the competition all while sticking to a few simple and honorable principles. It is funny when I look back at my blog and see how many times I have mentioned his name and the many more times I have cited advice which parallels the Buffett maxims because I actually spend very little time managing my investments. But I guess the lack of time I put into investments is symbolic of the approach that I take. If you don't have the time to dedicate to extensive research then you are probably better off just investing in index funds, investing for the long haul, and gladly taking the gains that the broad market enjoys over time. This is a classic Buffett nugget of advice for passive investors worldwide and it is one I have heeded. Here are a few other Buffett bites of wisdom from the MSN Money homepage:

Stay liquid. "We will never become dependent on the kindness of strangers," he wrote. "We will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses."

Buy when everyone else is selling. "We've put a lot of money to work during the chaos of the last two years. It's been an ideal period for investors: A climate of fear is their best friend. . . . Big opportunities come infrequently. When it's raining gold, reach for a bucket, not a thimble."

Don't buy when everyone else is buying. "Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance," Buffett wrote. The obvious corollary is to be patient. You can only buy when everyone else is selling if you have held your fire when everyone was buying.

Value, value, value. "In the end, what counts in investing is what you pay for a business -- through the purchase of a small piece of it in the stock market -- and what that business earns in the succeeding decade or two."

Don't get suckered by big growth stories. Buffett reminded investors that he and Berkshire Vice Chairman Charlie Munger "avoid businesses whose futures we can't evaluate, no matter how exciting their products may be."

Diversify your portfolio. Most investors who bet on the auto industry in 1910, planes in 1930 or TV makers in 1950 ended up losing their shirts, even though the products really did change the world. "Dramatic growth" doesn't always lead to high profit margins and returns on capital. China, anyone?

Understand what you own. "Investors who buy and sell based upon media or analyst commentary are not for us," Buffett wrote.
"We want partners who join us at Berkshire because they wish to make a long-term investment in a business they themselves understand and because it's one that follows policies with which they concur."

Defense beats offense. "Though we have lagged the S&P in some years that were positive for the market, we have consistently done better than the S&P in the 11 years during which it delivered negative results. In other words, our defense has been better than our offense, and that's likely to continue."

Timely advice from Buffett for turbulent times.