7 Paths to a Successful Startup

0:08Hello and welcome to another episode of the Duct tape marketing podcast. This is John Jantz So my guest today is Lori Rosenkopf. She's the Simon Imidge Poly professor, professor of management and vice dean of entrepreneurship at the Wharton School. Her research on technology and communities and knowledge flow has been published in top journals. She's served as a senior editor and consultant and has led significant curriculum and diversity initiatives. We're going to talk about her book, Unstoppable Entrepreneurs, Seven Paths for Unleashing Successful Startups and Creating Value Through Innovation.

0:44It's going to be out in, depending upon when you're listening to this, it'll be out in April of 2025. So Lori, welcome to the show. Thanks, John. Great to be here. So you talk about, I've got a one word underlined here that you talk about stories from entrepreneurs that you call the unvarnished stories that you find that really deeply resonate with folks. I wonder if you can talk a little bit about that. Sure. So many of the stories that we see in the media about entrepreneurs tell a successful path without so many of the obstacles and challenges that were faced along the way. And we know that all entrepreneurs are really facing daily, if not hourly, challenges.

1:28And so I wanted to tell stories of people who were going through these challenges and how they got through them, because there's a lot of lessons for all of us across the different stories. Yeah, I would agree. I mean, the media loves the unicorn stories and things. And even in some of those stories, the whole like, we tried this eight times and pivoted eight times before we hit on the thing. And all that really happens is like, oh, look at this big success story. I mean, there's lots of really big success stories that people mentioned Ubers of the world that were other things before they were that.

2:05So I think - And it's not just even choosing to pivot because the first approach isn't working, but it's like you're Caitlin, who's the social entrepreneur in my book. And she has taken a set of girls to discovery days to see different companies, to learn about careers, because that's her mission, to help girls find great careers. And she's running bus tours and COVID happens. Well, her business is gone. There's no bus tours. And she winds up doing a virtual program, which allowed her, once she digitized, to forex her business really quickly. And now it's grown into a really thriving endeavor.

2:45She's an ed tech now instead of a bus tour operator. You know, it's interesting. I never want to say that the pandemic was a good thing. But, you know, how many industries, you know, that really came out of that out of necessity that everybody went, oh, this is actually a better way. but probably would have never really got tried or adopted without that set of circumstances. How much is your environment at the school really fed into your learning and certainly what you put in the book? I'm so glad you asked that. My role as vice dean of entrepreneurship means that I'm the faculty director of our student center for entrepreneurship at Wharton.

3:26And we have a host of students with a host of different interests who are demographically diverse and are trying to learn how to be more entrepreneurial, whether or not they'll go and become entrepreneurs right away. And I was seeing stories in the media which were just the celebrity entrepreneurs, the unicorns, like you said. And those were a singular type. And I really wanted to tell stories of so many of our amazing students and alumni entrepreneurs to give them role models because role models matter. So you talk about entrepreneurial mindsets, and I'm so glad you picked on the tech bro a little bit image, but mindsets that you call the six R's.

4:09Yeah. Reason, recombination, relationship, resources, resilience and results. I butchered it there, but you can maybe expand on that idea that you've distilled into these six R's. Yeah. And each of the seven stories we tell, so the seven different paths, there's not a one size fits all path to entrepreneurship. We talk about each of these different aspects and they're motivating principles that can help anyone to be more entrepreneurial. And so without going through the laundry list, my personal favorite is recombination. My research has focused on that historically. But the idea that each of us has a unique set of experiences, both in our workplace and our education, but also in our family life and where we've lived and the like.

4:55And it's through mixing all of the different experiences and relationships and resources to throw in a couple of others that we're able to see ideas that allow us to innovate. And innovation is what allows entrepreneurs to create value. So are those mindsets something that we can adopt or have or are they actually or they've actually become more like tactics or strategies, you know, that somebody. So like recombination, that can be somebody's mindset. They might think that way. They may look at architecture or calculus and say, oh, what if we took some of those principles and did this with them?

5:33Or they might actually just say, you know, that's who I am, that that's how my mind works. I mean, how do you balance kind of that idea of strategy versus mindset? Well, when we're educating students, we're always talking about growth mindsets and figuring out how you can push yourself in new directions. And so I think that recombination, it's something that one can look backwards wherever they are and say, what's my mix and take a little bit more stock and say, if I put these two things together and start to do some idea tournaments with yourself, but also in looking ahead, particularly for younger folks who are saying, what kind of job should I be looking to take or what kind of measure might I take to say, let's stretch yourself a little bit.

6:17Let's not just take the standard path that everybody follows because then you're going to be very cookie cutter. But the people who are able to be the most successful and the innovations that have been really the most provocative and disruptive are ones where there's some novelty involved. So I'm glad you used the word disruptive because you actually have that as a path. You feature, I think, is it Amy? Yes. And so I think a lot of people tend to think that way, like I need to create something that It just disrupts the market. I think a lot of people, that's their mindset. But it's actually really hard, isn't it?

6:51Yes, it is very uncommon, let's say it that way, in addition to being hard. And I selected Amy specifically because she wasn't a tech bro. She's selling originally women's hair color, but she's built out a phenomenal omni-channel empire. And at the beginning, she had a little bit more struggle raising funds than someone who was doing it for, say, Dollar Shave Club. But she knew she wanted to do something big and disruptive. She had worked as a venture capitalist. So back to recombination, she knew what was the pattern. And she saw this market and went for it. And she's essentially a unicorn. She's doing extraordinarily well.

7:35You'll be seeing more of them in the news. You mentioned venture capital. I do think that there's a common feeling amongst people that startups like we've got to raise money or this round, we're in this round. I mean, that's a lot of the talk you hear. You give a lot of ink to bootstrapping. And I'm curious kind of your thinking or your approach to that path. It's what we recommend to all of our young people starting off is go as long as you can without raising. And I think these days that advice is getting out there more. But five or 10 years ago, everybody was saying, I need to raise, I need to raise.

8:09Particularly in a place like Wharton where everyone wants to build high growth enterprises. Bootstrapping, I love this story. Jesse is my bootstrapper. He built a digital marketing firm. This wasn't his original training. He was just looking for a way to be entrepreneurial after being a banker. But he was one of the first in with Facebook's API. So lots of digital spends managing that. He sold that and now, and all bootstrapped, and now he's building out additional companies to help other entrepreneurs. You should have him on the show as well. Make an introduction. I'd be happy to. Okay. But to go back to recombination, because this is why it's my favorite, Because he built this digital marketing firm, because he had spent a couple of years working in banking and private equity sorts of environments, people from private equity firms are saying, could you help me assess whether this$10 billion acquisition I'm thinking about actually has a capable digital marketing strategy?

9:18He's built a new consulting business on that. Others come to him and say, you outsourced your talent to the Philippines and got all these growth assistants. He's built another company that hires growth assistants and places them for everyone. So like his entrepreneurial spirit is just incredible. And everything he does is bootstrapped. So it's quite remarkable. Well, and you said there's a statistic that you shared about bootstrapping an 80 percent survival rate after five years. I mean, that's not the common statistic, is it? Well, right, because you're not worried about satisfying your investors or your debtors right away.

9:54So you have a little bit more time and space. So there's another term that you use in the book, technology commercializers. That, again, I guess that's a bit of a recombination, maybe path, kind of bridging the gap between existing innovation and new market applications. Talk about your story there. Yeah, I love to use that term to refer to a path where somebody sees that technologies exist and figures out how to bring them to markets that need them. So in the book, I talk about Joan, who had been working as a scientist, a PhD scientist at a large pharmaceutical firm. She calls herself an accidental entrepreneur because after many years of doing that and worrying about whether the pills should come in a two pack or a four pack, she wanted to work on life changing medicines.

10:50She wound up building a small investing arm herself, not in the pharmaceutical firm, and then becoming CEO of one of the portfolio companies. And now they're working on cures for cystic fibrosis, which, you know, that's life changing for people. And she didn't invent the science, but she was able to assess the scientists and small biotechs that were developing it. It's like you're reading my questions. I was going to the accidental idea because it seems like that's a threat. Like you mentioned her, but it seems like almost all of the people, there was some little bit of, I wasn't really trying to change the world.

11:29I was just doing this. And, you know, it led me to that. I mean, is that, do you think that that's, is that just coincidental with your stories? Or do you think there's something to that? Well, one of the other R's in the book is reason, you know, your reason for doing it. And there are two kinds of people I've seen. And some are very much, I want to be an entrepreneur from square one. They're like, I had the best paper route when I was a kid. You know, I was selling candy in middle school, et cetera. And it's just continued. And I just had to find a good place to go and be an entrepreneur and make money.

12:04And some of the stories in my book are those types. But there are others who people, their reason is a deep burning personal passion. And some of them, like Caitlin, knew that she wanted to do female empowerment stuff from when she was very young. But others came to that through their series of experiences. And at Wharton, we don't say people need to go and be entrepreneurs right away when we're training. We just want them to be entrepreneurial thinkers. We want them to go out, do some work, learn a space, and then see opportunity and then capitalize on it. I imagine that you have particularly, pick on your younger students if I can for a minute, that they come to the program initially and it's like, what technology is ripe for, you know, disruption?

12:52Like, or, you know, or what's the app I can create, you know, to create this huge commercial success? How do you help them figure that out? Well, we do a lot of experiential learning. We have 25 programs in my center where students can do anything from get a$500 award to test out their grandmother's cornbread recipe and see if they can build it into a brand to$10 ,000 awards that we give to our students in accelerators who are really pushing and working on ventures. But the experimentation is incredibly important because most of these ideas that people can come up with when they're this young age are not the ones that are going to be the source of their career.

13:38You know, again, outsized attention to things like Snapchat. But but that's not what we're typically seeing. But by by playing with any venture idea, one can develop a repertoire to become more entrepreneurial, see more of those opportunities and pursue them more effectively in the future. What are some of the kind of most innovative things you've seen entrepreneurs do beyond sort of the creating financial returns, you know, for community, for mentoring, for, you know, other things that you've seen founders do? Founders, Jared is the founder of a venture capital firm, and it's a venture capital firm that has the mission of creating a thousand diverse entrepreneurs.

14:21He felt like he's an underrepresented minority and he felt like money was being left on the table because there are documented biases about the amount of funding that both women and minority entrepreneurs are able to access. And so he built a firm expressly to do this. And they've been able to bring in a portfolio. Everyone is welcome in the portfolio, but diverse entrepreneurs are more represented. And they've built ways, special ways in which the founders support each other. They're not just independent portfolio companies. And they're very proud of their statistics, which show that one in nine people who are minorities working in venture capital have gone through at least one of Harlem Capital's training programs or internship programs.

15:10That's awesome. So are they located in Harlem or that was just a chosen name? No, they were in New York City. And I think that was specifically chosen to indicate their mission. Yeah, yeah, yeah. So this last question is either going to be the dumbest question I asked you or the hardest question. Okay. Okay. All right. So how would you define innovation? Let me start by saying I define entrepreneurship as value creation through innovation. And that's why I can come up with those seven pathways because it's not just founding a business and disrupting like that media stereotype. But then innovation is the application of knowledge in order to create a productive product or service or process.

15:56It's anything that's going to allow us to do something differently and hopefully create value from it and therefore be entrepreneurial. And I guess doesn't exist today would be one aspect, right? Something new. Well, in many cases, innovations are adoptions of things from other places. You start off by saying, what if I put out architecture together with calculus? In many cases, people are able to take something that's effective in one domain and transplant it into another market, for example, or another geography. So those are very common sorts of approaches. So it's innovative to that place.

16:36If I'm reading your book, am I to choose one path or is it amalgamation? you if you are reading my book you should be inspired by all of the stories and what you would see is that most of the people over the span of a career so those who were have a little bit more age under their belts like you and me they're able to take different paths at different times jackie was a banker originally she went into tech she went to square you know square used to have those little white square. I still do the square white point of sale terminals, but that's where it started. And because she was a banker, she said, oh my gosh, they can use this data to make loans.

17:22She builds out a banking business, Square Financial Services within Square. And then she sees these banks don't do enough for fintechs like Square. And then she goes and acquires a traditional bank and turns it into this disruptive fintech bank. So what did we have there? She was an entrepreneur. She was an acquirer. She was a disruptor as well. So really, a career can be an amalgamation of many paths. You mentioned age. And one of the things I've seen a lot and heard a lot of people talk about, I think the media tends to play up these very young startup founders when, in fact, a lot of 55, 60-year-olds are actually driving some of the most innovation, aren't they?

18:10Yeah, one of my colleagues, Danny Kim, he's a fellow professor in the management department with me. He's done some research on the cream of the crop in venture capital, top firms there. And the majority of them are founded by people, the median is around late 30s, early 40s. And I think you'll see even more of the older entrepreneurs now as we're seeing all these changes in the workforce and job dislocation and the like. So here are people with a lot of expertise and necessity is a big promoter of entrepreneurship, too. No question. Laurie, I appreciate you taking a few moments to stop by the Ductate Marketing Podcast.

18:50Is there anywhere you'd invite people to learn more about your work? Obviously, find unstoppable entrepreneurs. entrepreneurs. Well, absolutely. Google my name. I'm the only Lurie Rosenkopf in the world. And you can also find the book at all of your favorite, read about Venture Lab, where our student entrepreneurs are doing great things. But it's been wonderful to have this conversation with you, John. Thanks for having me. Again, I appreciate it. And hopefully we'll run into you one of these days out there on the road.