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Archive for October, 2011

John Maynard Keynes coined the phrase “animal spirits” in his 1936 book The General Theory of Employment, Interest and Money.  He uses the term to describe emotions which influence human economic behavior.  Healthy animal spirits create an ambience of trust and faith and are a necessary prerequisite for human actions, much more than quantitative logic.  Keynes felt animal spirits were needed as a goad to economic action rather than inaction.

Entrepreneurs are different than other business people.  They are optimistic risk-takers and people of passion and instinct.  They are marchers to the beat of their own drummer.  But they are also very much dependent creatures of their own animal spirits.

In a sense, entrepreneurs are much like the wild things of the forest.  They are part of an economic and emotional ecosystem that molds them, that fertilizes them.  They will not stay healthy without this ecosystem.  Hence, the importance of a salubrious trope in the macroeconomy.

A very wet blanket has been thrown over the animal spirits of small business in the last three years.  While excessive and growing regulation saps energy and time, it is ultimately only a wasteful annoyance.  A growing tax burden excessively milking the small business community is a more serious discouragement to the entrepreneur, but also not fatal.

What is potentially fatal is the undermining of the spiritual reason for entrepreneurship.  As much as profit is important, at base I believe most entrepreneurs are seeking a meaningful and free life.

While political philosophy can be argued one way or another, I personally feel the greatest and most unnecessary economic mistake of the current administration is its gratuitous and overwrought attack on the motives and values of business.  It is very hard to continually pillory the businessman as venal, greedy, and selfish and not destroy the animal spirits and passion prerequisite for success within our group.

It is also unnecessary and wasteful to cast the businessman as a villain.  It would cost nothing to hold up the virtue and value  of our group rhetorically, rather than debunking and denigrating our community.  The rewards in entrepreneurial optimism and response would be significant.  And it would not cost a dime.  Even within our depressed economy, the entrepreneur remains a risk taker.  But who wants to take the risk of adding investment and new hires when the reward is a cacophony of governmental contempt and calumny?

The current government cannot create an emotional dead zone for the entrepreneur and expect him to be enthused and fierce.  If our current recession must be remediated through the 65% of new hiring done by small businesses, why not lift us up with celebratory eloquence?  It’s free to do so, so why not a little sunny celebration and support, rather than depracatory demonization?

As John Maynard Keynes puts it, “…if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fail and die.”

Thank you, John Maynard.

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Per my meditation on Steve Jobs last week, I’ve been thinking about advanced business degrees and entrepreneurship.

Coincidentally, the Wall Street Journal came out with a whole section on the value of MBA’s the day after Jobs’ death (October 6, 2011-Section B).  In an article titled, “Is an MBA Worth It?,” reporter Melissa Korn interviews five students on the value of their degree.  While these students were generally positive about their degrees, she points out that companies are significantly reducing their hiring of MBAs in favor of their less educated and elitely sculpted brethren.  While the MBA may offer credibility across industries, may result in extra earnings, and should offer rich peer-level networking opportunities, corporations are becoming less sanguine about this accreditation–even among the most prestigious institutions like Wharton, HBS, CBS, Booth, Tuck, Kellogg, Fuqua, et. al.

Whatever the reasons for corporate caveats around MBA training, these caveats should apply in spades to MBAs for entrepreneurial leaders.  While there is a real need for the traditional training in green-eyeshade strategic and practical orthodoxies and legacy business skills that can be easily slotted into corporate culture, I am quite agog at the proliferation of institutions that now are offering MBAs in entrepreneurship.  I can see how they can teach you how to run an entrepreneurial company, but not to create one.

One of my clients at Corporate Rain International is a very successful multiple entrepreneur who actually teaches a course in entrepreneurship at Tulane Business School.  I asked him frankly over dinner last year how in the world do you teach entrepreneurship?  (I certainly couldn’t.) How do you teach originality?  How do you teach personal vision?  How do you teach stewardship of the larger universe your parvenu company is part of?  How do you teach the passion for freedom?  How do you teach the courage to fiercely fail and even fail multiple times?  How do you summon sufficient hubris to slay the dragon of self-doubt each day and continue to create something out of nothing?  How do you teach all that and many other non-quantitative intuitions? How do you bring love into the building of a company?

There seems to be a romanticism that has developed around entrepreneurship in our country.  It’s cool to be an entrepreneur.  But, I tell you, most of the successful entrepreneurs I know, including myself, are somewhat eccentric, if not downright odd.

So was Steve Jobs.  Jobs created his own country, his own universe of meaning, his own private Idaho where he could live with freedom, passion, and love.  It is no wonder it is a country many people want to live in with him.  An MBA will not teach you how to create these things.

Herman Melville says in Moby Dick, “A whale ship was my Yale College and my Harvard.”

Whale ships, not MBAs, make entrepreneurs.  Thank you, Herman–and thank you (again) Steve Jobs.

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Amidst all the encomiums and panegyrics to Steve Jobs over the last week, the most notable thing to me was a celebration of Steve Jobs as an almost religious artistic entrepreneur.

While Jobs is certainly a great and seminal American businessman, very much the equal of Thomas Edison, Henry Ford , or Bill Gates, he also clearly thought of himself as an artist.  Bob Rice, General Managing Partner of Tangent Capital Partners, in an interview on Bloomberg (10/6/11), speaks of Jobs as “living at the intersection of art and technology.”  Indeed, Jobs defined himself specifically in terms of art.  At his speech introducing the iPad in 2010, Jobs defined Apple’s success in the following words:  “It’s in Apple’s DNA that technology alone is not enough.  It’s technology married with liberal arts, married with the humanities, that yields the results that make our hearts sing.”  That very verbiage is the language of the poet.  His lifework is as much that of the auteur as of the entrepreneur.

An artist illuminates and helps us understand the truth of existence in a way not unlike that of a religious thinker.  l think great entrepreneurs are imbued with this sense, even if not explicitly acknowledging it, as Jobs has done.

On August 26, 2011, after Jobs resigned as CEO of Apple, Holman W. Jenkins, Jr. wrote the following in an editorial in the Wall Street Journal.

“What comes to mind now is a forgotten PBS show in the 1980s that tried to explain what was then known as the ‘quality revolution’ in business.  Interviewed was some wise old MIT professor who said, ‘Quality is love.’  Mr. Jobs determination to make superb products was, one likes to think, an expression of love for the world, life and possibility.”

Perhaps I am especially sensitive to these qualities in Steve Jobs, since I personally come out of an explicit background in the arts and in religion.  It seems to me entrepreneurs who are unattached to the deeper values that make a meaningful, truthful existence are that much lessened in the value of their business life.  Steve Job’s lived a uniquely successful business life that inculcated art, truth, ethics and also lucre.  He was a uniquely integrated entrepreneur and an elegantly realized human being.

My favorite tribute to Steve Jobs this week came in a tweet from Michael Yang, CEO of Become.com, who says, “Steve Jobs will be remembered in the same vein as Einstein, Ford, and John Lennon.”  That seems just right to me.  Thank you, Michael Yang.

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Failure is seminal for any successful salesman.  And failing big is even more wonderful.

As many of you know, I was an actor for a good while in my younger years.  One of my colleagues was a man named Austin Pendleton.  I remember Austin talking one day about solving his auditioning conundrum–the problem being how to figure out what directors really were looking for.  He told me what he had finally decided was to “go big” with his audition choices.  If he had an “outrageous failure” at least he was rejected for something distinctive.

I have often thought back on that comment in my 17 years as head of my executive sales outsourcing firm Corporate Rain International.  I fell on my face often as an actor and I had to learn to handle my frequent (very personal) rejections and even enjoy the process.  It’s helped me enormously as an entrepreneur and salesman for my company.

I was caught by an article in the Wall Street Journal last week by reporter Sue Shellenbarger, titled “Better Ideas Through Failure.” (Tuesday, Sept. 27, 2011-Section D, p. one)  It concerns a pitch done by Amanda Zolten, a Sr. VP at Grey Advertising for a kitty litter product.  Ms. Zolten found an answer to her pitch through her cat, Lucy Belle.

“Before she and her team met with six of the company’s executives, Ms. Zolten buried Lucy Belle’s mess in a box of the company’s litter and pushed it under the conference-room table.  No one noticed until Ms. Zolten pointed it out–and the fact that no one had smelled it.

Shocked, several executives pushed back from the table. Two left the room. After a pause, those who remained started laughing, says Ms. Zolten, a senior vice president with Grey New York.  “We achieved what we hoped, which was creating a memorable experience.” she says.

She won’t know for a few weeks whether Grey won the business. But her boss, Tor Myhren, named Ms. Zolten the winner of his first quarterly ‘Heroic Failure’ award for taking a big edgy risk.”

There is a wonderful lesson for the entrepreneurial salesman here.  Compelling charismatic sales narrative  comes out of fearlessness and free expression of the truth.  Peregrinations within the timid confines of the quotidian n’er did win fair maidens–nor new clients.  Bravo, Grey Advertising!

As Dostoevsky put it in The Idiot in 1869, “Inventors and men of genius have almost always been regarded as fools at the beginning (and very often at the end) of their careers.”

Thank you, Fyodor.

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