Author: Jeff Cornwall

Dr. Jeff Cornwall is the inaugural Jack C. Massey Chair in Entrepreneurship at Belmont University in Nashville, Tenn. Dr. Cornwall's current research and teaching interests include entrepreneurial finance and entrepreneurial ethics.

Dr. Jeff Cornwall is the inaugural Jack C. Massey Chair in Entrepreneurship at Belmont University in Nashville, Tenn. Dr. Cornwall's current research and teaching interests include entrepreneurial finance and entrepreneurial ethics.

Baby Boomer Careerists From the Eyes of the Entrepreneurial Generation

The generation whose leading edge is just coming into the work force, the ones that many of us call the Entrepreneurial Generation, are sick and tired of the simultaneous bragging and whining that we Baby Boomers constantly offer up when talking about our work and careers. They are the children of the tale end of the Baby Boomers — and they are angry and they want to make changes in our culture.
One of my students offered this comment to a post I wrote on Character last summer:

There are many things that help forge our character and values. My generation, from what I’ve seen, is really focused on keeping family first, even before career. Some say that this is because we watched so many baby boomers screw this whole family thing up. My take on it is that because the baby boomers sometimes grew up wanting, they determined in their minds that their families would want for nothing. Unfortunately, my generation has all they want, but grew up with workaholic parents who were absent in their lives. I believe we’re searching to find that balance between family and career.

Penelope Trunk, who writes a blog called Brazen Careerist, offered her take yesterday on a Harvard study on “extreme careerists” (who are most often Baby Boomers):

I cringe every time I read an interview with a “Successful Mom” who works a 70 hour week and can miraculously balance her kids and husband’s 70-hour week as well. All of this womens magazine [stuff] is self-reported, and what mom or dad is going to stand up and say they are destroying the kids by working long hours?…
Here’s what the Harvard Business Review article should have said: The long-standing practice of baby boomers to have dual-career families with no one home for the kids is bad for the kids, even if the parents are enjoying themselves. Fortunately, the post-boomer generations recognize the problem and plan to not repeat it.

And if you think her words sting, make sure to read the comments that follow her post!
Cal Thomas’ quote on the mess we Baby Boomers have left the generations that follow us are worth repeating:

My generation has been obsessed with making money and acquiring things in place of investing necessary time on marriage and children. The message the kids get is that if marriage is mostly about accumulating wealth and acquiring stuff, they can do that without getting married.
Family trees are beginning to resemble kudzu…

Other countries and cultures around the world are not the only people ready to rebel against today’s American culture — so too are the young adults who are inheriting it.

Near Record Hiring Reported by US Small Businesses

Almost one out of five small businesses plan to hire new employees over the next three months, according to the latest survey from the NFIB. With the exception of the “dot com” boom, the survey indicated the highest job-creation level in its history: during the next three months, 18 percent plan to create new jobs, while only 6 percent plan reductions, yielding a seasonally-adjusted net 19 percent (net 12 percent seasonally unadjusted) planning to create new jobs. Job-creation plans are positive in all industries. In addition to these new job openings being planned, more than 50% of the small businesses surveyed report trying to fill existing positions. But, they continue to report difficulties, with 80% report few or no qualified applicants.
Traditional business media seems to be a collectively puzzled by our true economic conditions. Why given the bad news coming out of so much of traditional corporate America do we still have such strong employment and a growing economy? The answer — when you only focus on half of the economy you are going to miss some important data. GM lays off 10,000 workers and it is major headlines. Small businesses add 100,000 new jobs and it goes almost unnoticed.

Formed, Not Born

Roger (not sure where Roger is from) e-mailed me about the age old question: are entrepreneurs born or made? As Roger said in his e-mail:

I am one of those that believe it’s impossible to teach anybody how to become an entrepreneur because I believe that they are born and not made.

Although I have addressed this issue before, let me try a new angle. My answer is: neither.
First, although I continue to make this mistake, we should avoid using entrepreneur the noun in such discussions. I have written about the risks of viewing any career as a noun in an earlier post. By describing someone simply by what they do for a living misses so much about who they are as a person. I think this might be part of the problem with this on-going debate of nature versus nurture in the context of entrepreneurship.
Entrepreneurship is not in our genes. People come to pursue entrepreneurship by their life experience. For some of us it comes from our family upbringing. I caught the bug at an early age by being involved in family businesses (thanks Dad!). For others, entrepreneurship is the result of some career crisis — often this means getting fired. Unemployment can be a powerful motivator. Pursuing entrepreneurship may be the logical way out of a frustrating career. Maybe they finally realize they hate their job, don’t belong in a cubicle any longer, are sick of “working for the man,” etc., etc. You get the scenario. For others, entrepreneurship comes out of an insatiable desire to pursue interests and passions in life. Self employed musicians or artists are great examples of this type.
Another factor that we cannot ignore is the role of our culture. As we see in so many studies, the culture in which we live is a powerful force creating start-ups and fueling entrepreneurial economies.
Entrepreneurship is much more passion than personality. We are not born with passion. It comes from our experiences — our family, our work, our hobbies, the people around us, the gifts we have been given, and our culture.
But even though they are not born, I cannot make someone choose this path in life, or even inspire someone to pursue a career in entrepreneurship who is not already headed that way. The fire has to be in their belly. Once in a while I have to stoke that fire, or help them see that the fire is there. And when they feel that fire, my job is to help them have a better chance for success. By learning about the process of properly defining and aligning the opportunity, securing the necessary resources, planning the venture, and managing growth effectively, we can increase their chance of financial success by an average of about 50%.
Entrepreneurs are formed — not born or made. Oh, drat! I made it all the way to the end before I used that pesky noun again! Let me try it one more time. Entrepreneurship is a career that comes out of our life experiences, and with some education, we can improve the success rates of those who start-up new ventures. Not quite as pithy, but hopefully your get the point.

The Art of the E-mail

When we first installed e-mail in our company in the early 1990s, I had to “pull the plug” on the system after just a few months. People were sending incredibly caustic messages, writing things in their messages that they would never say face-to-face. It was a new form of communication, and we had to take the time to train people on how to use it and how to be polite and courteous when communicating via this new medium before “turning it back on.”
Fifteen years later it seems that people still don’t have a clue on the effective use of e-mail communication. Web Worker Daily offered a wonderful tongue in cheek post on negotiating via e-mail that illustrates how little progress has been made.

In the new world of web work, you might find yourself negotiating by email over a job or project. Most of us know how to screw up phone or face-to-face discussions. Scotching plans by email requires a completely new approach.
Remember that email is asynchronous, impersonal, and only seemingly private. Use these characteristics to best advantage and you’ll never have to deal with a pesky email-negotiated business deal again.

It would be even more funny if it weren’t so true!!
(Thanks to Ben Cunningham for passing this along).

Competing for Good Talent

Eric from Canada e-mailed me the following question:

How exactly would you answer the question: “why should I work for your company when there is a bigger company offering me a great salary?”

I found that just listening to what the employee really wants and being flexible in how you structure the offer and the job can be very effective.
There was a manager I wanted to hire to run a new program we were starting, as he was one of the best in our industry. He worked for a large, national company. I knew I could not match his salary, but I did not give up.
I got to know him and found out what he was really looking for in his career and in a job. He wanted to have more control over his department. That was easy as we were small and our structure was quite decentralized. He could run the new program like it was his own business.
He wanted to have some real ownership in the business he worked in. We could do that, too, as we set up separate corporations for each new program we started and we had already planned to offer a small ownership stake for the right manager. Equity or equity-like incentives can be a way to defer compensation until you can afford it, and create an incentive that gets everyone pursuing the same goals.
There was one more thing he wanted, however, and it was clear it was a deal breaker for him. His current employer had very strict rules on vacations and holidays. He was a Viet Nam veteran and had wanted to go to Washington, DC each Veterans Day to remember his fallen comrades. His current employer’s rules did not make it possible to guarantee that, and he had missed the last two Veterans Day observances. So, in my offer I promised him that he would be guaranteed Veterans Day and one work day on either side of it off each and every year (they were counted as vacation days). That was all it took to convince him that we were the best place for him to work. He came to work for us taking a significant cut in base salary from what he had been making before.
I also find that being able to work in an entrepreneurial company with a team that is excited and committed to what they are doing attracts many managers to smaller companies. So when you interview prospective management candidates make sure to use your team as not just part of the interview process, but to sell the prospective employee on the benefits of working in your company.
Finding management talent in the first place can be a daunting challenge. For example, where should you look to find a Controller, a Marketing Director, or a Human Resource Manager for your company? I recommend using your network. Talk to your CPAs and your attorneys. Talk to your advisory board. Talk to other entrepreneurs that you know. Talk to people you trust in your industry. That is usually the best way for entrepreneurs to get a good pool of candidates for their growing businesses.
To attract them to your business you need to listen to what they want beyond the salary, and find creative ways to put it all together. Once you know who you want, get into the selling mode and use all of the important attributes you know are important to them in your pitch.

VC Career Advice

I meet many MBA students studying Entrepreneurship who tell me they are planning to have a career as a venture capitalist. Guy Kawasaki recently wrote a post at his site offering some lengthy, but very good advice to young aspiring VCs. Here is his conclusion (edited to make it “G” rated).

Here’s the bottom line: You should become a venture capitalist after you’ve had the [expletive deleted] kicked out of you. This will yield at least two positive results: First, you’ll stand out from the full-of-[expletive deleted] artists who entered the business when they were young. Second, you’ll really be able to help your portfolio companies–which is what venture capital should be all about. See you in ten or twenty years.

It is similar advice that I offer to those who aspire to teach Entrepreneurship. Go out and be one, or at least work for one. A little miles under your belt and some wear on the tires goes a long way!
(Thanks to James Shewmaker for passing this along).

Study on Small Business Growth Trends

Small business growth and decline tends to persist and is not easily reversed, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration.
“We know that overall small business is a dynamic sector of the economy,” said Dr. Chad Moutray, Chief Economist of the Office of Advocacy. “This study shows that the growing and declining firms tend to stay in the same mode over time. Consequently, policies that affect growth or decline can have an impact on small businesses over a longer term than originally anticipated.”
Drs. Rich Perline, Robert Axtell, and Daniel Teitelbaum of NuTech Solutions wrote Volatility and Asymmetry of Small Firm Growth Rates Over Increasing Time Frames with funding from the Office of Advocacy.
The report followed up a study from 2005 that examined firm growth rates by size of firm and industry type. That report found that firm growth tends to be relatively more concentrated among fast and slow growth firms. The current study examined growth rates over a five-year period, using special tabulations of the Census Bureau’s Business File dataset.
This is important information given the fact that 50% of the GDP in the US is made up of small business activity.

Strategic Partnerships

Kauffman’s eVenturing has another outstanding collection of materials — this month it is related to strategic partnerships.

For entrepreneurs building growth companies, engaging strategic partners tends to be par for the course. The bottom line is the right partner can drive success for your company while the wrong partner can be stifling. This collection provides entrepreneurs insights on identifying, selecting, and negotiating with prospective partners and covers ways to manage effectively the partner relationship to maximize chances for success.

Pay particular attention to the “wrong partners can be stifling” part of this collection. Getting locked in — and by locked in I really mean locked in — with the wrong partner is more than stifling. Strategic partnerships are most often with large, established companies in your industry. They have enough resources and enough lawyers to make your life miserable if you do not do things their way. Do your homework. Get to know their culture, talk to other companies they have done strategic partnerships with in the past, and hire a really good attorney who is experienced in such matters to make sure the deal it fair.
Go in with your eyes wide open. Don’t sit down to negotiate a strategic partnership unless you are ready willing and able to walk away from the discussions if things don’t look right to you.

Entrepreneurship for the Masses?

There has been a lot written over the past month on Jeff Bezos’ plans for Amazon. As Bezos explained to Business Week when he first unveiled his plan, he wants to transform Amazon the on line store into Amazon the engine of the entrepreneurial economy.

Bezos wants Amazon to run your business, at least the messy technical and logistical parts of it, using those same technologies and operations that power his $10 billion online store. In the process, Bezos aims to transform Amazon into a kind of 21st century digital utility. It’s as if Wal-Mart Stores Inc. had decided to turn itself inside out, offering its industry-leading supply chain and logistics systems to any and all outsiders, even rival retailers. Except Amazon is starting to rent out just about everything it uses to run its own business, from rack space in its 10 million square feet of warehouses worldwide to spare computing capacity on its thousands of servers, data storage on its disk drives, and even some of the millions of lines of software code it has written to coordinate all that.

Here is how the Bezos plan was described in USA Today:

That’s the future Amazon.com CEO Jeff Bezos hopes to set in motion with the company’s new direction. If you tease out Bezos’ plan, you get to a point where a high school cheerleader sitting at home with a laptop could theoretically harness computing power, design capabilities, manufacturing and distribution from around the world, and make and market a cute little pink hot rod that would compete against General Motors.

Now that the ink has dried on Bezos’ plan, I’d like to offer my take on it. His assumptions show that he never learned one of the most important lessons of the dot.com disaster. He does not seem to understand that markets really matter. For example as Pets.com illustrated, just because you can sell dog food through the Internet it does not mean that there is a market for such a service.
Starting a successful business has two critical pieces. First you need a viable product or service that you can deliver. That is the part that Bezos is focusing on.
But second, you need a large enough market willing to spend enough to cover your costs and leave you a profit. The dot.com kids only worried about the first part and never paid much attention to generating sales and profits. Just because we can enable a “high school cheerleader sitting at home with a laptop could theoretically harness computing power, design capabilities, manufacturing and distribution from around the world, and make and market a cute little pink hot rod that would compete against General Motors” does not mean there are customers for her product.
I hope we are not setting people up for even bigger failures by making part of the process so much easier. My fear is that it will encourage more people to ignore the customer part of the equation and start businesses that are doomed to fail.