The Evolution of a Curriculum
The undergraduate and graduate business school curriculum is often associated with preparation for roles at large companies, or with service providers to large companies. A healthy dose of accounting, finance and economics in the first half of a curriculum builds a foundation that prepares students for the discretion driven disciplines of marketing, operations and strategy in the second half of the curriculum. Depending on the student’s professional goal, a concentration in a specific field may be necessary to prepare for roles accessible via the most likely off-ramps -- large banks, consulting firms and Fortune 500 companies.
Increasingly, interest in entrepreneurship, early stage businesses and technology innovation has warranted a shift in the business school curriculum. Today, many schools offer classes, internships, conferences and mentoring programs that provide exposure to a variety of topics related to entrepreneurial or small business interests. One example of this is the Southeast Entrepreneurship Through Acquisition conference, which took place this past weekend at Duke University’s Fuqua School of Business.
Among the over 500 attendees at this year's conference were entrepreneurs, aspiring entrepreneurs, students, investors, lawyers, accountants and professionals from a number of fields. The event was hosted by Duke in collaboration with the University of Virginia, the University of North Carolina and Georgetown University.
Nick and I had the pleasure of attending this event and witnessed the positive progress made towards opening doors to new paths for students and professionals from all walks of life. Below are three of our takeaways from the event. If entrepreneurship through acquisition is new to you, read more about the ETA practice here.
1. Community - To Have It When You Need It, Invest In It When You Don’t
A panel of four entrepreneurs during the second day of the conference covered the topic of preparing for entrepreneurship. Our key takeaway: aspiring searchers and entrepreneurs must build a diverse network of experienced operators, current searchers, and business owners with unique backgrounds and interests.
Communities are an important part of life and the benefits of communities are well documented. Finding others who share the same interests and values will contribute to the success of forming a sense of self. Whether coming together over shared support of a sports team, an affiliation with a school or a connection to a hometown, we build confidence through shared connections.
For entrepreneurs, community is particularly important because the entrepreneurial path is notoriously difficult and the support offered by a community is much needed. A high failure rate, regular bouts of stress and pressure, and a constant need to navigate risk creates a challenging professional backdrop for entrepreneurs. Although the public perception of entrepreneurial success is aligned with a fantastic image of a wealthy and liberated individual who is free from the stress of a 9 to 5 job, the reality is that the entrepreneurial experience will occasionally leave the operator of a business longing for the stability of a job with a mature business. In these moments, lean on your community.
When considering the composition of an entrepreneur’s community, it’s important to include peer entrepreneurs, but it’s just as important to look beyond entrepreneurs and to build relationships with a diverse group of stakeholders. For example, employees are a key contributor to any business and represent critical constituents in the entrepreneur’s community. Investors, lenders, vendors, family and customers are similarly important in the entrepreneur’s community.
Also important is the need to invest in the community. As a child, my grandmother shared an anecdote about the importance of saving money, capping her comments with a memorable line. She said, “to have it when you need it, save it when you’ve got it.” As I listened to the panelists speak about their communities, my grandmother’s statement came to mind. We should not rely on community engagement only when we need our communities, but instead we should make ongoing investments in these communities, especially when we don't need them. This way, we can ensure that the support of the community is enduring and available when we need it most.
2. Know Who You Are and Be Comfortable With Your Weaknesses
Throughout the conference, references to self-awareness were pervasive. Successful entrepreneurs understand their weaknesses and they address these weaknesses proactively. A primary benefit of entrepreneurship is autonomy and many choose the entrepreneurial path to gain more control over a professional destiny. But a desire for autonomy should not prevent the entrepreneur from taking an honest inward look to understand where help is needed. In doing so the entrepreneur can enlist the contributions of others who are proficient in the entrepreneur’s areas of weakness.
Entrepreneurs and business owners may be tempted to control all aspects of business operations. Entrepreneurs should be well versed in their businesses. However, being well versed does not preclude an entrepreneur from empowering individuals to step up in areas of the entrepreneur’s inexperience or in which the function does not come naturally to the entrepreneur.
By understanding strengths and areas of weakness, entrepreneurs are well positioned to build a complementary team. For instance, a technical person with limited sales experience can lean on an experienced account executive for sales guidance. An operations professional with limited product experience can empower a specialized product manager to create and execute the product roadmap. A great sales person with limited accounting and finance experience can bring in a strong controller or finance professional to structure budgets, KPIs, and internal controls. Or if an entrepreneur is a great fundraiser but is not well versed at deploying capital, the entrepreneur will benefit from the experience of a seasoned financial planning and analysis team member.
Solving for areas in which an entrepreneur has limited experience not only increases the strength of the collective output, it reduces burnout and fatigue. Running a business is hard. Build confidence and increase your odds of success by empowering those who have expertise in areas you don’t.
3. Come With a Marathon Mentality and Have Staying Power
Entrepreneurship through acquisition, and entrepreneurship broadly, is a long term decision and should be considered carefully prior to dashing from the starting line. As noted in a prior blog post, about 30% of funded ETA searchers will not acquire a business, suggesting that after two years of looking for a company the searcher will wind down the effort and move on to a new endeavor. Although the inability to acquire a business may feel like a failure, purchasing the wrong business may result in a greater failure given that the entrepreneur’s commitment to a business is likely to be more than two years.
Long term decision making is a challenge for humans. We tend to more heavily weigh near-term risk and circumstances than long-term risk when making decisions. We struggle with the marathon mentality because we like to solve immediate problems (mile 1), often to the detriment of the best long term risk adjusted decision (mile 26). For instance, if someone is unhappy in a job today, the prospect of switching jobs tomorrow presents an immediate benefit that may be antithetical to sound long term decision making. Whether that person will be happy one year from now with the decision to switch jobs is less consequential during the decision making process than the desire to depart the current role.
In addition to careful thought about the type of business that an entrepreneur is best suited to operate, it’s important to reflect on the realities of wealth building through entrepreneurship. Entrepreneurship is not a get rich quick scheme. As a matter of fact, it’s the exact opposite. Wealth is built slowly and compounds over time as a business grows and continues to operate. Entrepreneurship is a get rich slow scheme. This too represents a counterintuitive decision making point because if the risk of entrepreneurship is to be offset by a requisite reward, the entrepreneur must have staying power so that compounding can work its magic.
Perhaps the best modern example of the power of compounding is none other than the success of Warren Buffet, who in his earliest annual writings espoused the profound impact that the passage of time has on compound growth. Buffet’s partner, Charlie Munger, similarly praises the impact of compounding and is reported to have stated that the first rule of compounding is to never interrupt it unnecessarily.
Entrepreneurial success is certainly not linear. But it also won’t have the opportunity to compound if an entrepreneur doesn’t have staying power. Finding the right business and allowing compounding to work its magic is a critical part of the entrepreneurial equation. Use your best discretion prior to going down the entrepreneurial path so that you are not forced to unnecessarily interrupt the benefits of compounding.
Rounding Out the Experience With a Round-Elbow Community
The community at the Southeast Entrepreneurship Through Acquisition conference is best described as collegial. The group is a self-proclaimed “round elbow” community and the support that this group lends to entrepreneurs and aspiring entrepreneurs is admirable. Your community is an important facet of support and success on the entrepreneurial path. Build it, invest in it and make sure that you don’t neglect it when you don’t need it.
We all have weaknesses. Solve for these by recruiting great team members and empowering these individuals to lead. Company performance will benefit and burnout and fatigue will be staved off.
Often romanticized in the short-term, entrepreneurship is a marathon. Prepare for the long haul. While it can be liberating for the right personality types, it can also be tormenting for those who end up in the wrong businesses or on the wrong path. Entrepreneurship works if the operator has staying power. Prepare for a marathon.
Every bank, consulting firm and Fortune 500 company started as an entrepreneurial endeavor. Although large firms are an important part of the economy and are an excellent professional path for many, the Southeast ETA conference displayed in full force the support for small business ownership and operation. We are excited to see which great companies will grow out of the current generation of entrepreneurs and become the large corporations of tomorrow.
