A school for entrepreneurs

I am working on a school for entrepreneurs. It is still work in progress and I am approximately halfway to securing funding and collaborators, and therefore, my ideas are still radical and reflect what I really think about entrepreneurship. I know, after having been there a few times, that I may not be able to implement these ideas in the pure form: There will be adjustments and compromises made along the way, and at this stage, I am better off defining clearly what is non-negotiable and which parts are open to modification. 

Let's take for example one of the things I want to do: Start the entrepreneurship education programme by dissecting business failures. I want to have an intensive examination of not just how businesses fail, but what happens when they do. This, for me, is an useful corrective for the celebration of start-ups, which obscures how painful setting up a business is. In fact, it is a good starting point to know that if a business doesn't work, the entrepreneur is likely to find themselves alone and friendless, perhaps in debt and questioned about intentions. My opening gambit is that the best starting point is to think if you still want to start a business knowing what happens when it doesn't work. 

I am aware that this may not fly well with the investors who may back the project believing entrepreneurship is cool and everyone can do it. The approach I am suggesting will point to the opposite direction: That entrepreneurship is painful and only select people can do it. This would also lead to some practical considerations what most people do not think about much.

One of them is the purpose of the business. I am not necessarily talking about the mission and vision statements, which, for most businesses, is a marketing exercise. I believe these are really important elements, but I would rather start with defining the real purpose. The elephant in the room here is shareholder value maximisation, one of the worst ideas to rule the roost in the last fifty years. I would rather spend time reading together books like Eric Ries' Incorruptible, to explore the nuances of business purpose and understand why the shareholders should come - in terms of priority - after the customers and employees. Smart investors and entrepreneurs understand this intuitively - that shareholder value is a result of the business achieving its purpose rather than the purpose itself - and yet this is written all over in the company documents and the way employees are rewarded in most businesses.

This may also lead to an important discussion, often covered superficially, about who the co-travellers should be. This includes, most importantly, the co-founders, but also the employees, investors and professional service providers (e.g., the accountants and the lawyers). I have made my mistakes here so I speak from experience. Often one doesn't choose investors but gets chosen by them, but if this is really the case, the business is most likely to be doomed. Right now, even if it doesn't feel like, money is the most available thing in the world, and for the right business, virtually costless. Therefore, it is a sellers' market, too much money chasing too few good businesses, and yet, if one is having to surrender to the investors, it is either a person who hasn't spent time building networks, have no reputation or the business idea is useless. In summary, one should be able to choose one's investors as much as the investor chooses them, at the least, and the choice should be based on business-investor fit. Secondly, choosing wrong co-founders not only hampers the business, but the entrepreneur is likely to left stranded when the difficult times come. The same goes for the employees, but the co-founder, because of the co-ownership aspect, can have a much greater impact. As for employees, I have come to the view that a start-up should only hire someone only if the vacant position has a direct commercial impact. Hiring people because one feels committed to them, as I have done in the past, is a great disservice to the business, to oneself and to them as well. Finally, it is easy to underestimate the importance of the professional service providers in a start-up, and one must budget for this and go through a process of choosing them; not being able to do is a near-fatal mistake.

I often wondered if there is any value in setting up an education programme for entrepreneurs, as entrepreneurship is about doing it. But over time, and as I lived an entrepreneur's life, I have come to realise how much there is to learn and think. The popular culture may celebrate the school of hard knocks but this popular view is misinformed: Many failures - and the resultant social waste - could have been averted with a programme of education. In the Silicon Valley, where money and opportunities are plentiful, one can get there through trial and error, but in the rest of the world, one shot is all most people get. Hence my idea: We need more entrepreneurs in Britain and more good entrepreneurs. A carefully designed education programme will go a wrong way ensuring that can happen.