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Jason Nazar, founder of Docstoc and host of Startups Uncenscored
Entrepreneurship is one of the most important drivers of economic growth. According to a recent US Census bureau study, startups in their first year added an average of 3 million jobs per year. By contrast, existing firms are net job destroyers, losing 1 million jobs net combined per year. That is, all net-positive job growth in the past 30 years can be attributed to startups.
In light of that, the local Los Angeles tech community encourages university programs to teach entrepreneurship to further our economy. But considering the magic of lonely, enigmatic and imaginative types, like Steve Jobs and Thomas Edison, is entrepreneurship fit for teaching?
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“Of course it can be taught,” said Helena Yli-Renko, Director, Lloyd Greif Center for Entrepreneurial Studies at USC’s Marshall School of Business. “The relevant question is: ‘How can it best be taught?’”
USC’s Greif Center claims to be the oldest program for teaching entrepreneurship in the United States. It’s one of several universities in Los Angeles, including UCLA and Pepperdine University, offering courses and degrees in entrepreneurship.
Professor Larry Cox of Pepperdine University’s Graziadio School of Business and Management agrees.
“For a long time people said entrepreneurship can’t be taught,” said Cox. "Anything that has a process, principles and tools can be taught.”
“I can always identify what behaving entrepreneurial is like,” said Cox. “The problem is we sort of expect this lighting in a bottle experience.”
Too often aspiring entrepreneurs “think the first solution that comes up in your head is the best solution,” said Cox. When, in fact, they would be better served by a process and by principles.
This makes it seem like teaching entrepreneurship shouldn’t differ much from other textbook-based MBA courses, however, Yli-Renko cautioned, “it really can’t be taught in the traditional educational format. It really requires getting out there and doing experiential stuff.”
Entrepreneurship is “not a linear approach, it’s much more messy and experimental,” said Yli-Renko.
Pepperdine University and USC have similar ways of developing those entrepreneurial skills, though with varying amounts of steps.
At Pepperdine students are taught to work through their plans in an eight-step process:
1) Find a problem
2) Fact-finding
3) Reframe the problem
4) Find solutions
5) Feasibility
6) Building a business model
7) Marshall resources- money, people, tech, licenses, etc
8) Launch
At USC, there are fewer steps, but the process is generally the same:
1) Opportunity recognition
2) Feasibility
3) Venture Initiation
These steps are not a rigid, sequential recipe for success, rather they are gut-checks and guiding principles. A closer look at these processes reveals an admission of uncertainty in entrepreneurship. Within entrepreneur classes the hustle is fully acknowledged: the “who do I know, what do I know; improvisational process,” said Yli-Renko. And this is important to teach because this resourceful, creative process is too often foreign to most people.
People have “abandoned creativity because they think it is not efficient,” said Cox.
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“When you were in the fourth grade you were very creative,” said Cox. "But you unlearned the skills.”
Instead many people think, “I’ll just cut to the chase because it’s more efficient.”
In fact, the “cut to the chase” instinct is something commonly referred to, within entrepreneurial studies, as casual decision making. That is: ‘if I do X, Y will happen.’
Casual decision making is typical of corporate management but “the ways an entrepreneur makes decisions are very different from a typical corporate manager,” said Yli-Renko.
As an entrepreneur, you can’t assume that much. You don’t know ‘X’ will produce ‘Y’. You might not even have ‘X’ available.
So entrepreneurs who live in a world of uncertainty, where the future is not well known, and resources are limited, need a much more opportunistic approach, something entrepreneurial studies call effectuation thinking.
"Causal decision-making is focused on reaching a particular goal, getting from point A to point B. Whereas effectual, entrepreneurial decision-making is more flexible and improvisational - the goal often changes along the way," said Yli-Renko.
In professor Yli-Renko's class at USC, students practice effectual decision making via an “E Challenge” assignment. As part of the challenge, teams have two to three weeks to do a pop-up venture with $50 and five hours to sell (all profits go to charity). By throwing students out into the real world, with real money, the program forces them to deal with uncertainty, and to make effectual decisions.
“Entrepreneurship: we like to think of it as a contact sport,” said Yli-Renko. These types of entrepreneurial scrimmages are key.
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Founder of Docstoc (which was acquired by Intuit) and host of the monthly Startups Uncensored event, Jason Nazar echoed that sentiment almost exactly. “Those [entrepreneurship programs] are good starting points, but entrepreneurship is a contact sport,” said Nazar.
For example, “[Michael] Jordan teaching basketball would give a great understanding of basketball, but ultimately you have to get out there and do it,” said Nazar. “Nothing will ever substitute for being in the arena and learning the lessons of doing your business.”
Nazar knows the arena well from experience. Before selling Docstoc to Intuit for $50 million, Jason and his team spent years grinding away at the startup.
“We typically did not leave the office until 1:00 or 2:00 am everyday,” said Nazar, “working on average 16 hours per day.”
And that mental toughness, that stubborn persistence “it’s a quality that can be made aware, but I don’t think you can teach it,” said Nazar.
Nazar said the important question for him is: “What is your why?”
The 'why you are doing this startup' motive is key.
“You have to have a big why to keep pushing harder,” said Nazar.
So with all the right principles, the biggest why and strongest work ethic will your startup succeed?
“You don’t know,” said Nazar. “That’s the whole point.”
